Korean Commercial Arbitration Board proposes major overhaul of rules

KCAB has issued a draft of the overhauled rules (‘Draft Rules’) for consultation. The proposed changes, which will update the existing 2016 KCAB International Arbitration Rules, are designed to enhance transparency, efficiency and cost-effectiveness in international arbitration and position KCAB alongside leading arbitral institutions.

While certain aspects of the proposed amendments may benefit from further clarification, these substantial amendments are timely, and will no doubt be welcomed by the international arbitration community and ensure the growth of South Korea as a major arbitration hub in Asia.

New KCAB Court to be established

One notable change is the introduction of the KCAB Court (‘the Court’) composed of independent experts to oversee key procedural matters – including arbitrator appointments, challenges, consolidation and cost decisions. This significant development brings KCAB in line with major arbitral institutions such as International Chamber of Commerce (ICC), Singapore International Arbitration Centre (SIAC) and Hong Kong International Arbitration Centre (HKIAC), enhancing transparency, expertise and oversight. The Court and the Secretary-General will jointly manage case administration and rule interpretation. All decisions made by the Court and its Chairperson, Secretariat and Secretary-General – all terms defined by the Draft Rules – are conclusive and binding, with parties waiving their right to appeal their decisions to any court where their waiver is validly made.

The Draft Rules also streamline arbitrator appointment, challenges and replacement procedures. For instance, the timeline for the joint nomination of a sole arbitrator has been halved from 30 to 15 days. The Draft Rules empower the Court to appoint arbitrators with an emphasis on diversity and qualifications. Grounds for challenging arbitrators have been amended to include lack of qualifications and failure to perform duties, with the Court deciding contested challenges and replacements. The standard of proof required for challenging an arbitrator is to be changed from “justifiable” doubts to the arguably less stringent threshold of “reasonable” doubts – a shift which may invite more frequent, and potentially unmeritorious, challenges.

In addition, the Draft Rules newly introduce an award scrutiny mechanism where draft awards must be submitted to the Secretary-General within 60 days of the last hearing or filing of the last directed written submissions, whichever is later. The Secretary-General may refer the draft awards to the Court, depending on the complexity of the dispute and presence of a dissenting opinion, and no award shall be issued by the arbitral tribunal until it has been approved by either the Secretary-General or, where appropriate, the Court. This enhances quality control and again aligns KCAB with other major institutions like the ICC and SIAC.

Measures to enhance time and costs

To enhance time and costs, the Draft Rules also introduce a general obligation for parties and arbitral tribunals to conduct proceedings efficiently and cost-effectively. They mandate early case management conferences (CMCs), requiring the arbitral tribunal to hold a CMC promptly after receiving the file and to establish a provisional timetable without delay. The arbitral tribunal also has broad discretion over hearing formats and communication methods.

The Draft Rules actively promote the use of digital tools such as e-filling, virtual hearings and electronic evidence presentation. Notably, the adoption of technology-enabled practices and discussions around the use of AI tools in arbitration are supported. There is also an indication that KCAB will set up an online platform for submission of case materials, similar to the platforms of HKIAC, ICC and SIAC.

The Draft Rules provide that that an arbitration commences on the date the ‘request for arbitration’ (request), as defined by the Draft Rules, is received by the Secretariat, even if formalities are incomplete. This new provision is particularly significant for statute of limitation purposes, ensuring that even incomplete requests secure an arbitration commencement date.

Tribunals will also be empowered to order security for costs, reinforcing their authority to manage financial risks and deter frivolous claims. On costs more broadly, the KCAB has also revised its fee structure and introduced higher filing and arbitrator fees, while remaining competitive. An hourly rate option for determining arbitrators’ fees in “exceptional circumstances” is now available for high-value disputes exceeding KRW 15 billion (South Korean won, approximately US$11.5 million), offering greater cost flexibility.

KCAB’s new early determination procedure empowers the arbitral tribunal to dismiss claims or defences that are “manifestly without legal merit” or “manifestly outside” their jurisdiction. With a 30-day timeline from the date of filing the application for the arbitral tribunal to make an order or award, this is significantly shorter than the 45-day timeline under the SIAC arbitration rules (7^th edition), and enhances procedural efficiency. However, the interpretation of the term “manifestly” may be unclear and could invite scrutiny or challenge. This procedure also aligns with similar provisions in the HKIAC and SIAC arbitration rules.

The Draft Rules also expand and clarify the scope and procedure for joinder and consolidation applications, where the right to request a joinder is now extended to additional parties, who may request to be joined to a pending arbitration. The Court is empowered to decide on joinder applications before the arbitral tribunal is constituted, and on consolidation applications. The Court may also revoke previously appointed arbitrators prior to the decision on joinder, ensuring fairness in complex disputes, aligning with similar provisions in the HKIAC and SIAC arbitration rules.

The Draft Rules establish a comprehensive framework for concurrent proceedings, expedited procedure and fast-track procedure, aimed at improving efficiency and flexibility in arbitration. The introduction of the concurrent proceedings provisions will allow multiple arbitrations involving common questions of law or fact to be heard in parallel or sequentially before the same arbitral tribunal, mirroring similar mechanisms in SIAC and HKIAC arbitration rules. The new expedited procedure is applicable to claims under KRW 4 billion, with a six-month award deadline from the date of the constitution of the arbitral tribunal, and the new fast-track procedure for claims under KRW 500 million, with a three-month timeline for the arbitral tribunal to make an award. Both expedited and fast-track procedures provide for the appointment of a sole arbitrator, unless the parties have agreed otherwise. Notably, while the fast-track procedure is comparable to the SIAC’s new ‘streamlined procedure’, a comparable mechanism is not currently found in the ICC arbitration rules.

KCAB introduces a new structured timeline for final awards, requiring draft awards to be submitted to the Secretary-General within 60 days of the last hearing or directed written submission, whichever is later, and the arbitral tribunal to issue the final award within 15 days after scrutiny by the Secretary-General or the Court (Article 39). This is a substantially shorter timeline than SIAC’s 90 days or HKIAC’s three-month window for the submission of a draft award to the SIAC and HKIAC Secretariat respectively.

Measures to enhance transparency

The Draft Rules establish new disclosure obligations requiring prospective arbitrators to submit statements of availability and impartiality and independence, and to disclose any circumstances that may raise “reasonable” doubts about their impartiality or independence prior to their appointment as arbitrators. Notably, threshold for disclosure has been lowered from “justifiable” to “reasonable” doubt. Parties must also “promptly” disclose third-party funding arrangements, although the Draft Rules lack specific deadlines for such disclosures.