1. 2.  Summary of Parties’ Arguments

   1. A.  Plaintiff

      Under the premise that the Arbitral Clause clearly applies to the Commitment Letter, enforcement of the Arbitral Award should be approved pursuant to Article 39⁶ of the 2002 Arbitration Act and Article III of the New York Convention. Plaintiff also argues that Defendant should be liable for the delay damages incurred from the day after the service of the Arbitral Award in addition to the principal amount due under the award.

   2. B.  Defendant

      The Arbitral Clause does not apply in this case to the dispute concerning the Commitment Letter. Defendant further argues that an arbitration agreement does not exist concerning the Commitment Letter and that Plaintiff is not a party to the Arbitral Clause.

2. 3.  Determination

   1. A.  Application and Regulations of New York Convention

      1. 1)  [The court confirmed that Japan, where the Arbitral Award was rendered, and Korea were both member countries of the Convention and that the dispute concerned a commercial relationship under Korean law.]

      2. 2)  [The court first cited Article II(1) and Article II(2) of the New York Convention.] In addition, Article IV(1)(b) of the Convention requires the parties to supply the original copy of the agreement referred to in Article II to obtain recognition and enforcement of an arbitral award. Article IV(1) regulates the means of evidence by stipulating that any dispute over the existence or details of an arbitration agreement between the parties may be verified only with the documents specified in Article IV(1).⁷ This is an active requirement for the enforcement of foreign arbitral awards, and the party applying for recognition and enforcement of the arbitral award has the burden of proof.⁸

         Meanwhile, Article V(1) provides that recognition and enforcement of the arbitral award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where recognition and enforcement is sought, proof that: (a) parties to the agreement referred to in Article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it (p. 95) or, failing any indication thereon, under the law of the country where the award was made, or (c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration.

         In light of the above regulations of the Convention and related legal theories, if Defendant contests the existence of the arbitration agreement, Plaintiff who seeks enforcement of the foreign arbitral award must prove the existence of the arbitration agreement by submitting said document. If such document is submitted, Defendant must then prove that the arbitration agreement made under said document is invalid or that the arbitral award does not address a dispute subject to the arbitration agreement to prevent recognition and enforcement of the award.

   2. B.  Whether an Arbitration Agreement Exists in this Dispute

      1. 1)  & 2) (first paragraph) [See para. 5.20 for the court’s finding that Japanese law was the applicable law in determining establishment and validity of the arbitration agreement because it was the place of the arbitration.]

      2. 2)  [after first paragraph] As provided above, the Commitment Letter itself and Plaintiff’s 1 December 2004 notice to Defendant that served as the basis for delivering the Commitment Letter both do not contain separate arbitration agreements. Defendant received upon execution and delivery of the Commitment Letter the Prepaid Purchase Price of KRW 50.2 billion (USD 43.7 million), which consisted of the stockholder dividend of KRW 21,404,651,510 (USD 18.6 million) and bond principal and interest of KRW 28,795,348,490 (USD 25 million). The amount of the bond principal and interest together exceeded the dividends. On 19 December 2000, Plaintiff, Defendant, and LSF3 entered into the Bond Agreement in connection with the bonds to be issued by Plaintiff and the repayment of such bond principal and interest. They also entered into the Shareholders’ Agreement regarding such matters as Plaintiff’s rights and obligations as a shareholder.

         The agreement under the Commitment Letter between Plaintiff and Defendant should not be considered a partial amended agreement of the Shareholders’ Agreement or an agreement clearly anticipated under the Shareholders’ Agreement.⁹ Similarly, one cannot deem it an agreement premised on the Bond Agreement applying to the refund of the bond principal and interests that is part of the Prepaid Purchase Price and the Shareholders’ Agreement applying to the return of the stock dividends. Therefore, the dispute between Plaintiff and Defendant merely concerns the interpretation and application of the Commitment Letter and does not have a direct relationship with the Shareholders’ Agreement,¹⁰ when the following points are comprehensively considered:

         1. (i)  Unlike the Shareholders’ Agreement, the Bond Agreement does not contain an exclusive arbitral clause and, among other things, provides for a different governing law. Thus the Bond Agreement and the Shareholders’ Agreement should be deemed as separate agreements. It is reasonable to conclude that the bond (p. 96) principal and interest, which occupies a greater portion of the Prepaid Purchase Price, should be paid pursuant to the Bond Agreement and that the stock dividends should be paid pursuant the Shareholders’ Agreement;¹¹

         2. (ii)  Meanwhile, although the Bond Agreement and the Shareholders’ Agreement contain provisions regarding the payment of the bond principal and interests or stock dividends, no evidence exists that these agreements contain provisions regarding the refund of the previously paid bond principal and interests or stock dividends to Plaintiff;

         3. (iii)  The Prepaid Purchase Price furnished to Defendant and LSF3 was part of the purchase price furnished to Plaintiff pursuant to the 30 November 2004 amended agreement between Plaintiff and Haemil concerning the Site. The amended agreement contemplates that Plaintiff may be required to refund the purchase price to Haemil due to such factors as termination of the agreement or repurchase. As for Plaintiff’s relationship with Defendant and LSF3, who are its bondholders and shareholders, the same Prepaid Purchase Price was distributed as bond principal and interests or stock dividends. Termination of the above sale and purchase agreement or a circumstance such as a repurchase does not mean that automatically the Prepaid Purchase Price paid to Defendant or LSF3 must be returned to Plaintiff; and,

         4. (iv)  Defendant’s obligation to return the Prepaid Purchase Price therefore only arose through the Commitment Letter.

            Nevertheless, Plaintiff only sought to argue and prove that the Shareholders’ Agreement contained the Arbitral Clause, but failed to prove that the Commitment Letter contained an arbitration agreement made in writing. We find that Plaintiff’s claim for enforcement of the Arbitral Award against Defendant is unwarranted without the need for further review.

      3. 3)  Furthermore, we next consider the assumption that the agreement between Plaintiff and Defendant under the Commitment Letter is an amended agreement of the Shareholders’ Agreement or an agreement anticipated under the Shareholders’ Agreement such that the Arbitral Clause in the Shareholders’ Agreement applies.

         In that case, the law governing the establishment of the arbitration agreement should be reasonably deemed Bermuda law, the governing law specifically stipulated by the parties under the Shareholders’ Agreement that is the underlying contract. Bermuda law applies the following principle for contract interpretation: ‘the meaning which the instrument would convey to a reasonable person having all the background knowledge which would reasonably be available to the audience to whom the instrument is addressed […] this objective meaning […] is conventionally called the intention of the parties.’¹²

         (p. 97) Even if these interpretative principles of Bermuda law are applied, in light of the circumstances below, the Arbitral Clause still should not apply to Plaintiff and Defendant.

         In other words, Plaintiff could be considered to have participated as a party to the Shareholders’ Agreement based on the following factors: (i) while the Shareholders’ Agreement in principle sets forth the rights and obligations of Defendant and LFS3 as shareholders, Article 6, among others, sets forth Plaintiff’s obligations thereof; (ii) the recital of the Shareholders’ Agreement states that it has been entered into among Defendant, LFS3, and Plaintiff; and (iii) Plaintiff affixed its signature at the end of the Shareholders’ Agreement.

         Nevertheless, although Paragraphs (b) and (c) of the Arbitral Clause use the term ‘parties’ instead of the term ‘shareholders’, we find it reasonable to conclude that Defendant, LSF3, and Plaintiff drafted the Arbitral Clause intending it to apply to disputes between Defendant and LSF3, based on the following points:

         1. (i)  Even if an arbitration agreement is incorporated into the underlying contract as an arbitral clause, said arbitral clause shall be deemed to be separable such that other clauses in the underlying contract do not affect the effectiveness of the arbitral clause,¹³ which is also the case under Bermuda law.¹⁴ Even if there is only one contract, all of the contract’s provisions are not necessarily effective upon all of the parties, and the parties may obviously agree that certain provisions shall not have effect on specific parties. As such, the parties in the Shareholders’ Agreement could be differentiated from the parties subject to the Arbitral Clause;

         2. (ii)  Under Section 10(1), which contains the Arbitral Clause, Paragraph (a) uses the expression the rights and obligations of the ‘shareholders’ in setting forth the governing law. In contrast, Paragraphs (b) and (c) provide that if any dispute arising between the ‘parties’¹⁵ is not resolved through settlement, it should be referred to arbitration. In this regard, it appears that the Shareholders’ Agreement differentiates the usage of the terms ‘shareholders’ and ‘parties’. Paragraph (d), however, which specifically sets forth the appointment of arbitrators under the arbitration proceedings, does not provide that Plaintiff may appoint an arbitrator, but instead provides that one arbitrator shall be appointed by Defendant, the other arbitrator shall be appointed by LSF3, and the third arbitrator should be selected by agreement of the ‘party’-appointed arbitrators. In light of general transaction norms, it is difficult to understand why three parties who may become opposing parties in an arbitration would grant the right to appoint an arbitrator only to two of the parties, without granting the same right to the remaining party, when specifically agreeing on how to appoint the arbitrators. In addition, it would be difficult to find that the parties mistakenly failed to grant Plaintiff the right to appoint an arbitrator while specifically agreeing on the right to appoint the arbitrators; and,

         3. (iii)  The expression ‘parties’ is customarily used in contracts, and shareholders can be referred to as parties, and, indeed, Paragraph (d) refers to the arbitrator appointed by the shareholders as the ‘party-appointed arbitrator’.

            (p. 98) Meanwhile, we may consider whether it would be possible to acknowledge that an arbitration agreement at least implicitly existed between Plaintiff and Defendant based on such factors as the Arbitral Clause or the appointment of arbitrators under the subsequent arbitration proceedings. Given that Defendant explicitly contested the existence of the arbitration agreement in the arbitration proceedings, however, we find it difficult to recognize an implicit arbitration agreement. Furthermore, the New York Convention only recognizes an explicit arbitration agreement in writing as a valid agreement.

            Therefore, even if the Arbitral Clause applied to the Commitment Letter, Plaintiff is still not a party to the Arbitral Clause and the existence of an arbitration agreement cannot be acknowledged. We therefore find that either an arbitration agreement does not exist regarding the dispute between Plaintiff and Defendant or the Arbitral Award addresses a dispute outside the scope of the arbitration agreement. Accordingly, enforcement of the Arbitral Award cannot be permitted.

   3. C.  Sub-conclusion

      Therefore, because the existence of an arbitration agreement has not been proven, or the Arbitral Award addresses a dispute outside the scope of the arbitration agreement, enforcement of the Arbitral Award should be refused. Plaintiff’s claim for enforcement of the Arbitral Award shall be deemed groundless, without the need for further review. In addition, Plaintiff’s claim for payment of delay damages premised on enforcement of the Arbitral Award shall also be deemed groundless.

3. 4.  Conclusion

   As a result, Plaintiff’s claim in this case is groundless and is hereby dismissed. The court of first instance’s judgment that reached the same conclusion is justified, and Plaintiff’s appeal shall also be dismissed. The court of first instance’s judgment failed to pass judgment on who should bear the costs of litigation. Hence, this court determines who shall bear the total cost of litigation (the costs of litigation for the main action in the court of first instance and the costs of appeal) pursuant to Article 212(3) of the Civil Procedure Act. The court enters judgment as provided in the Disposition.

1. 1.  First and Second Issue on Final Appeal

   1. A.  [The Supreme Court summarized the facts from the lower court judgment.]

   2. (p. 99) B.  Furthermore, based on these facts, the lower court decided that (1) Plaintiff could not be considered a party to the Arbitral Clause; and (2) the dispute regarding the Prepaid Purchase Price between Plaintiff and Defendant surrounding the Commitment Letter is not related to the Shareholders’ Agreement and hence the application of the Arbitral Clause does not extend to the Commitment Letter.

   3. C.  Yet, based on the following reasons, we do not find the lower court’s determination convincing:

      1. (1)  The Shareholders’ Agreement was entered into among Plaintiff, Defendant, and LSF3. The agreement distinguished the terms ‘parties’ and ‘shareholders’ when using them. In light of this, when the agreement used the term ‘parties’, we find it should be deemed to include all three companies that signed it, unless special circumstances exist. The same should apply for the Arbitral Clause that stipulates the arbitration agreement. Thus, we find it reasonable to conclude that Plaintiff should be included as a party to the Arbitral Clause.

      2. (2)  The Commitment Letter involved an arrangement that under certain circumstances the Prepaid Purchase Price that Defendant would receive in the name of shareholder dividends and principal of and interest on the bonds would have to be returned. In other words, the letter was a return arrangement as a precondition for Plaintiff to pay the Prepaid Purchase Price. It specified the terms of the Shareholders’ Agreement that provided for such matters as the shareholder dividends for the shareholders, the issuance of debt securities, and repayment of the loans, and should be considered a subsequent arrangement for the execution of the Shareholders’ Agreement.

         Thus, the dispute regarding the Prepaid Purchase Price between Plaintiff and Defendant surrounding the Commitment Letter is not a separate dispute that was unrelated to the Shareholders’ Agreement. We find it should be considered a dispute ‘arising out of’ or ‘in connection with’ the Shareholders’ Agreement. We believe the lower court’s interpretation that the parties to the Shareholders’ Agreement sought to settle disputes regarding the ‘distribution’ of the Prepaid Purchase Prices by arbitration but then to settle disputes related to its ‘return’ by other dispute resolution procedures does not conform to the reasonable intent of the parties. Instead, we find it would conform to the reasonable intent of the parties that they intended to settle all disputes related to the distribution and return of the Prepaid Purchase Price through a single type of dispute resolution or, in other words, to settle by arbitration pursuant to the Arbitral Clause.

   4. D.  Despite this, the lower court found Plaintiff should not be considered a party to the Arbitral Clause, and the application of the Arbitral Clause did not extend to the Commitment Letter. The lower court found that an arbitration agreement did not exist between Plaintiff and Defendant regarding the dispute and that the arbitral award dealt with a dispute that was not within the scope of the arbitration agreement. We hold that this lower court judgment committed an error of law regarding such matters as the interpretation of the Arbitral Clause that affected the outcome of the judgment.

2. 2.  Therefore, we reverse the lower court’s judgment without making a determination on the remaining issues on final appeal and remand the case for the lower court to re-examine and re-determine. By unanimous consent of the justices, we rule as provided in the disposition.

1. 3.  Remaining Grounds for Final Appeal

   After rejecting Defendant’s first two points on final appeal, the lower court confirmed the court of first instance’s various findings of fact and ultimately upheld the judgment of the court of first instance that ruled in favour of Plaintiff. They also rejected Defendant’s third point on final appeal as follows:

   1. (1)  Regarding Defendant’s argument that, since Plaintiff was a partnership¹⁷ or an organization similar to a partnership they did not have the legal capacity or authority to enter into the Shareholders’ Agreement that included the Arbitral Clause, the lower court dismissed the argument because Plaintiff was considered a non-incorporated association.

   2. (p. 101) (2)  Regarding Defendant’s argument that since Plaintiff was not a shareholder they could not become a party to the Shareholders’ Agreement, based on the admitted evidence, the lower court first recognized that (a) the Shareholders’ Agreement defined ‘shareholders’ as Hansol PCS’s registered shareholders and parties to the Shareholders’ Agreement, and (b) at the time of the permission contract, Plaintiff was registered in the shareholder list as ‘Employee Stock Ownership Association—AAA’ (‘AAA’ being the name of the head of the Association at the time) and their holdings amounted to 3.88 per cent of the issued stock. The lower court then dismissed the argument because, as long as Plaintiff was a registered shareholder of Hansol PCS, even if practically and economically the Association belonged to the individual members of the Association, they found that Plaintiff could be considered a party to the permission contract or Shareholders’ Agreement.

   3. (3)  Regarding Defendant’s argument that a direct Shareholders’ Agreement was not established between Plaintiff and Defendant, the lower court dismissed the argument because, as provided in the established foregoing facts, they were deemed as parties to the Shareholders’ Agreement and subject to its application according to the permission contract and Shareholders’ Agreement, as long as they each entered into the permission contract.

   4. (4)  Regarding Defendant’s argument that the Arbitral Clause was merely an example or was against public policy and therefore null and void, the lower court dismissed the argument because based on such factors as the background behind the entry of the Shareholders’ Agreement and the purpose of the permission contract they found the Arbitral Clause could not be considered as an example or against public policy.

   [Issue (5) is covered in para. 4.33 and issue (6) is covered in para. 9.74.]

   The lower court, in the end, upheld the court of first instance’s judgment that was rendered in favour of Plaintiff.

   In light of the record, we hold that the lower court’s foregoing finding of facts and determinations were all justified. We find that they did not commit an error of law regarding Plaintiff’s legal capacity or the right to representation, the Shareholders’ Agreement or Arbitral Clause, the validity of the arbitral award, or the grounds for refusing to enforce a foreign arbitral award, nor did they contravene court precedent, failure to state reasons, fail to fully deliberate, or fail to exercise the right of explanation, among other things, as argued on final appeal.

1. 1.  Defendant KCAB’s Defence before Addressing the Merits Proceedings

   1. A.  Defendant KCAB, an incorporated association, raises a defence before addressing the merits that Plaintiff’s action is unlawful because it was filed against a party without standing. Plaintiff’s action seeks to affirm that the arbitral tribunal’s decision on the arbitration language in the arbitration case between Plaintiff and Defendant Westinghouse exceeded their authority.

   2. B.  We observe that when parties that have requested arbitration object to the jurisdiction of an arbitral tribunal, the 2013 Arbitration Act allows court control through the following three methods:¹⁹ (1) if an arbitral tribunal rules as a preliminary question with respect to an objection by a party that it has jurisdiction under Article 17(1) to 17.5, any party who is dissatisfied with that ruling may request, within thirty days under Article 17(6), that a court decide on the jurisdiction of the arbitral tribunal, and the court may thereof decide upon the jurisdiction of the arbitral tribunal; (2) when a party dissatisfied with an arbitral award raises an action to set aside such arbitral award under Article 36, a court may decide on matters such as whether an arbitration agreement existed; and, (3) when a party requests the recognition or enforcement of an arbitral award under Article 37, a court may decide during the litigation proceedings therein on matters such as whether an arbitration agreement existed.²⁰

      The main purpose of court control concerning the jurisdiction of an arbitral tribunal is for parties contesting the validity of the arbitral tribunal’s decision or the effects of an award to seek a final determination from a court. Therefore, a party contesting the validity of an arbitral tribunal’s decision or award must bring an action against the party with a contrary interest regarding the validity of the award or decision of the arbitral tribunal.

      In this case, however, the interested parties contesting the arbitral tribunal’s decision on arbitration language are Plaintiff and Defendant Westinghouse. Defendant KCAB is merely an incorporated association that oversees arbitration cases and is an entity that is not in a position legally to have any interest in the contest. Thus, we find that Plaintiff’s action against Defendant KCAB is unlawful because Defendant KCAB has no standing in the case.

1. 1.  Arbitration Agreement

   [facts summarized in para. 6.17]

   According to the foregoing established facts, Plaintiff and Korean Company agreed to settle disputes that arose under the agreement by an arbitrator’s award in Hong Kong. Plaintiff argues that the Korean Company is a personal business entity that Defendant operates such that the application of the arbitration agreement extends to Defendant.

   In response, Defendant contests that the foregoing agreement was executed between Plaintiff and non-litigant Keuk Dong Seafood Co., Ltd. and that the Korean Company was not a contractual party. Hence, the foregoing arbitral clause does not apply to Defendant.

   We observe that, according to the various evidence above, non-litigant Keuk Dong Seafood Co., Ltd. was also listed together with the Korean Company on the contract as a contracting party. Yet, we also recognize that Keuk Dong Seafood Co., Ltd. was listed in parenthesis after the Korean Company in the format of ‘Korean Company (Keuk Dong Seafood Co., Ltd.)’. Given the manner in which it is written, we do not find it convincing that only Keuk Dong Seafood Co., Ltd., which was stated afterward in parenthesis, was a party to the contract, excluding Korean Company, which was stated first. According to Plaintiff Exhibit Nos. 6-1–2 and 7-1–5, Plaintiff drafted and sent purchase orders for some of the products to Keuk Dong Seafood Co., Ltd. and paid the purchase price to Keuk Dong Seafood Co., Ltd. by the method of letter of credit settlement.

   At the same time, according to Plaintiff Exhibit Nos. 6-3–4, 8-1–2 and 42-14, Plaintiff drafted and sent purchase orders to the Korean Company and paid the price to Keuk Dong Seafood Co., Ltd. by a letter of credit settlement at the request of the Korean Company. After executing the foregoing agreement, the Korean Company opened a letter of credit and settled the payment of the goods, but requested that the beneficiary be written as Keuk Dong Seafood Co., Ltd. According to this, we conclude that in light of the way the agreement is written and the overall circumstances after the agreement was executed, the Korean Company that Defendant personally operated was clearly a party to the agreement. Hence, Defendant’s foregoing arguments that are based on a different premise are unwarranted.

1. 1.  First Issue on Final Appeal

   1. A.  [The court first cited Articles I(1), II, III, IV, and V of the New York Convention.]

      Considering together the foregoing provisions, for a foreign arbitral award to be recognized and enforced under the New York Convention, it first must be an award subject to Article I(1). It must also be based on a written arbitration agreement of the parties. An enforcing country’s court that receives a request for recognition and enforcement of a foreign arbitral award under the Convention must first review the arbitral award and arbitration agreement that Claimant submitted. If they determine that the arbitral award does not meet the above conditions, then they will refuse recognition and enforcement of the award based upon such points without determining whether grounds exist to refuse recognition and enforcement.

      The enforcing country’s court does not have the authority to judge the appropriateness of the contents of an arbitral award. But, within a necessary scope, they may (p. 105) independently examine and determine matters decided in the merits to decide upon whether the above conditions for enforcement have been satisfied and whether grounds to refuse enforcement exist.

   2. B.  Considering together the admitted evidence, the lower court’s judgment explained and recognized the background behind and the circumstances surrounding the execution of the steel bar sales contract (including the arbitration agreement). Based on the foregoing, the lower court did not find it convincing that non-litigant Sang-Jun Lee entered into the sales contract as a representative of Defendant. They also did not find it convincing that Plaintiff had a justified basis for believing that non-litigant Sang-Jun Lee represented Defendant or had the authority to enter into a sales contract on their behalf. Upon finding that Defendant was not a party to the sales contract (including the arbitration agreement), the lower court dismissed Plaintiff’s claim.

      Considering the lower court’s reasoning in light of the New York Convention, we find that Plaintiff Exhibit No. 4-2–4 (Sales Contract that included the Arbitration Clause), which Plaintiff submitted as the arbitration agreement between the parties to serve as the basis of the arbitral award, was an agreement between Plaintiff and non-litigant Hanil Industries through the intermediation²³ of non-litigant Sang-Jun Lee, and was therefore not an agreement between Plaintiff and Defendant. Even if we considered that an agreement was entered between non-litigant Sang-Jun Lee, as the person in charge of Defendant’s London office who represented Defendant, and Plaintiff, Sang-Jun Lee did not have the authority to represent Defendant and enter into the sales contract under Korean law. Furthermore, in light of the background behind the execution of the sales contract, even his apparent authority could not be established. No matter how one views it, Plaintiff Exhibit No. 4-2–4 could not be considered an arbitration agreement between Plaintiff and Defendant. We conclude that the arbitral award ultimately cannot be viewed as being based upon a written arbitration agreement between Plaintiff and Defendant.

      Given that the lower court refused recognition and enforcement of the arbitral award because it was not based upon a written arbitration agreement between Plaintiff and Defendant, who were the parties to the arbitration, we find that the determination was clearly pursuant to the New York Convention. We hold that the argument that the lower court committed an error of law in contravention of the New York Convention by making a determination on the merits is unwarranted.

2. 2.  Second through Fifth Issues in Final Appeal

   1. A.  In light of the record, we examine Plaintiff Exhibit No. 4-2–4 that Plaintiff submitted as the arbitration agreement between Plaintiff and Defendant that served as the basis of the arbitral award. The foregoing documents provide that Plaintiff, who ordered the steel bars, presented an offer to buy from Defendant as the seller that included the purchasing conditions and an arbitration agreement with terms and conditions that provided that all disputes arising from the contract would be decided by arbitration under LCIA Rules. In response, the documents provided that non-litigant Sang-Jun Lee accepted this.

      (p. 106) At the same time, according to the testimony of witness Sang-Jun Lee that was admitted in the court of first instance and the lower court, we find that when Lee signed the foregoing documents, he was the person in charge at the London office of Defendant company. Unless other special circumstances exist, we find it reasonable to conclude that the steel bar sales contract (including the arbitration agreement) was entered into between non-litigant Sang-Jun Lee, the person in charge at the London office of Defendant as the representative of Defendant, and Plaintiff. As the lower court established, the non-litigant Sang-Jun Lee signed the foregoing contract in his personal capacity and did not state the name of Defendant or his position in the signature line of the contractual parties for each sales contract. Furthermore, even though the signature of Hyeok Jeon²⁴ was added underneath Sang-Jun Lee’s signature and the beneficiary of the letter of credit according to the sales contract was the non-litigant Hanil Industries, we cannot conclude otherwise solely based upon these circumstances.

      In addition, in light of Plaintiff Exhibit No. 4-2–4, based upon the general principles of experience, we find it difficult to accept, as is, the part of the non-litigant Sang-Jun Lee’s testimony, which the lower court found credible, that the seller in the sales contract was the non-litigant Hanil Industries and not Defendant. We cannot find any other references in the record to hold otherwise. Thus, we hold that the lower court’s finding of fact contravened the rules of evidence when it concluded that, according to the admitted evidence that included non-litigant Sang-Jun Lee’s testimony, Plaintiff Exhibit No. 4-2–4 was a sales contract between Plaintiff and the non-litigant Hanil Industries.

   2. B.  Even if the steel bar sales contract (including the arbitration agreement) was considered an agreement between Plaintiff and non-litigant Sang-Jun Lee, we find that given that in this case Defendant denies that Lee had agency authority, Plaintiff Exhibit No. 4-2–4, could only be considered a written arbitration agreement between Plaintiff and Defendant under Article IV(1)(b) of the New York Convention if Lee had the authority to execute the sales contract as Defendant’s representative, or, pursuant to a legal principle such as apparent authority, it could be recognized that the effects of the sales contract that Lee had executed reverted to Defendant as the principal.

      Moreover, this case concerns international private legal relations of Korean nationals as provided under Article 1 of the Act on International Private Law. To determine whether non-litigant Sang-Jun Lee had the authority to represent Defendant and whether apparent authority could be established, we must first decide which applicable law should govern. In the case of a non-statutory agent, whether a principal should be held responsible to a counterparty as a transacting party that transacted through an agent or a person calling themselves an agent shall be determined by the laws of where the agency occurred. This is because the stability of transactions and protection of counterparties should be taken into consideration.²⁵ We conclude that whether non-litigant Sang-Jun Lee had the authority to represent Defendant and whether apparent authority could be established should be determined pursuant to English law, the law of the location where the steel bar sales contract was executed.

      Therefore, the lower court should have first ascertained under English law, the applicable law, whether the effect of non-litigant Sang-Jun Lee’s execution of the sales (p. 107) contract would apply to Defendant. The lower court did not reach such a conclusion and instead concluded pursuant to Korean law that non-litigant Sang-Jun Lee did not have the authority to represent Defendant and that apparent authority also could not be established. We hold that the lower court committed an error of fact that violated the rules of evidence by determining that Defendant was not a party to the sales contract. We also hold the lower court committed an error that affected the outcome of the judgment by failing to fully deliberate because they misunderstood the applicable law when determining the existence of agent’s authority or apparent authority. We conclude that Plaintiff’s assertion concerning this point was warranted.

      We unanimously reverse the lower court’s judgment and remand the case to the lower court and enter judgment as provided in the disposition.

1. 1.  First Point on Final Appeal

   Based on the admitted evidence, the lower court established the following facts: (i) Defendant entered into a construction contract with Plaintiffs for a cement factory in the Tabuk Region of Saudi Arabia (‘Construction Contract’) concerning the engineering and construction work that they were responsible for as a member of a consortium; (ii) during the construction, a disagreement arose over responsibility over rock and soil examination and exploration and other matters, and, after the construction was delayed and eventually discontinued, a dispute arose as a result; and, (iii) Plaintiffs requested arbitration for compensatory damages based on the arbitration agreement in the Construction Contract and the arbitration proceeded in London, UK. As provided in the annex to the lower court’s judgment, an award was rendered ordering Defendant to pay damages (‘Arbitral Award’).

   Defendant argued that the Joint Venture of Dywidag Saudi Arabia Ltd. & Kettaneh Brothers Saudi Arabia Ltd. (‘Joint Venture’), which had a separate corporate personality and was a joint venture of Plaintiffs, was the party that requested the arbitration and entered into the Construction Contract rather than Plaintiffs. They argued that Plaintiffs could not request enforcement of the Arbitral Award because they were not the parties that requested the arbitration.

   (p. 108) The lower court noted that after Plaintiffs entered into a joint venture contract under Swiss law to form the Joint Venture as a cooperative enterprise with a specific purpose, they entered into the Construction Contract and then requested the arbitration herein. The lower court, however, dismissed Defendant’s foregoing argument by ruling that the Joint Venture did not acquire legal personality under Swiss law, Saudi Arabian law or English law. The lower court found that the Joint Venture was merely an indication that its rights and duties thereof indivisibly belonged to Plaintiffs, who were its members.

   In light of the record, we are convinced that the lower court’s finding of facts and determinations were justified and that they did not commit any errors of law such as relating to the standing to bring an enforcement judgment action as argued in the final appeal.

2. 2.  Second Point on Final Appeal

   The lower court’s foregoing determination that the parties in the Arbitral Award were Plaintiffs rather than the Joint Venture included a dismissal of the following hypothetical arguments: (1) if the Arbitral Award was rendered under the premise that the Joint Venture was a party to the award, then the award was null and void because the Joint Venture did not have the capacity to be a party that could request the arbitration; and (2) even if the Arbitral Award was valid in the country where it was rendered, it goes against the provisions of the Korean Civil Procedure Act, which does not recognize the capacity of partnerships (johap) to be a party, and was contrary to Korea’s public policy, which would constitute grounds to refuse enforcement.

   Therefore, we do not find that the lower court committed an error by failing to make a determination about the validity of the Arbitral Award based upon the lack of capacity to be a party or separately committed an error of law regarding enforcement judgments. (According to the record, we find that the omission of ‘Co.’ in writing Plaintiff’s name ‘Dywidag Saudi Arabia Co. Ltd.’ in the Arbitral Award clearly appears to be a misprint. We thus do not find that this can amount to a flaw that they were not the same party.)

3. 3.  [The third point on final appeal is covered in para. 7.11.]

1. 1.  Based on the reasoning in the judgment by the court of first instance, the lower court recognized the facts established based on the evidence provided. The lower court then found that Plaintiff entered the name of respondent as ‘Iri Frozen Goods Trading Company’ when filing the request for arbitration at the China International Economic and (p. 109) Trade Arbitration Commission (‘CIETAC’), which led to respondent being recorded as ‘Iri Frozen Goods Trading Company’ in the arbitral award.

   The lower court found that this merely amounted to referring to Defendant,²⁶ respondent in the arbitration, according to their business name. The lower court found it reasonable to conclude that the party to the purchase contract and the arbitration agreement and respondent of the arbitral award should be considered Defendant referred to according to their the business name ‘Iri Frozen Goods Trading Company’. The lower court rejected Defendant’s argument that Plaintiff brought the action against one who lacked standing to be sued because they had brought it against Defendant and not against Iri Frozen Goods Trading Company, respondent in the arbitral award.

   In light of the record, we find the lower court’s finding of facts and determination correct. We find that their determination includes in essence a rejection of Defendant’s argument that the arbitral award was an award against a party without standing to be sued. Therefore, we hold that one cannot hold that the lower court’s judgment contained errors as argued in the final appeal.

1. 2.  Court’s Determination

   1. A.  Parties’ Arguments and Issues

      Plaintiff seeks an enforcement judgment concerning the Arbitral Award, and Defendant objects as follows:

      1. (1)  First, compulsory execution of the Arbitral Award should not be allowed since the award mistakenly selected Defendant as a party and has no effect at all in relation to them. Although not an independent legal person, Defendant’s branch office in Indonesia adopted an accounting system independent from the head office and practically operated in the form of an Indonesian local subsidiary. Therefore, the contractual party to the Charter Contract was Defendant’s branch office in Indonesia that is unrelated to Defendant.

         In the alternative, Pertamina was the party to the Charter Contract since it should be considered that the branch office entered into the Charter Contract on their behalf. The production and distribution contract between the branch office and Pertamina required Pertamina’s approval and supervision for all transfer of capital to the branch office and provided that the actions of the branch office were to be deemed as the actions of Pertamina, the operator of the oil and gas development business.

      [Point (2) is covered in para. 6.29.]

   2. B.  Parties of the Arbitral Award

      As long as Defendant’s Indonesia branch office was not a separate legal person independent from Defendant, we find Defendant must be considered the responsible entity in terms of external legal relations, even if Defendant’s head office and the branch office were independently self-financed internally. Furthermore, we find no evidence to establish that Defendant’s Indonesia branch office entered into the above Charter Contract on behalf of Pertamina.

      Based on Plaintiff Exhibits Nos. 5–9, 10-1 and 10-2, and 11, Defendant Exhibits Nos. 1 and 2 and the oral arguments overall, we find Defendant, as a domestic corporation, did maintain its head office in Seoul. Nevertheless, in light of the purpose and background behind establishing the head office, we find it was a ceremonial presence that only handled incidental affairs such as communications. Instead, most of Defendant’s affairs were performed at the branch office established in Jakarta, Indonesia. Accordingly, Defendant used the Indonesia branch office’s address, telephone number, and other (p. 111) contact information in its business introduction material, advertisements and other material. Furthermore, the production and distribution contract that Defendant concluded with Pertamina on 7 May 1981 provided in Article 1(1) that ‘Defendant is selected and designated as the only company that can perform duties on behalf of both parties’. Article 3(3) in Annex D stated that ‘unless otherwise provided in this Annex, Defendant is the manager during the contractual term as long as Defendant has the right to intervene according to the Contract.’ Therefore, we hold that Defendant’s foregoing plea is unwarranted.

Plaintiff was a leading French film distributor and Defendant was a Korean film producer, importer and distributor. On 21 June 2000, N, an entity located in Budapest, Hungary, executed a contract with Defendant providing exclusive rights to distribute a motion picture P in Korea (‘Contract’). Under the Contract, Defendant was required to pay 20 per cent of the USD 300,000 deposit upon execution of the contract, and the remaining 80 per cent of the deposit after clearing a censorship review. According to an additional contract, any dispute arising from the Contract would be resolved by an American Film Marketing Association (‘AFMA’) arbitration under the laws of California. Defendant only paid the initial 20 per cent of the deposit. N delegated its rights to Plaintiff, and Plaintiff filed a request for arbitration seeking payment for the remainder, which an arbitrator awarded on 4 March 2004.²⁸

1. 3.  Determination Concerning Defendant’s Defences

   1. A.  Summary of Defendant’s Arguments

      1. (1)  Litigation Trust

         A litigation trust, whose main purpose is to allow one to carry out litigation, would be a legal act contrary to social order and therefore invalid. Litigation that could not (p. 112) be subject to a trust would include not only litigation brought under civil procedure but also bankruptcy requests, compulsory executions, and non-contentious cases, and arbitration, mediation, or other acts that like litigation that seek to settle legal disputes. In this case, Plaintiff was entrusted by N to solely carry out the arbitration, and thereafter act as the party to the arbitration. Entrusting Plaintiff to only carry out the arbitration would be a legal act contrary to the social order and therefore invalid, and enforcement of the arbitral award herein would also be contrary to public policy. Therefore, this is a case as provided under Article V(2) of the New York Convention where ‘the recognition or enforcement of the award would be contrary to the public policy of that country’.

      2. (2)  Violation of Public Policy

         Paragraph 3 of the arbitral award orders Defendant to pay Plaintiff at least the remaining USD 240,000 deposit. At the same time, paragraph 4 orders that Defendant return to Plaintiff the motion picture’s film and all other material that was delivered and received for the film’s distribution.²⁹ Returning the film to be used for the distribution and screening of a motion picture and the promotion and advertisement material would amount to depriving the licensing rights and preventing distribution of the motion picture. The minimum deposit that Plaintiff seeks represents the price for the motion picture’s distribution licence. Receiving the benefit of payment but not providing the corresponding rights is clearly improper and contrary to justice. Therefore, the enforcement judgment that Plaintiff seeks amounts to an abuse of rights that is socially unacceptable.

   2. B.  Determination

      Article V of the New York Convention restrictively enumerates the grounds for refusing enforcement. According to Article V(2), the court in the enforcing country may refuse recognition and enforcement of an arbitral award where recognition and enforcement would be contrary to the public policy of that country. The provision seeks to prevent the recognition and enforcement of the arbitral award from harming the fundamental moral beliefs and social order of the enforcing country, and to protect these concerns. The determination thereof must take into consideration not only the perspective of the domestic circumstances but also the stability of the international trading order and must be based on a narrow interpretation. Only when the specific result of recognizing the award is contrary to the enforcing country’s public policy will recognition and enforcement be refused.³⁰

      We observe that no evidence exists that when N entrusted Plaintiff with the primary purpose of carrying out the arbitral conduct that they entrusted them to only carry out the arbitral conduct. Based solely on the grounds argued by Defendant, we hold that it would be difficult to recognize that the specific consequences of enforcing the arbitral award would be contrary to the public policy of Korea, and no evidence to establish otherwise exists. We therefore hold that Defendant’s foregoing arguments lack merit.

1. 2.  Determination as to Plaintiff’s Claim

   1. A.  Applicability of the New York Convention [omitted]

   2. B.  Enforcement Conditions of the Arbitral Award [covered in para. 6.33]

2. (p. 114) 3.  Determination Concerning Plaintiff’s Arguments

   1. A.  Regarding the Non-existence of a Written Arbitration Agreement

      1. (1)  Summary of Defendant’s Argument

         The Charter Parties stipulate that for disputes between Defendant and the non-litigant company Ji Mei Hua Shipping the parties shall conduct arbitral proceedings under the rules of the LMAA. Plaintiff, however, is not a party to the Charter Parties and thus the arbitration agreement in Article 76 of the Charter Parties does not apply to Plaintiff. An arbitration agreement does not exist otherwise between Plaintiff and Defendant. Thus, Plaintiff’s argument seeking permission to enforce the Arbitral Award is unwarranted.

      2. (2)  Determination

         1. (i)  Article II(2) of the New York Convention provides that ‘agreement in writing’ shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.

         2. (ii)  In addition, Article 76 of the Charter Parties, as found above, stipulates that ‘[t]his Contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996’. Thus, whether a written arbitration agreement between Plaintiff and Defendant exists and whether it is valid shall also be determined under English law, the governing law of the Charter Parties.

         3. (iii)  We observe that Article 27 of the Charter Parties provides that Defendant shall pay Plaintiff an address commission of 1.25 per cent as established above. Article 1(1) of the Contracts (Rights of Third Parties) Act 1999 of the U.K. states that ‘[s]ubject to the provisions of this Act, a person who is not a party to a contract (“a third party”) may in his own right enforce a term of the contract if the contract expressly provides that he may’. According to a judgment rendered in the English Court of Appeal, in a case involving a broker seeking payment of a commission for brokering a charter party that had a similar commission clause like that of Article 27 of the Charter Parties, the court held that according to Article 1(1) of the Contracts (Rights of Third Parties) Act 1999, the broker could file a request for arbitration under the Charter Parties’ arbitral clause.³¹ Thus, we find the Charter Parties in writing includes an arbitration agreement clause that applies to Plaintiff, and Defendant’s above argument is unwarranted.

1. 1.  Defence Before Addressing the Merits

Plaintiff’s action seeks rescission of a waste water disposal plant construction contract (‘Construction Contract’) that they entered into with non-litigant Topco Engineering Co., Ltd. (‘Topco’) due to Topco’s failure to perform such obligations as completing the construction and based on grounds for rescission. Plaintiff also seeks to retain the security deposit from Defendant who entered into a contract guarantee with the non-litigant Topco.

Defendant objects that the action herein is unlawful since there is no legitimate interest in bringing a legal action.³³ Defendant cites that Plaintiff and non-litigant Topco entered into an arbitration agreement that stipulated that all disputes arising from the waste water disposal plant’s construction would be resolved by an arbitral award. Defendant argues that the application of the arbitration agreement should also extend to Plaintiff’s request for the security deposit against them because by its nature their guarantee obligation for the principal obligor Topco is appendant in nature to the obligation of Topco to Plaintiff.

We find that even if Plaintiff and non-litigant Topco, however, agreed to resolve all disputes regarding the waste water disposal plant’s construction through arbitration, such an arbitration agreement would be only valid between Plaintiff and non-litigant Topco and would have no relation to the appendant nature of the guarantee obligation. Therefore, Defendant’s foregoing defence before addressing the merits is unwarranted because we clearly do not find that the application of the arbitration agreement should extend to Defendant who is not a party to the agreement.

(p. 117) On 31 May 1983 Defendant transferred to the non-litigant Hanyang Shipping Corporation (‘non-litigant company’) its shipping vessels and business assets related to its maritime shipping business, among other things, but excluded such items as the claims, obligations, and work related to the vessel Samos.³⁶ Without any authority from Defendant, the non-litigant company participated in the arbitration proceedings such as by appointing an arbitrator, and the arbitral award was rendered thereof. Defendant argues that in essence it could not respond to Plaintiff’s claim because based on Article V(1)(b) and (d) of the New York Convention as, the party against whom the award was invoked it was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present its case, and the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties.

We observe that, in light of the evidence found below, we do not believe that part of the testimonies of the witnesses Sang-Bok Lee from the court of first instance, Dae-Seong Chae from the court of first instance and this court and Bong-Gil Hyeon from this court that appears to support the facts as argued by Defendant (excluding the parts below that we believe). We also do not find any evidence to support otherwise. Instead, we consider together Defendant Exhibit Nos. 2 and 3 (Various Telexes), Defendant Exhibit Nos. 4–9 (Various Correspondence), Defendant Exhibit No. 10 (Certified Copy of Legal Person Registry), Defendant Exhibit Nos. 13–15-1–2 (Various Telexes and Translations thereof), Plaintiff Exhibit No. 6-1–5 (Various Telexes), whose authenticity has been established through the overall oral arguments, Defendant Exhibit No. 1 (Business Transfer Contract), whose authenticity has been established through the testimony of the court of first instance witness Sang-Bok Lee, parts of the testimony of the above witnesses (excluding the parts above that we do not believe), and the overall oral arguments. Accordingly, we find the following facts:

1. (1)  Defendant’s main business was originally the manufacture and sale of steel products from the location 3-21 Juandong, Namgu, Incheon. At the same time, they also maintained a shipping business at 32-2, Mugyodong, Junggu, Seoul that, unlike the Incheon headquarters, had separate personnel and physical facilities that were used in the maritime shipping business;

2. (2)  The management of the so-called Hanyang Group, which Defendant was a part of, decided to separate the maritime business, which, from a business standpoint, as an organization operated completely differently from Defendant. On 6 May 1983, the non-litigant company was established using only the personnel and physical facilities of the former maritime business. On 31 May 1983, Defendant transferred to the non-litigant company the entire business related to the maritime business, including the vessels and business assets (as a result, Defendant’s maritime business division ceased to operate);

3. (3)  Pursuant to the closure of Defendant’s maritime business division and the establishment of the non-litigant company as provided above, Defendant and non-litigant company notified the facts thereof to their former transaction counterparties in the maritime business. During this process, they also made sure that Hanssem International (also Plaintiff’s domestic agents), who was the broker for the charter party, would also contact the non-litigant company for future maritime related work;

4. (p. 118) (4)  The dispute between Plaintiff and Defendant regarding the charter party had already arisen before the establishment of the non-litigant company, and it remained unresolved at the time of its establishment. Plaintiff thereafter requested arbitration according to the arbitration agreement’s provisions to resolve the dispute and notified this fact to the non-litigant company on 23 November 1983 through Hanssem International; and,

5. (5)  The non-litigant company that received this notification appointed Holman, Fenwick and Willan as Defendant’s attorneys, and this law firm then appointed John Selwyn as the arbitrator, thereby leading to this arbitration.

Pursuant to these established facts, we find that Defendant delegated to the non-litigant company the tasks of handling the dispute regarding the charter party on their behalf. (Even if the 31 May 1983 Business Transfer Agreement between Defendant and the non-litigant company did not include the charter party demurrage, we find that it was not included as an obligation because at the time only a dispute existed and the obligation was not finalized. We do not find that they deliberately excluded it as an obligation because Defendant wanted to handle the dispute itself and did not want the non-litigant company to handle it.) Furthermore, we rule that, as found above, the non-litigant company that represented Defendant in the resolution of the dispute of the charter party received notification of the arbitration and instructed the London law firm to respond to the arbitration. As long as the above law firm lawfully appointed an arbitrator and participated in the arbitration proceedings according to the local law where the arbitration proceeding was being conducted, we find all of Defendant’s foregoing arguments are unwarranted.

The non-litigant Chungil Corporation (‘Non-litigant’) held a construction payment claim against Defendant concerning a large-scale trade centre and public facility infrastructure construction project called Centum City (‘Construction Project’), located at 1287-5 Wu-dong, Haeundae-gu, Busan. On 5 July 2001, Plaintiff was assigned KRW 706,863,300 (USD 615,000) of the claim from the Non-litigant and at around that time notified Defendant accordingly and through this action seeks payment thereof.

Yet, according to Defendant Exhibit No. 2-2 (The ‘Construction Contract General Conditions’ that became the basis of the standard construction contract that the Non-litigant and Defendant established for the Construction Project), we find that the Non-litigant and (p. 119) Defendant agreed to resolve disputes that arose while carrying out the foregoing contract through consultation. If consultation did not work thirty days after the dispute arose, then they would resort to arbitration of the KCAB pursuant to the Arbitration Act.

We also find Defendant could raise an objection based on the foregoing arbitration agreement against Plaintiff, who was assigned the rights to the construction payment claim from the Non-litigant. We thus rule that the action herein, which Defendant objected to during the first preparatory procedural hearing based on the arbitration agreement, is unlawful because it contravenes the arbitration agreement.

(Plaintiff argues that the arbitration agreement is incapable of being performed under the proviso of Article 9(1) of the 2001 Arbitration Act because composition³⁸ proceedings had commenced pursuant to the bankruptcy of the Non-litigant that was a party to the arbitration agreement. We find that even if composition proceedings had commenced, Plaintiff’s argument is unwarranted because such proceedings would not affect the Non-litigant’s rights or legal capacity to act or rights to manage and dispose of assets.)

1. A.  Applicability of the Arbitration Agreement

   Based upon Plaintiff Exhibit No.3 and Defendant Exhibit No.1 and considering together all the oral arguments, we recognize the following facts: (1) the Bill of Lading was issued on 20 January 2011 to the Consignee ‘TO ORDER’; (2) the overleaf of the Bill of Lading contained a provision concerning the applicable law and the provision regarding arbitration such that ‘the contract authenticated under this Bill of Lading or included in the Bill of Lading shall be governed by Japanese law. All disputes arising out of the Bill of Lading will be settled under the rules of the Tokyo Maritime Arbitration Commission (‘TOMAC’) according to arbitration at TOMAC and the arbitrator’s award shall be ultimately binding on both parties’; (3) LG International originally (p. 120) entrusted carriage of the Cargo to Plaintiff, and Plaintiff entrusted the carriage to Nippon Gas Line (‘NGL’); NGL then entered into a carriage contract with LG International and chartered the Vessel from Defendant to carry the Cargo; and, (4) Plaintiff issued the Bill of Lading on behalf of the captain of the Vessel.

   In addition to this, we find it reasonable that a written agreement (bill of lading’s overleaf) existed between the carrier and holder of the Bill of Lading to resolve all disputes related to the carriage of the Cargo by arbitration based on the following facts: (1) when terms and conditions have been included in a bill of lading, there is no reason for the terms and conditions on the cover of the bill to differ in effect from those on the overleaf; (2) traditionally, bills of lading are unilaterally issued, but depending on the bill, a contractual obligation relationship may arise under the carriage contract between the carrier and holder of the bill of lading; the terms and conditions therefore attached to the bill may be considered an agreement between the carrier and holder; (3) generally, a duty to explain the terms and conditions exists to protect a party who lacks comparable bargaining power with respect to a counterparty from being unreasonably bound by terms and conditions that the counterparty uniformly uses for execution with multiple contractual parties; we do not find it convincing that such a duty therefore should uniformly apply to all carriage contracts; furthermore, LG International entrusted the carriage to Plaintiff who issued the Bill of Lading on behalf of the captain of the Vessel; we also do not find it convincing that Defendant unilaterally prepared the terms and conditions; and, (4) where the applicable law was designated as Japanese law, the mandatory explanation provisions under Korea’s Act on the Regulation of Terms and Conditions do not automatically apply.

   Overall, we rule that the application of the arbitration agreement extends to Plaintiff, who acquired the right to claim compensatory damages from the Consignee, in their request for compensatory damages from Defendant, the actual carrier.

Determination concerning Defendant’s Arguments

1. A.  Arbitration Agreement Defence (Defence before Addressing the Merits)

   1. 1)  Defendant objected that ‘[i]t agreed with Cido to settle all disputes arising out of the Charter Contract by arbitration in London with English law as the applicable law. This legal action that is not pursuant to arbitral proceedings is unlawful because Plaintiff, who subrogated Cido’s claim pursuant to Article 41(2) of the 2011 National Tax Collection Act⁴⁰ and is requesting payment of the charterage from Defendant, is bound by the arbitration agreement.’

   2. 2)  We find that the Seocho Tax Office’s request for performance of the obligation against the third party debtor based upon their subrogation of the delinquent taxpayer’s claim pursuant to Article 41(2) of the National Tax Collection Act should be considered an exercise in claim collection rights. In a claim collection action, the third party debtor can in principle invoke against the collection creditor all the grounds that occurred before the attachment as defences, including the existence of an arbitration agreement.

      Yet, the effects of an arbitration agreement cannot apply without limits to all disputes.⁴¹ In the limited sphere where the pursuit of special public interest demands, it will be necessary to limit the effects of an arbitration agreement. Imposition and collection of national taxes is an extremely⁴² important public interest. The exercise of claim collection rights under the provisions of the National Tax Collection Act is a disposition for the purpose of collecting delinquent taxes and cannot be considered the same as a standard exercise of claim collection rights.

      Therefore, we hold that Defendant cannot challenge Plaintiff’s claim based on the arbitration agreement with Cido, based on the following reasons: (1) an unreasonable outcome would occur, if the mere coincidental circumstance that an arbitration agreement existed between a delinquent taxpayer and a third party debtor led to changes in the method, location, and the applicable law in levying national taxes; (2) if the mere existence of an arbitration agreement could prevent a state’s exercise of claim collection rights as part of a disposition for delinquent taxes, an arbitration agreement could be abused as a means to evade taxes; (3) even if the attached credit and existence of a payment obligation between the delinquent taxpayer and third party debtor was not contested, a state’s exercise of its claim collection rights pursuant to a foreign arbitral proceeding would be extremely unreasonable from the perspective of speed and economic feasibility of tax administration; and, (4) above all, since no disagreement existed between Plaintiff and Defendant concerning the substance of the Charter Contract as well as regarding the existence, amount, and payment date of Cido’s charterage to Defendant, ultimately a dispute that is the subject of arbitration did not exist at all.

Defendant objects that Plaintiff’s action herein is unlawful and should be dismissed because it violates the arbitration agreement. According to Defendant, Plaintiff and the non-litigant company entered into an arbitration agreement stating that disputes that arise regarding the Supply Contract should be resolved under the Commercial Arbitration Rules of the KCAB such that Plaintiff should have first requested arbitration with KCAB instead of filing the action herein.

We observe that according to Defendant Exhibit Nos. 1 and 2 an arbitration agreement existed that stated that when a dispute regarding the Supply Contract arises, the parties did have an arbitration agreement to follow ‘arbitration … of the Commercial Arbitration Committee of Korea’.⁴³ Yet, the parties of the Supply Contract are Plaintiff and the non-litigant company. As a result, we cannot find that Plaintiff’s action herein against Defendant is contrary to the above arbitration agreement.

(p. 123) (At the same time, Article 9(2) of the Arbitration Act provides that a defence that an arbitration agreement exists must be raised by the first oral arguments on the merits of the dispute. Defendant sought a judgment to dismiss Plaintiff’s request and made a statement challenging Plaintiff’s asserted facts on 26 January 2005, the date of the first oral arguments. After its arguments on the merits, Defendant submitted a memorial to this court on 8 March 2005 that contained a defence concerning the existence of the arbitration agreement. We find the record is clear that this brief was argued on 8 April 2005, the date of the second oral arguments. From any viewpoint, Defendant’s foregoing defence before addressing the merits is unwarranted.)

1. 2.  Determination

   1. A.  Enforcement of the Arbitral Award

      The court first confirmed that the New York Convention applied and that the US was a member, and that the case involved a commercial dispute.

      (p. 124) Regarding this decision, Defendant C alleges that as the representative director he entered into the Contract on behalf of Defendant B and thus the party of the Contract is only Defendant B. No contract at all was established between Plaintiff and Defendant C and hence an arbitration agreement did not exist. Defendant C argues that the Arbitral Award that was rendered against him is not valid with regard to him.

      We observe that according to Article V(1)(a) of the New York Convention recognition and enforcement of a foreign arbitral award may be refused when the parties to the agreement are, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made.

      At an arbitral award’s recognition and enforcement phase, the substantive law to apply when determining the existence and validity of an arbitration agreement concerning issues other than the capacity to act is first the law that the parties designated as the governing law and second the law of the place of the arbitration. As the facts established above show, when Defendant C entered into the Contract with Plaintiff under the name of ‘Defendant President & CEO Defendant company’ (B. Co., LTD., By: C, Title: President & CEO), the parties agreed that the governing law for the Contract and the arbitration agreement thereof would be the law of the State of Texas, U.S. According to Plaintiff Exhibit No. 3-2 and the overall oral arguments, under the interpretation of the Contract according to the laws of the State of Texas, U.S., Defendant C should also be considered a party to the Contract and the arbitration agreement thereof. Therefore, Defendant C’s above arguments are unwarranted.⁴⁵

1. 2.  Determination as to Plaintiff’s Claim

   1. A.  Applicability of the New York Convention

      The court confirmed that the UK, where the award was rendered, and Korea were members of the Convention and that the case involved a commercial dispute.

   2. B.  Requisites for an Enforcement Judgment

      [Covered in para. 9.33](p. 125)

2. 3.  Plaintiff’s Argument

   1. A.  Non-existence of a Written Arbitration Agreement

      1. (1)  Summary of Defendant’s Argument

         The Charter Parties stipulate that for disputes between Defendant and the non-litigant company Ji Mei Hua Shipping the parties shall conduct arbitral proceedings under the rules of the LMAA. Plaintiff, however, is not a party to the Charter Parties and thus the arbitration agreement in Article 76 of the Charter Parties does not apply to Plaintiff and an arbitration agreement does not otherwise exist between Plaintiff and Defendant. Thus, Plaintiff’s argument seeking permission to enforce the Arbitral Award is unwarranted.

      2. (2)  Determination

         1. (i)  Article II(2) of the New York Convention provides that an ‘agreement in writing’ shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.

         2. (ii)  In addition, as found above, Article 76 of the Charter Parties stipulates that ‘[t]his Contract shall be governed by and construed in accordance with English law, and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996’. Thus, whether a written arbitration agreement between Plaintiff and Defendant exists and whether it is valid shall also be determined under English law, the governing law of the Charter Parties.

         3. (iii)  We observe that Article 27 of the Charter Parties provides that Defendant shall pay Plaintiff an address commission of 1.25 per cent as established above. Article 1(1) of the Contracts (Rights of Third Parties) Act 1999 of the UK states that ‘[s]ubject to the provisions of this Act, a person who is not a party to a contract (“a third party”) may in his own right enforce a term of the contract if the contract expressly provides that he may’. The English Court of Appeal rendered a judgment where a broker was seeking payment of a commission for brokering a charter party. The Court held that if a commission clause similar to that of Article 27 of the Charter Parties existed, then according to Article 1(1) of the Contracts (Rights of Third Parties) Act 1999, the broker could file a request for arbitration under the charter party’s arbitral clause.⁴⁶ Thus, we find the Charter Parties included an arbitration agreement clause in writing that applies to Plaintiff, and Defendant’s above argument is unwarranted.

1. 4.  Claim against Defendant Unimark

   1. A.  The Law of Washington State Regarding Piercing the Corporate Veil⁴⁷

      According to the statements in Plaintiff’s exhibits, the Revised Code of Washington State §25.15.060 provides that ‘the court may consider the factors and policies set forth in established case law with regard to piercing the corporate veil’. The Court of Appeals of Washington, in 2003, held in Evaline Community Association v Jason and Jane Doe Good,⁴⁸ that ‘[t]here are circumstances, however, in which the corporate form has been so abused that, in order to do justice, the corporate personality will be disregarded so long as the rights of innocent third parties are not prejudiced. Although the facts have varied from case to case, the corporate entity has been disregarded when it is used to perpetuate a fraud or wrong, gain an unjust advantage, or evade an obligation.’⁴⁹ In 2005, in Dickens v Alliance Analytical Laboratories, Inc.,⁵⁰ the court concluded that ‘piercing the corporate veil is an equitable remedy imposed to rectify an abuse of the corporate privilege … To pierce the corporate veil, two separate, essential factors must be established. First, the corporate form must be intentionally used to violate or evade a duty. Second, the fact finder must establish that disregarding the corporate veil is necessary and required to prevent an unjustified loss to the injured party.’

   2. B.  Determination

      As established above, we find it proper to decide that Defendant Unimark Maritime was essentially the same company as Unimark America and was established to evade Unimark America’s obligation under the Arbitral Award. We considered the following facts:

      1. (1)  On 30 January 2006, Plaintiff requested arbitration against Unimark America, and on 19 May 2006 the Arbitral Award was rendered. Right before this, on 12 April 2005, Defendant WT, who served as the representative of Unimark America, applied for the cancellation of Unimark America’s registration, and on the next day, 13 April 2005, applied for the registration of Defendant Unimark Maritime as its representative;

      2. (p. 127) (2)  At the request of Unimark America, Plaintiff remitted the purchase price not to a bank account in the name of Unimark Korea, but instead to a personal Korean bank account in the name of Defendant WT; and,

      3. (3)  Based on the circumstances below that were established by combining the overall gist of the oral arguments and Plaintiff and Defendant’s relevant exhibits:

         • ①  All business offices of Unimark America and Defendant Unimark Maritime are located at Bainbridge Island, WA 98110, and both the telephone number (206-xxx-xxxx) and fax number (206-yyy-yyyy) of the business offices of Unimark America and Defendant Unimark Maritime are identical;

         • ②  When Unimark America’s registration was cancelled, four persons, C, E, F, and G, worked at Unimark America along with Defendant WT (C and E have the same address on their employee withholding tax statements, and appear to be married or relatives). Around the time when Defendant Unimark Maritime was established in 2005, four persons, F, G, H, and J, worked there along with Defendant WT. Among the four persons, F and G were employees that used to work at Unimark America, and H’s address on the employee withholding tax statement was identical to that of Defendant WT’s, and H appeared to be Defendant WT’s spouse or relative;

         • ③  Unimark America’s primary business was exportation and importation of fishery products between Russia, Korea, and Japan, and Defendant Unimark Maritime was also engaged in the identical business;

         • ④  B maintained an office at Busan, Korea under the corporate name of Unimark Korea ever since Defendant Unimark Maritime was established and handling Defendant Unimark Maritime’s sale offers, negotiations and shipment of goods related to the export and import of fishery products between Russia, Korea, and Japan. Before Defendant Unimark Maritime was established, B handled the same affairs for Unimark America; and,

         • ⑤  On 8 November 2005, Plaintiff sent a notice to B that they ‘will file a legal action for the compensatory damages due to the defects in the Fishery Products’. At the time, B filed an application to cancel Unimark America’s registration and establish Defendant Unimark Maritime, while B was still handling work for Defendant Unimark Maritime. Nevertheless, B sent a response to Plaintiff on Unimark America’s letterhead as follows:

• We find it reasonable to conclude that Unimark Maritime and Unimark America are in fact the same company and that Unimark Maritime was established to avoid Unimark America’s obligations under the Arbitral Award. If we had found that Unimark America and Defendant Unimark Maritime were two separate legal entities, then Plaintiff, the award creditor against Unimark America, would have suffered the unjust harm of not being able to collect on its claim due to the cancellation of Unimark America’s registration. Hence, to prevent this, we find it necessary to pierce Defendant Unimark Maritime’s corporate veil.

  Therefore, under the legal principle of piercing the corporate veil, Plaintiff can seek fulfilment of the obligations under the Arbitral Award from Defendant Unimark Maritime. Under the Arbitral Award, Defendant Unimark Maritime is obligated to pay USD 53,160.80 and JPY 3,739,241,⁵¹ and interest at the rate of 6 per cent per annum thereon for the period from 9 November 2004 for the USD 53,160.80 and from 9 November 2005 for the JPY 3,005,281 until the date of full payment.⁵²

1. 5.  Claim against Defendant WT

   1. A.  US Washington State Law Regarding the Tortious Acts of the Representative of a Legal Entity

      According to Plaintiff’s exhibits, Chapter 19.40 of the Uniform Fraudulent Transfer Act⁵³ of Washington State provides that it is considered a tortious act if a debtor transfers assets or incurs an obligation with the intention to, among other things, conceal assets, delay payment of an obligation, or defraud a creditor. In this regard, if a director does not conduct business in good faith, such as by committing fraud or a tortious act, then a third party can hold the director responsible. Some jurists believe that if the actual and nominal representative of a company transfers assets or incurs an obligation with the intention of, among other things, defrauding the company’s creditors, then he must be held responsible along with the company.

   2. B.  Determination

      As found above, we find that due to the piercing of Defendant Unimark Maritime’s corporate veil, Plaintiff can now obtain the fulfilment of the obligation under the Arbitral Award from Defendant Unimark Maritime. As long as this is the case, even if Defendant WT, who is the representative of Unimark America, cancelled the registration of Unimark America and established Defendant Unimark Maritime to avoid legal obligation under the Arbitral Award, it would be difficult to find that Plaintiff suffered any damages as a result. Thus, by extension, we find Plaintiff’s tortious act argument need not be considered and is unwarranted.

[Further facts excerpted in the lower court decision in para. 5.58.] Plaintiff Federal Insurance Company requested reversal of the first instance judgment in favor of Defendant Sungje Shipping Co., Ltd. The High Court adopted the reasoning of the first instance judgment but added the following decision.

1. (1)  Plaintiff argues that the charterer who signed the Charter Party herein was not Samsung Asia but Samsung C&T Co., Ltd. (‘Samsung C&T’) and that the issuer of the Bill of Lading herein was not Defendant but Zodiac Enterprise Corporation (‘Zodiac’). Plaintiff thereby asserts that Defendant cannot raise a defence before addressing the merits based on the arbitral clause of the Charter Party.

   According to Defendant Exhibit No. 1, we recognize the fact that the Charter Party was signed as ‘Samsung Corporation’ on the charterer signature line.

   Based solely on this fact, however, we find it difficult to conclude that the charterer of the vessel herein was Samsung C&T and no evidence exists to prove otherwise. Rather, according to Defendant Exhibit No. 1, we confirm the fact that the charterer is clearly stated as ‘Samsung Asia’ in the Charter Party.

   At the same time, although the Bill of Lading was issued in the name of Zodiac as seen above, considering the overall gist of the arguments along with Plaintiff Exhibit No. 3 and No. 4, we find that Defendant, for various convenience purposes for their marine business activities established Zodiac in the British Virgin Islands, registered it as the vessel owner, registered themselves as the management company, and practically exercised all rights relevant to the vessel as the owner. Thus, we find that Zodiac was founded for convenience purposes and cannot be regarded as having a separate corporate entity from Defendant, and the effect of the Bill of Lading thereby should extend to Defendant. (In consideration of these facts, Plaintiff themselves deemed Defendant to be the carrier and filed the action herein against Defendant.)

   Hence, we rule that Plaintiff’s arguments in this section are unwarranted.

2. (2)  Plaintiff asserts that the arbitral clause cannot be considered to apply to Plaintiff based on the following facts: (a) neither Plaintiff nor Cage Chemical is a party to the Charter Party; (b) when Plaintiff contacted Defendant to identify the real owner of the vessel before filing the action herein, Defendant responded that they were only a management company of the vessel and they did not disclose anything concerning the Charter Party or the arbitral clause to Plaintiff; and, (c) neither Samsung Asia nor Samsung C&T delivered the Charter Party to Plaintiff or Cage Chemical, and hence neither of them knew that a clause that provided for arbitration in Hong Kong was included in the Charter Party.

   As we see from above, as long as the Bill of Lading explicitly provided on the overleaf terms and conditions ‘Charter Party including the arbitral clause’, we find it reasonable to conclude that Plaintiff knew about the existence of the arbitral clause in the Charter Party. Moreover, even if Plaintiff did not know about the place of arbitration that is stipulated in the (p. 130) arbitral clause, we find it difficult to conclude that, based solely upon such circumstances, the application of the arbitral clause does not extend to Plaintiff. Therefore, Plaintiff’s above contention is unjustified.

3. (3)  Lastly, Plaintiff alleges that in light of the various circumstances found above, Defendant’s defence before addressing the merits at this stage of the action based upon the arbitral clause herein is contrary to good faith.

   We cannot conclude that Defendant’s defence before addressing the merits is contrary to good faith simply based on the facts that Defendant notified false information or kept silent when Plaintiff inquired about the specific place of arbitration and⁵⁴ that Defendant introduced themselves as the manager in response to Plaintiff’s inquiry as to the practical owner of the vessel. We find the remaining circumstances that Plaintiff argues are contrary to the principle of good faith, did not concern actions that were Defendant’s responsibility and thereby were not matters to be considered in determining whether a breach of good faith existed. Hence, Plaintiff’s argument thereof is also unwarranted.

1. E.  Whether the Arbitral Award Contravened Public Policy

   1. 7)  Whether the Arbitral Award Disregarded the Principle of Independent Legal Personality

      As found above, the arbitrator determined that PESC⁵⁵ was a legal person established to represent Defendant in relation to the contract and Defendant had the right to the profits it gained from selling Plaintiff’s products. As a result, the profits that Defendant gained through PESC constituted profits gained as Plaintiff’s exclusive distributor. The arbitrator did not disregard PESC’s legal personality as a separate company and view it de facto as the same company. As long as the arbitrator did not find that the PESC’s profits were naturally Defendant’s profits because PESC was a subsidiary of Defendant, we cannot (p. 131) find that the arbitrator’s determination undermined the principle of independent legal personality.

      Also, Plaintiff contests that the arbitrator’s determination that Defendant has rights in PESC’s profits is without basis. We observe as follows:

      1. (1)  Plaintiff in essence contests the arbitrator’s finding of fact. Arbitrators have complete authority in fact finding so actual re-examination of an arbitral award is only recognized in a limited manner. In principle, an arbitrator’s fact finding needs to be respected. Even if an arbitrator makes a finding of fact based upon what appears to be somewhat insufficient evidence, as long as it does not appear to be an arbitrary determination manifestly lacking in fairness or reasonableness, then we cannot conclude that such fact finding is unjust and that an arbitral award rendered accordingly is contrary to public policy.

      2. (2)  The arbitrator’s determination that Defendant had rights to PESC’s profits was based upon indirect facts that were recognized based on E’s testimony and other sources such as the background of PESC’s establishment and Defendant’s method of conducting business in light of its purpose and the statutory regulations.

      3. (3)  We find that both parties were guaranteed sufficient opportunity to argue and prove their views regarding Defendant’s lost profits that were gained through PESC.

      4. (4)  Unlike PEGK that Defendant co-established with Haier Ranjoo or other entities that Defendant conducted business with that Defendant and E did not exercise any control over, PESC is closely related to Defendant. No documentation exists that can establish that another body exercises control over PESC. It appears that Defendant could actually acquire most of the profits that the PESC earned by selling Plaintiff’s products. As a result, the arbitrator’s determination that all of the proceeds that Defendant’s acquired through PESC should be viewed as Defendant’s lost profits does not appear to be a recognition of a wrongful acquisition of profits or to be so unjust as to contravene public policy.

      In light of these points, we do not find that the arbitrator’s determination regarding Defendant’s right to PESC’s profits undermined the principle of independent legal personality causing the arbitral award to contravene public policy. We find this part of Plaintiff’s argument groundless.

Although Paragraphs (b) and (c) of the Arbitral Clause [of the Shareholders’ Agreement] use the term ‘parties’ instead of the term ‘shareholders’, we find it reasonable to conclude that Defendant, LSF3, and Plaintiff drafted the Arbitral Clause intending it to apply to disputes between Defendant and LSF3, based on the following points:

1. (i)  Even if an arbitration agreement is incorporated into an underlying contract as an arbitral clause, the arbitral clause shall be deemed to be separable such that other clauses in the underlying contract do not affect the effectiveness of the arbitral clause,⁵⁶ which is also the case under Bermuda law.⁵⁷ Even if there is only one contract, all of the contract’s provisions are not always necessarily effective to all of the parties, and the parties may obviously agree that certain provisions shall not have effect on specific parties. As such, the parties in the Shareholders’ Agreement can be differentiated from the parties subject to the Arbitral Clause;

2. (ii)  Under Section 10(1), which contains the Arbitral Clause, Paragraph (a) uses the expression the rights and obligations of the ‘shareholders’ in setting forth the governing law. In contrast, Paragraphs (b) and (c) provide that if any dispute arising between the ‘parties’⁵⁸ is not resolved through settlement, it should resort to arbitration. In this regard, it appears that the Shareholders’ Agreement differentiates the usage of the terms ‘shareholders’ and ‘parties’. Paragraph (d), however, which specifically sets forth the appointment of arbitrators under the arbitration proceedings, does not provide that Plaintiff may appoint an arbitrator. Instead it provides that one arbitrator shall be appointed by Defendant, the other arbitrator shall be appointed by LSF3, and the third arbitrator to be selected through an agreement between the ‘party’-appointed arbitrators. In light of general transaction norms, it is difficult to understand why three parties who may become opposing parties in arbitration would grant the right to appoint an arbitrator only to two of the parties without granting the same right to the remaining party, when specifically agreeing on how to appoint the arbitrators. In addition, it would be difficult to find that the parties mistakenly failed to grant Plaintiff the right to appoint an arbitrator while specifically agreeing on the right to appoint the arbitrators; and,

3. (iii)  The expression ‘parties’ is customarily used in contracts, and shareholders can be referred to as parties. Indeed, Paragraph (d) refers to the arbitrator appointed by the shareholders as the ‘party-appointed arbitrator’.

1. 2.  The Second Issue

   According to the reasoning in the lower court judgment, the lower court rejected Defendant’s argument that the arbitral award was improper Defendant had argued that Plaintiff lacked standing to bring this case by itself in the arbitration proceedings without a joint party, the third party Saudi Establishment for Commercial Representation and Contracting Ltd. (‘SECRC’) located in Riyadh, Saudi Arabia. The lower court held that the party to the arbitration proceeding was formally Plaintiff by itself. But Plaintiff submitted the request for arbitration in a parallel capacity first on its own behalf and alternatively on behalf of SECRC.

   The lower court confirmed that the arbitral tribunal rejected the claims that Plaintiff brought on behalf of SECRC stating that they were not within their jurisdiction, given that Plaintiff did not have authority to act or make a claim on behalf of SECRC. Even if SECRC was a joint party to Plaintiff as argued by Defendant, the applicability of the New York Convention would not be determined based upon the nationality of the arbitral party, but upon whether the country where the arbitral award was made was a member to the Convention. The lower court found that when an arbitral award was rendered in favour of one of the multiple parties in an action that award creditor party could alone seek recognition and enforcement of the award.

   Based upon a review of the record, we are persuaded that the finding and decision of the lower court were reasonable. We do not agree with Defendant’s assertion that that they committed an error of law concerning the standing to bring an enforcement judgment that would have affected the judgment. We find Defendant’s arguments groundless.

1. B.  Determination

   1. 1)  (Applicable Law)

   2. 2)  Effect of the Arbitral Award and Confirmation of the Bankruptcy Credit on Defendant

      Whether Plaintiff can argue in this litigation that the effect of the Arbitral Award and the effect of the award credit that was confirmed at Hwami’s bankruptcy proceedings and recorded in the Schedule of Bankruptcy Creditors, which are both premised on recognition of the award in Korea, can be applied as is against Defendant must be determined according to the procedural law of Korea, the lex fori, because it concerns the meaning of effect under the civil procedure law.

      The Arbitral Award is based upon the Contracts between Plaintiff and Hwami. Among other things, a judgment or arbitration against the seller of a business will not have res judicata effect upon the acquirer of the business that continues to use the same trade name.⁶¹ Therefore, even if we assume that the Arbitral Award could be recognized in Korea, Defendant could still contest, among other things, the establishment and continuity of Plaintiff’s claims against Hwami. The Arbitral Award serves merely a means of evidence to demonstrate Plaintiff’s claims against Hwami.⁶²

      At the same time, according to the Debtor Rehabilitation and Bankruptcy Act (‘DRBA’), the claim amount is confirmed if the Bankruptcy Trustee and bankruptcy creditors do not raise any objections on the Claim Inspection Date under the bankruptcy procedures. The DRBA provides that recording the confirmed claim on the Schedule of Bankruptcy Creditors has the same effect as a final and conclusive judgment applicable to all of the bankruptcy creditors.⁶³ The same effect as a final and conclusive judgment only means it has an incontestable, confirmatory effect internally within the bankruptcy reorganizing procedures and does not mean that it has res judicata effect. Therefore, even if an extinguished claim is confirmed without protest and recorded in the Schedule of Creditors, this does not mean that the existence of such a claim is confirmed.⁶⁴ Defendant can still contest through litigation whether Plaintiff’s claim exists even if Plaintiff’s claim is confirmed under the bankruptcy procedures (p. 136) and recorded in the Schedule of Bankruptcy Creditors because Defendant is neither a bankruptcy creditor nor the one bankrupt.

      Therefore, regardless of whether the Arbitral Award can be recognized, the court can review the merits and decide differently from the award concerning whether Plaintiff possesses the credit for payment ordered under the award against Hwami.

      The court ultimately held that Plaintiff’s claims against Hwami for unpaid sales payment and compensation for damages were unwarranted.