Korean Commercial Arbitration Board Enacts and Enforces “International Mediation Rules”

The Korean Commercial Arbitration Board (the “KCAB”) has enacted its International Mediation Rules, effective as of January 1, 2024.

Since the adoption of the United Nations Convention on International Settlement Agreements Resulting from Mediation (the “Singapore Mediation Convention”) in 2018, international mediation has captured considerable attention as a means of dispute resolution. Signed by 56 countries, including Korea, the US and China, this convention underscores the growing potential of international mediation on a global scale. Particularly, it serves as a viable alternative in international commercial disputes, especially in situations where predicting the outcome of a litigation or arbitration becomes challenging as a result of the absence of clear standards, such as relevant laws or precedents. It is also noteworthy that mediation can resolve disputes flexibly beyond the strict legal framework by offering creative possibilities to parties, such as future business opportunities together with or in lieu of monetary compensation. Kim & Chang has conducted several international mediations, leading to successful outcomes aligned with our clients’ objectives. For instance, representing a Korean energy company, we identified the potential for a favorable settlement in a USD 1 billion technology dispute against a US fuel cell company. Through international mediation, we were able to successfully resolve the matter promptly at an early stage. Meanwhile, the KCAB has enacted its own international mediation rules, which lay the foundation for the promotion of international mediation in Korea.

The KCAB announced that it has examined and incorporated international practices, as well as the practices of other arbitration and mediation institutions regarding international mediation procedures. This effort was made to establish the International Mediation Rules, comprising a total of eleven clauses that delineate the mediation process from commencement to conclusion, along with an Annex detailing the costs of mediation. The key details are outlined as follows:

Prevention of Conflicts of Interest

A mediator, jointly nominated by the parties or selected by the KCAB, plays a crucial role in facilitating settlement discussions between the parties and overseeing the mediation procedures. Prior to the appointment, the mediator is required to submit a written declaration of impartiality and independence, disclosing any known actual or potential conflicts of interest. In addition, unless otherwise agreed upon by the parties involved, the mediator must not act as an arbitrator, representative, counsel, expert, judge or witness or act in any other capacity in (i) any dispute that is the subject of the present or past mediation proceedings, or (ii) any dispute arising out of or in connection with the same or related contract or legal relationship.

Assistance in Executing Settlement Agreements

One of the key features of the KCAB’s International Mediation Rules is their role in facilitating the enforcement of settlement agreements achieved through mediation. In other words, under these Rules, parties have the option to (i) request the mediator to sign the settlement agreement or any other document indicating that mediation took place, or (ii) request the KCAB to issue a certification confirming that a settlement was reached during mediation, ensuring the enforceability of such settlement agreements under the Singapore Mediation Convention or other applicable laws. This provision allows a party to request the necessary documents from either the mediator or the KCAB for submission to the court for the enforcement of international mediation under the Singapore Mediation Convention, thereby enhancing the convenience of the enforcement process for the parties involved.

Confidentiality

As a fundamental principle, both the mediation proceedings and the resulting settlement agreement are confidential. This means that any documents, statements or communications submitted by the parties during mediation, as well as any views, suggestions, or admissions within mediation, will not be admissible as evidence in any judicial, arbitral or similar proceedings. This provision safeguards the confidentiality of mediation proceedings, ensuring that their content cannot be used against the parties, even in the event of a mediation breakdown and subsequent referral of the dispute to litigation or arbitration. This protective measure fosters an environment that allows parties to engage more freely in the mediation process, facilitating the pursuit of agreements within that framework.

The KCAB’s enactment and enforcement of the International Mediation Rules represent a significant milestone in promoting international mediation in Korea. By establishing the groundwork for international mediation through the International Mediation Rules, the KCAB has paved the way for enhancing the utilization of international mediation proceedings as efficient means of dispute resolution for its users.

[Korean Version]

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