Kim & Chang successfully represented a Korean company (“Company C”) against a Chinese company in an arbitration in Shanghai, China conducted under the Rules of the China International Economic and Trade Arbitration Commission (the “CIETAC”) by effectively persuading the arbitral tribunal comprised of three Chinese nationals.

In this case, Company C agreed to supply LCD manufacturing equipment worth approximately KRW 10 billion to a Chinese company under a supply contract.  However, the Chinese company, which was suffering financial difficulties, repeatedly refused to receive the machinery that Company C manufactured in compliance with the contract and did not make any payment.  Accordingly, Company C terminated the supply contract and commenced arbitration proceedings at the CIETAC pursuant to the dispute resolution provisions of the contract.

On behalf of Company C, we advised our client to first demand the Chinese company to fulfill its payment obligation and then to subsequently terminate the supply contract, and proceeded with the CIETAC Shanghai arbitration in Chinese in cooperation with a Chinese law firm.  In the arbitration, Company C claimed for compensation of KRW 10 billion, and after the hearing, the arbitral tribunal comprised of three Chinese nationals issued an arbitration award in favor of the Korean company. 

This case which proceeded in Chinese involved Chinese tribunals comprised entirely of Chinese nationals and verification of evidence submitted in paper or electronic copies against the original evidence, similar to domestic civil proceedings in China.  This is therefore a meaningful case, as a Korean law firm on behalf of a Korean entity, in cooperation with the Chinese law firm, successfully claimed and met the burden of proof against a Chinese entity.  In particular, given that disputes with Chinese entities are increasing, the above case provides a better understanding of international arbitration comprised of Chinese tribunals and Chinese arbitral institutions.