1. 2.  Defendant Westinghouse’s Defences before Addressing the Merits Proceedings

   1. A.  Relevant Provisions of the Arbitration Act and the Arbitration Rules

      The court cites Articles 17 and 23 of the 2013 Arbitration Act³ as well as Article 50 of the 2008 KCAB Rules. Article 50 provides that ‘[t]he Korean language shall be used in the arbitration proceedings, unless agreed otherwise by the parties. Where there has been a request from one of the parties or both, or when there is among the arbitrators a person of a nationality other than Korean, both the Korean and English language may be used and the arbitral award written in both Korean and English shall be deemed to be the duly authenticated arbitral award. However, when a discrepancy in interpretation has arisen between the two versions, the Korean language version shall prevail.’

   2. B.  Determination

      For a party to request court review on whether an arbitral tribunal exceeded its authority under Article 17 of the 2013 Arbitration Act, the following three factors must be fulfilled: (i) the arbitral tribunal exceeded the scope of its authority during the arbitration proceedings;⁴ (ii) a party immediately raised an objection;⁵ and (iii) the arbitral tribunal rendered a decision on the party’s objection hereof as a preliminary question.⁶

      Under requirement (i) above, ‘the arbitral tribunal exceeded the scope of its authority’ shall mean that the arbitral tribunal exercised its authority in the arbitral proceedings and the exercise thereof exceeded the scope of the authority granted to the arbitral tribunal.

      (p. 200) At the same time, arbitral tribunals are, in accordance with the Arbitration Act, granted authority in the following matters: ruling on its own jurisdiction⁷ (Article 17); interim measures (Article 18); arbitral proceedings [Article 20 (discretionary authority), Article 21 (authority to decide place of arbitration), Article 23 (authority to determine the language), etc.]; arbitral hearings (Article 25); examination of evidence (Article 20, Article 28); appointment of appraisers (Article 27); and, rendering of arbitral awards (Articles 29 and 30). Through this action, Plaintiff contests the arbitral tribunal’s authority to determine the language. To them, the issue is the status of the act that appears to be an exercise of the arbitral tribunal’s authority to determine the language.

      Plaintiff claims that the Recommendation exceeded the scope of the Arbitral Tribunal’s authority. Yet, we find the Arbitral Tribunal’s act of recommending Plaintiff and Defendant Westinghouse to agree on the arbitration language by providing the Recommendation was merely a part of conducting the arbitration proceedings to encourage an agreement between the Parties and cannot be deemed an exercise of its authority to determine the language. Such a conclusion is based on a collective consideration of the finding of facts, evidence presented, entire oral proceedings and is derived from the following factors: (i) wide-ranging deference is recognized for party autonomy in conducting the arbitral proceedings;⁸ (ii) when parties agree upon the language of the arbitration, it will be granted top priority;⁹ (iii) the Arbitral Tribunal recommended an agreement on the language of the arbitration through the Recommendation after the Parties failed to reach an agreement on the language of the arbitration, and this should only be considered an exercise of its authority to conduct the proceedings in a manner that fully incorporated the Parties’ intentions, which is the essential nature of arbitration proceedings; (iv) an agreement on the arbitration language between the parties is not limited by Article 50 of the 2008 Arbitration Rules and they can freely decide to use, among other things, English or Korean, or Korean and English together; (v) the Arbitral Tribunal’s Recommendation merely presented the possible language of the arbitration that the parties could agree upon and cannot be viewed as based on a mistaken determination of its authority; and, (vi) the Arbitral Tribunal expressly stated that the Recommendation should not be considered as the Tribunal’s exercise of its authority to decide the arbitration language.

      Rather, in light of the above findings of fact such as the progression of the arbitration proceedings and the contents of the Decision on Language, we find it reasonable to conclude that the Arbitral Tribunal exercised its authority to decide the arbitration language through the Decision on Language on 25 December 2013.

      At the same time, as found above, Plaintiff raised an objection to the Arbitral Tribunal’s Decision on Language on 20 January 2014. Yet, no evidence exists to demonstrate that the Arbitral Tribunal rendered a decision concerning Plaintiff’s objection as a preliminary question. Article 17(5) of the 2013 Arbitration Act grants the arbitral tribunal the right to choose between rendering a decision concerning a party’s objection as a preliminary question and making a determination on the objection together with the merits in the arbitral award. We thereby do not find that the prerequisite condition for requesting (p. 201) judicial review regarding an arbitral tribunal’s authority under Article 17(6) of the 2013 Arbitration Act was satisfied given that the tribunal did not decide on the objection as a preliminary question.

      In the end, Plaintiff’s action against Defendant Westinghouse failed to satisfy the litigation requirements and hence is deemed unlawful.

1. 3.  Determination

   1. A.  Relevant Provisions of the Arbitration Act

      [The court cites Articles 19, 29, 32, and 36.]

   2. B.  In a set aside judgment of an arbitral award where Korean law applies, the court may independently review and determine a matter determined in the merits to determine whether a set aside ground under the Arbitration Act exists, within a necessary scope. Yet, the Korean Arbitration Act does not provide that such matters as an arbitrator’s error of fact or error of law are grounds to set aside an arbitral award. An arbitral award has the same force as a final and conclusive court judgment. Pursuant to res judicata, the right to bring claims that are the subject of the arbitral award will already be considered final and binding between the parties. In light of these points, a re-examination of the substantive matters determined during the merits must occur on an exceptional and limited basis. A total re-examination of whether the arbitrator substantive determination was justified is not allowed.

   3. C.  Whether the Arbitral Proceeding Was Erroneous

      As provided above, with regard to Plaintiff’s argument concerning allegations that E provided bribes, the arbitrator of the arbitration determined that material crimes such as a bribe must be substantiated through credible evidence. Based on this fact alone, however, we do not find it convincing that stricter standards were applied to the evidence that Plaintiff submitted in the arbitration regarding their cause of action than (p. 202) to the evidence that Defendant submitted. Based only upon these established facts, we find insufficient basis to recognize that in these arbitral proceedings the arbitrator determined the evidence submitted by the parties according to different standards. We find no evidence to establish otherwise.

      As provided above, the arbitrator disclosed his views about the applicable law of this case before the first written submission. We find that this was to prevent both parties from submitting documents prepared based on statutes other than the governing law of the arbitral award. This was the result of the final hearing on the governing law being scheduled after the deadline for submitting the first written submission, due to a change in the manner in which the governing law was to be decided. Therefore, based only on these recognized facts, we find insufficient basis to recognize that the decision on the governing law of the arbitral award occurred unfairly. We find that evidence to establish otherwise does not exist. (Instead, according to the foregoing established facts, both parties of the arbitral award were guaranteed a sufficient and fair opportunity to present their views through their counsel concerning the governing law of the award.)

1. B.  Defendant’s Argument

   1. 1)  Summary of Arguments

      1. B)  The arbitrator visited Plaintiff’s legal counsel, had contact with the attorney in charge of the arbitration, and ordered Defendant to bear USD 424,314.43, an excessive amount of legal fees. The arbitrator also restricted Defendant’s ability to prove their case such as through the submission of recorded minutes. Defendant’s representative director who was not fluent in English was forced to answer either ‘yes or no’ without more specific interpretation. In contrast, Plaintiff’s representative director E’s testimony was granted high evidentiary value. The arbitration proceedings were thus unjustly conducted. The arbitral award’s unfairness and partiality has to be questioned when, among other things, it did not consider the card commission rate in the contract or the particulars of the contracted amount. Thus, the award should be set aside under Article V(2)(b) of the New York Convention for violating public policy.

      2. C)  Out of the licensing costs that Defendant must be paid until the termination date, USD 300,000 should be offset from Plaintiff’s arbitral award credit.

   2. 2)  Determination

      1. B)  Only when the specific result of recognizing the foreign arbitral award is contrary to Korea’s public policy will recognition and enforcement be refused on the (p. 203) grounds of a violation of public policy under Article V(2)(b). Therefore, when an enforcing country’s court needs to examine and determine substantive issues that have already been decided during the arbitral proceedings to determine whether grounds for refusing enforcement exist, they must do so in an exceptional, limited manner.¹⁰

         Defendant argues that the ‘stenographic record’ states that the arbitrator had contact with Plaintiff’s legal counsel, but they were not able to submit this document as evidence. Other evidence that could substantiate this assertion did not exist. We find no evidence that the arbitrator conducted the arbitration proceedings in a partial manner. According to Plaintiff Exhibit Nos. 5-1 and 5-2 and the overall oral arguments, we recognize that during the arbitration proceedings Defendant did not object to Plaintiff’s submission of the amended version of the 22 February 2013 legal costs statement. Thus, we cannot conclude that allowing compulsory execution of the arbitral award would violate Korea’s public policy.

      2. C)  As provided above, the tribunal dismissed Defendant’s counterclaim for USD 400,000 in licensing costs during the arbitration proceedings. As a result, we cannot accept Defendant’s argument for an offset of a credit of USD 300,000 that appears to be part of the licensing costs, as it would be contrary to the res judicata of the arbitral award.

1. 3.  Assertions and Determination

   1. B.  Grounds to Set Aside under Article 36(2)(i)(b) of the 2010 Arbitration Act

      1. 1.  Plaintiff’s Argument

         The arbitral tribunal did not provide proper notice regarding the arbitration proceedings such as the preparation and submission of the Opinion,¹¹ denying Plaintiff the opportunity to point out the unjustness of the Opinion. This resulted in Plaintiff being unable to effectively make oral arguments during the merits. Therefore, the arbitral award must be set aside under Article 36(2)(i)(b) of the 2010 Arbitration Act for ‘a party making the application was not given proper notice … of the arbitral proceedings or was otherwise unable to present her case’.

      2. 2.  Determination

         Article 36(2)(i)(b) provides that if ‘[t]he party making the action for setting aside was not given proper notice of the appointment of the arbitrator or arbitrators or of the arbitral proceedings or was otherwise unable to present her case and furnishes such proof then the award may be set aside’.¹² This provision does not seek to apply to all situations where a party was not able to present their case, such as the one above, but is limited to situations where the right to present one’s case has been infringed to a strikingly unacceptable degree.¹³

         In this case, the arbitral tribunal did not notify the parties that the Opinion was prepared. Yet, the Arbitration Act and arbitration rules and other regulations at the time of the arbitration did not contain any provisions regarding such expert reports as the Opinion in the case. As provided above, we do not find that the arbitral tribunal’s lack of notification to the parties of the Opinion could be considered a violation regarding the arbitration proceedings. Yet, the appraiser and expert advisor’s opinion also had a considerable influence in forming the arbitral tribunal’s inner conviction. From the perspective of guaranteeing the party’s right to defend, the parties should have been granted an opportunity to present their opinions concerning the expert advisor’s opinion. Moreover, the Opinion in essence could be deemed an appraisal opinion or the results of an appraisal. The arbitral tribunal furthermore incorporated most of the Opinion so the need for such an opportunity was even greater.

         (p. 205) The issues raised in the Opinion, however, were the main subject of the parties’ oral arguments during the arbitration hearings. Both parties were granted the opportunity to submit their opinions and supporting references, among other things, throughout all six hearings. In fact, the parties presented oral arguments regarding the foregoing issues and submitted the said supporting references, among other things. AA prepared the Opinion based on such things as the parties’ arguments and documentary evidence that were submitted during the arbitration proceedings. With regard to the disclosure of technology, AA prepared the Opinion after conducting a separate investigation in addition to considering the references Plaintiff submitted.

         Although the arbitral award incorporated most of the Opinion, the arbitral tribunal ultimately determined such matters as the sameness of the First Oven and the Second Oven. During the action to set aside the arbitral award, Plaintiff only argued that the Opinion and the determination of the arbitral award were mistaken regarding the disclosure of First Oven’s technology and the sameness of the First Oven and Second Oven. They did not submit evidentiary references other than the evidence submitted during the arbitration proceedings. As a result, we do not find that they lost an opportunity to prove themselves. We find that the tribunal notified both parties about preparation of the Opinion and they did not contravene procedural fairness.

         Considering these points together, even if the arbitral tribunal did not notify the parties about the preparation of the Opinion and did not grant Plaintiff an opportunity to present their views concerning the Opinion, we do not find that, based on those facts, that Plaintiff’s right of defence was manifestly infringed to an unacceptable degree. They were not effectively denied the opportunity to present oral arguments during the merits due to, among other things, the failure to receive proper notice regarding the arbitration proceedings. We conclude that Plaintiff’s foregoing argument is groundless.

1. 2.  Dispute Arises

   [facts summarized in para. 6.18]

2. 3.  Arbitral Award

   [facts summarized in para. 6.18]

3. 4.  Plaintiff’s Claim for an Enforcement Judgment of the Arbitral Award

   Korea and Hong Kong both joined the New York Convention as contracting parties. Since the arbitral award was rendered in Hong Kong, it is binding in Korea pursuant to Article III of the Convention such that its recognition and enforcement should be granted. To enforce the arbitral award in Korea, Plaintiff submitted the original arbitral award and arbitration agreement and their translations as provided under Article IV of the Convention. They assert that enforcement of the arbitral award should be granted.

   In this regard, Defendant believed that they were not a party to the contract and did not respond to the arbitration proceedings. The arbitral tribunal rendered a final award after unilaterally conducting the proceedings without giving Defendant an opportunity to present their case. Thus, Defendant argues that the enforcement should be refused.

   Article V(1)(b) of the New York Convention provides that one ground to refuse enforcement of an arbitral award is that ‘the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case’. We examine whether the foregoing appropriate procedures were contravened or Defendant’s right to present their case was infringed in the arbitration proceedings. We do not find any evidence to support this. Instead, Defendant was repeatedly called upon to appoint an arbitrator but did not respond. At Plaintiff’s request, the HKIAC appointed YYY as the arbitrator for Defendant pursuant to the Hong Kong Arbitration Ordinance. According to Plaintiff Exhibit Nos. 22–33-1 and 2, in the arbitration proceedings, Plaintiff’s counsel, the law firm Ince & Co of Hong Kong, completed service of Plaintiff’s request for arbitration and written memorials, the notice of the oral hearing dates, and the first and final award by fax, registered mail, or personal courier to Defendant’s business or their attorney who was delegated the power to receive notice. We conclude that Defendant was granted a fair opportunity to participate in the hearings. Defendant’s foregoing argument that asserts otherwise is unwarranted.

   Under the premise that Article 203(2) of the Civil Procedure Act¹⁵ should apply to the foreign arbitral award, Defendant argues in essence that service of process was unlawful under the Civil Procedure Act and thereby was invalid. We hold that Article 203 of the Civil Procedure Act applies to foreign arbitral awards that are not subject to foreign court judgments or the (p. 207) New York Convention, and does not apply to the award herein that is subject to the New York Convention.

   Furthermore, the service of process in the arbitration proceedings was valid under Article 3 of the UNCITRAL International Commercial Arbitration Model Law that the Hong Kong Arbitration Ordinance follows, as long as the parties did not agree otherwise. Article 4 of the Arbitration Act of Korea, the enforcing country, also provides that such service is valid. We find that Defendant’s foregoing assertion that faults the service of process as unlawful is unwarranted.

1. B)  Determination

   According to Article V(1)(b) of the New York Convention, recognition and enforcement of an arbitral award may be refused when the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present her case. This provision does not seek to apply to all situations such as the one above where a party was not able to present their case but is limited to situations where the right to present one’s case has been infringed to a strikingly unacceptable degree. Furthermore, guaranteeing an arbitration party the right to present one’s case is directly connected with the realization of procedural justice and is part of public order. Its compliance should be determined according to the standards of the laws of the enforcing country Korea.¹⁶

   When Plaintiff and Defendant entered into the franchise contract, Article 2(1) of the UNCITRAL Arbitration Rules, the applicable rules of the arbitration, provided that any notice ‘is deemed to have been received if it is physically delivered to the addressee or if it is delivered at her habitual residence, place of business or mailing address, or, if none of these can be found after making reasonable inquiry, then at the addressee’s last-known residence or place of business. Notice shall be deemed to have been received on the day it is so delivered.’¹⁷ The UNCITRAL Arbitration Rules only provide for physical delivery or mail delivery as the methods for written notice in an arbitration proceeding and do not provide for notice by email. (The AAA provides in the Communication section of the Administrative Services part of the ‘Procedures for Cases under the UNCITRAL Arbitration Rules’ that communications will be transmitted to the address set forth in Claimant’s notice of arbitration to Respondent or any other address that has been furnished by a party in writing. Since the AAA procedural provisions are lower legal norms subject to the UNCITRAL Arbitration Rules that provide for physical delivery or mail delivery, we find that the ‘address set forth (in Claimant’s) notice of arbitration (to Respondent) or any other address that has been furnished by a party in writing’¹⁸ shall be interpreted as only referring to the mailing address.)

   According to Article 4 of Korea’s Arbitration Act, a written notice shall be delivered to the addressee in question personally. If a notice cannot be delivered by this method, the written notice shall be deemed to have been notified to the addressee when it is duly delivered to the addressee’s domicile, place of business, or mailing address. If the addressee’s domicile, place of business, or mailing address cannot be found, a written notice shall be deemed to have been provided to the addressee when it is sent to the addressee’s last-known domicile, place of business, or mailing address by registered mail or any other postal means which provides a record of the dispatch. Korea’s Arbitration Act also provides that physical delivery (p. 209) and mail delivery are the only methods of written notice required in arbitration proceedings and does not provide for notice by email.

   Therefore, while conducting the parties’ arbitration according to the UNCITRAL Rules, the ICDR should have provided the procedurally required notifications to the parties by physical delivery or mail delivery and notifications by email were not permitted. The same applies under the Arbitration Act of Korea, where the enforcement of the arbitral award has been requested.

   Yet, according to the facts established above, the ICDR only sent Defendant the First Notification as provided in Annex 3, which could be considered as a general communication of the arbitration proceedings, by mail delivery through an international courier after the arbitration proceedings between the parties commenced. Thereafter, without even confirming Defendant’s receipt, the ICDR through the case manager sent four notifications by means of email to the Email Address, regarding the arbitration proceedings that were directly related to Defendant’s right to present their case. This was contrary to the UNCITRAL Arbitration Rules and the statutory standards of the enforcing country Korea. The notifications included (1) a notification inquiring of an opinion on the arbitrator candidates, requesting if they wanted to challenge the appointment of the arbitrator, and regarding Plaintiff’s request for a documents-only hearing and the deadline to submit a reply therein; (2) a notification of Defendant’s deadline to submit a statement of defence; and (3) a notification on the conduct of the proceedings pursuant to documents only. Because Defendant was unable to check the foregoing email notifications (the First Notification that Defendant received by normal means did not contain any statement that future notification related to the arbitration proceedings would be made by email such that one could not have predicted email notifications), they received the disadvantageous arbitral award as provided in Annex 1 without being able to submit any replies or opinions to the ICDR. Defendant did not receive proper notice regarding the appointment of arbitrators or the arbitration proceedings before receiving the arbitral award such that their right to present their case was infringed. We find it reasonable to conclude that the degree of infringement was strikingly unacceptable.

1. 3.  Sub-Conclusion

   We hold that grounds to refuse enforcement of the arbitral award existed under Article V(1)(b) of the New York Convention. Without further need to examine the other grounds to refuse enforcement that Defendant asserts, we hold that the award cannot be enforced in Korea.

1. 1.  Arguments and Determination

   1. A.  Plaintiff’s Argument

      Plaintiff argues that the arbitration award should be set aside because they did not have an opportunity to make an oral pleading on the merits due to the lack of proper notice regarding the arbitral process and because an authentic copy of the arbitral award was not delivered. Plaintiff also cites that out of the interior construction, including the costs from additional construction, KRW 1,440,000 (USD 1,300) in construction payments instead remains outstanding, even if the air conditioning and the railing construction are excluded.

   2. B.  Determination

      According to Article 36(2)(1)(b) of the Arbitration Act, an arbitration award may be set aside if the requesting party proves that they did not receive proper notice of the appointment of an arbitrator or the arbitral proceedings or, for some other reason, they were unable to present their oral arguments during the merits proceedings. The lack of proper notice of the appointment of an arbitrator or the arbitral proceedings or comparable reasons thereof must have infringed upon the party’s right to present their case to a strikingly unacceptable degree.

      [The court quotes Articles 4(1) and 4(2) of the Arbitration Act.] Even if the written notice has not been delivered to the addressee, if it has been forwarded to the addressee’s sphere of control, it is presumed to have been notified to the addressee.

      [The court quotes Article 4(3) of the Arbitration Act.] Under certain conditions, by merely sending written notice, it will be presumed that the addressee was provided lawful notice.

      In this case, we observe that the various written documents such as the hearing notices that the KCAB sent to Plaintiff were not delivered to Plaintiff. Yet, we find that Plaintiff not only received the KCAB’s telephone call, but through the telephone (p. 211) conversation with Defendant became aware that Defendant filed an arbitration request with the KCAB related to payment of the interior construction costs.

      Also, Plaintiff actually resided at the address where the KCAB sent the various hearing notices, and, other than the above address, Defendant did not know of any other place to contact Plaintiff, such as their place of business. Considered together, we find that as long as the KCAB dispatched the various written documents such as the hearing notices by mail to Plaintiff’s address pursuant to the Arbitration Act, it must be deemed that Plaintiff lawfully received written notice. Therefore, we do not find it convincing, solely based on Plaintiff’s assertion, that they did not receive proper notice of the appointment of an arbitrator or the arbitral proceedings, or, that, for comparable reasons, their right to present their case was infringed upon to a strikingly unacceptable degree. We do not find any evidence to prove otherwise.¹⁹

1. 2.  Judgment

   1. A.  Relevant Provisions [Court cites Articles II, III, IV, and V of the New York Convention and Article 39 of the Arbitration Act.]

   2. B.  Determination Concerning the Cause of Action [Court confirms the case is a commercial case and that China is a member of the New York Convention.]

   3. C.  Determination Regarding Defendant’s Objection

      1. 1)  Defendant asserts that they could not appropriately exercise their right to be heard during the arbitral process because they only received notification of the (p. 212) appointment of arbitrators and arbitral proceedings in Chinese and not in Korean. Defendant asserts that enforcement of the award should be refused pursuant to Article V(1)(b) of the New York Convention.

         We observe that according to Article V(1)(b) of the Convention, recognition and enforcement of the 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 the recognition and enforcement is sought, proof that the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present her case. We interpret that this regulation does seek to apply to all situations where a party was unable to present their case due to the foregoing grounds but is limited to apply only where the degree of infringement is so striking as to be unacceptable.²¹

         In light of these legal principles, we consider Defendant’s foregoing defence. We consider together Plaintiff Exhibit No. 3 and the overall oral arguments to note as follows: (1) during the arbitral process, after receiving the Request for Arbitration, Arbitration Rules and List of Arbitrators on 10 October 2011 from CIETAC, Defendant selected Yang Jianyong as their party appointed arbitrator; (2) on 29 November 2011, Defendant received notice from CIETAC of the opening of the first hearing and attended the hearing held on 28 December 2011; (3) at the foregoing hearing, Defendant testified about the sales contract, participated in its verification, and also pleaded about legal issues; and, (4) after the arbitration hearing, Defendant submitted supplementary evidence and memorials to CIETAC and submitted counter-memorials in response to the memorials and evidence Plaintiff submitted.

         Considering the foregoing established facts, although Defendant received notifications written in Chinese and not Korean about the arbitration proceedings, we do not find that Defendant’s right to be heard was unjustly infringed, so this part of Plaintiff’s defence is groundless.

1. A.  In light of facts provided above, unless special circumstances exist, the arbitral award herein is subject to the New York Convention. We hold that Plaintiff’s claim (the amount that the arbitral award orders that includes delay damages at an annual 20 per cent under the Act on Special Cases Concerning Expedition, etc. of Legal Proceedings [Litigation Expedition Act] from the day after receipt of the copy of the complaint until complete payment) meets all of the conditions under Article 39(1) of the Arbitration Act and the Convention and a recognition and enforcement judgment is warranted.

2. B.  In this regard, Defendant states that (1) the payment guarantee that Plaintiff was supposed to submit to Defendant under the shipbuilding contract (Article 10(9) Performance Guaranty) was not submitted, and hence the contract itself was neither established nor entered into effect; and, (2) Defendant did not receive the documents relating to the request for arbitration that Plaintiff had faxed. Even if this was not so, among other things, Defendant contests that the foregoing documents were not properly forwarded to Defendant’s representative director and others due to the disorderly situation of Defendant’s office. Defendant-owned real estate was undergoing auction proceedings which made correct delivery of the documents related to the request for arbitration questionable.

   Not only does clear evidence to support Defendant’s foregoing arguments not exist (instead, we find that considering together Plaintiff Exhibit Nos. 2-1 and 4 and the overall oral arguments Defendant did receive the arbitrator’s fax of the documents related to the request for arbitration, and on 12 February 2010 also received delivery by registered mail), but Defendant’s foregoing arguments themselves do not serve as grounds that would have any direct influence on the establishment or validity of the shipbuilding contract. Therefore, we do not accept any of Defendant’s foregoing arguments.

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)  [The first point is discussed in para. 3.27.]

      2. (2)  Second, compulsory execution of the Arbitral Award should not be allowed because Plaintiff unilaterally conducted the arbitral proceedings without Defendant’s participation, seriously infringing their right to present their case in violation of Article V(1)(b) and (d) of the New York Convention. For Plaintiff to resolve the charterage issue through arbitration, as provided in the Arbitration (p. 214) Agreement, they should have notified Defendant about their selection of arbitration to settle the dispute within 21 days from the initial notice that a dispute has arisen. Plaintiff first notified Defendant that the dispute arose on 14 October 1992 but did not notify Defendant of their selection of arbitration until 8 February 1993. In the case of the arbitral award, not only did Defendant, who was disadvantaged by the award, not receive appropriate notice concerning the arbitral proceeding, but they also had no obligation to participate in the proceeding due to its grave procedural defect having been conducted contrary to the parties’ arbitration agreement.

      [Section B is discussed in para. 3.27.]

   2. C.  Determination Regarding the Procedural Defect of the Arbitral Award

      According to the foregoing established facts, Plaintiff’s written notice sent to Defendant on 14 October 1992 was nothing but a notice requesting payment of the delayed charterage and the interests and costs thereon and informing that necessary legal action would be taken if they were not paid. Had Defendant complied and paid the delayed charterage and other costs, in principle the dispute may not have arisen. Therefore, we find it difficult to establish that the above notification by itself satisfies the first out of the two conditions concerning ‘notice that a dispute has arisen’ that is required under English law, namely ‘to clearly convey that a litigation or potential litigation situation has arisen’.

      Moreover, we find the 14 October 1992 notice does not meet the second condition that ‘a party who does not want litigation related to the dispute to proceed in the United Kingdom courts must choose arbitration’ such that one cannot regard it as the ‘initial notice that a dispute has arisen’ under Article 40(b) of the Arbitration Agreement. We do hold that Plaintiff’s 8 February 1993 written notice of its selection of arbitration to settle the dispute included the ‘initial notice that a dispute has arisen’ such that it would be reasonable to find that this notice was provided at the same time.

      Hence, the arbitral proceedings herein did not violate the agreement between the parties to the Charter Contract as provided under Article 40(b) of the Arbitration Agreement that ‘the selection of arbitration shall be notified within 21 days from the initial notice that a dispute has arisen’. Furthermore, the arbitrator lawfully notified Defendant of the arbitral proceedings, yet Defendant ignored such notice and failed to respond to the arbitral proceedings, unavoidably leading to the Arbitral Award being rendered without Defendant’s participation. As a result, we hold that one cannot find as argued by Defendant that a defect exists in the proceedings of the Arbitral Award, and evidence that proves otherwise about any defect does not exist. We hold that Defendant’s foregoing plea is unwarranted.

1. 2.  Determination Concerning Parties’ Arguments

   1. A.  Parties’ Arguments

      Plaintiff seeks approval for compulsory execution of the Arbitral Award. In this regard, Defendant argues compulsory execution should not be permitted because the Arbitral Award contained grounds to be set aside under Article 36(2) of the Arbitration Act. Defendant argues for a set aside based on the grounds in (and cites Article 36(2)(1)(b) and Article 36(2)(1)(d)).

   2. B.  Determination of the Court

      1. i.  Relevant Law and Rules

         [Court cites Articles 40 and 41 of the Arbitration Act²² and Articles 56, 57, 58, and 59 of the Arbitration Rules.]

      2. ii.  Acknowledged Facts

         [Summarized in para. 6.31]

      3. iii.  Determination

         According to the facts established above, Defendant received notification that the arbitral proceedings of this case would proceed by the Expedited Procedure. As a result, the appointment of the arbitrator occurred according to Articles 56 and 57 of (p. 216) the KCAB Arbitration Rules, and the remaining arbitral procedures occurred based on Articles 22, 24, 25, 26 of the Arbitration Act and Articles 10, 11, 12, 17, 24, 27, 32, 37, 43, 58 of the KCAB Arbitration Rules. Therefore, we hold that the arbitral proceedings herein did not fall within the grounds to set aside the Arbitral Award herein under Article 26(2)(1)(b) and (d) of the Arbitration Act and no evidence to prove otherwise exists. Hence, we rule that Defendant’s foregoing arguments are unwarranted.

1. 2.  Determination Concerning Defendant’s Assertions

   1. B.  Regarding Refusal Grounds under Article V(1)(b) of the New York Convention

      1. a.  Summary of Defendant’s Arguments

         Manifestation of will under the Civil Act is only valid when it reaches a counterparty, but Defendant never received an email such as the request for arbitration from Plaintiff regarding the arbitral proceedings herein. Moreover, Defendant could not have responded to the arbitral proceedings in a timely manner because they were unable to properly check their email account after their employee in charge of the business related to the Charter Parties had left the company. Defendant was not able to check the 5 March 2007 email from the arbitrator until 5 April 2007 and could not respond to the arbitral proceedings in a timely manner. Therefore, grounds for refusal under Article V(1)(b) of the New York Convention exist because either Defendant was not properly notified of the arbitral proceedings or their right to present their case was infringed.

      2. b.  Determination

         According to Article V(1)(b) of the New York Convention, the recognition and enforcement of an arbitral award may be refused when a party against whom the award is invoked was not provided proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present their case. The purpose of this provision is not to apply to all situations such as the one above where a party was not able to present one’s case but rather is limited to situations where the right to present one’s case has been infringed to a strikingly unacceptable degree. Furthermore, guaranteeing an arbitration party the right to present one’s case is directly connected with the realization of procedural justice and is part of public order. Therefore, it was guaranteed should be determined according to the standards of the laws of the enforcing country.²³

      3. (p. 217) c.  We observe that based on Plaintiff Exhibit Nos. 3 and 5, Defendant Exhibit Nos. 4, 6, 7, and 8, and the overall oral arguments, we can recognize the following facts:

         1. (1)  Under the 2002 LMAA Small Claims Procedure, document exchange and notification regarding the arbitration proceedings herein was also possible via email;

         2. (2)  Plaintiff sent a letter to Defendant’s above email account that claimed payment of the brokerage and Plaintiff’s intention to request arbitration under the LMAA Small Claims Procedure. Defendant sent a response via email countering Plaintiff’s argument. Plaintiff’s arbitration request thereafter was sent to the identical email address of Defendant (Considering such circumstances, we find that the arbitration request herein was lawfully sent to Defendant, and we find Defendant Exhibit No. 10-1, which indicates otherwise, difficult to believe);

         3. (3)  On 5 February 2007, Plaintiff sent Defendant another email separate from the arbitration request that Defendant checked; in the email, Plaintiff notified Defendant of the arbitration request herein so Defendant knew about the arbitral proceedings;

         4. (4)  Thereafter, Defendant checked but did not respond to the arbitrator’s 5 March 2007 email requesting that they submit an answer and did not provide any response to the arbitrator’s 2 June 2007 email notification; the Arbitral Award was rendered on 6 September 2007 (Even if Defendant, as argued, had not checked the 5 March 2007 email until 5 April 2007, we find that Defendant had plenty of opportunity to respond and defend themselves in the arbitral proceedings considering the above turn of events, but did not do so); and,

         5. (5)  As long as the arbitration request and other matters were sent to Defendant’s above email account that fell under Defendant’s managerial domain, we find that notification of the arbitration was lawfully made regardless of whether Defendant actually checked it.

   Therefore, we hold it is difficult to find that Defendant’s right to present her case was infringed to a strikingly unacceptable degree so Defendant’s above argument lacks merit.

[Previous sections in para. 2.28](p. 218)

1. (3)  Defendant argues that the arbitration herein must proceed not only according to the English Arbitration Act but also under the rules of the LMAA and CIArb.²⁴ According to the rules of the CIArb, a request for arbitration that contains prescribed matters must be served upon the other party. If, within 30 days of sending this document, the parties cannot agree on an arbitrator, both parties may appoint an arbitrator. Claimant in the arbitration must send the particulars of claim of the case to the arbitrator and the other party within 30 days of receiving the arbitrator’s acceptance of appointment. The other side then must send a defence to the arbitrator and Claimant within 30 days of receipt of the particulars of the claim.

   The LMAA rules provide that agreement of the parties is needed in the case of documents-only arbitration without oral arguments. In this case, the specific arbitration procedures must be in accordance with the agreement of the parties. Within 28 days after the agreement regarding the arbitration procedures, Claimant’s claim submissions and supporting documents must be submitted. The other party must submit their defence submissions within 28 days of receiving the claim submissions, and Claimant must submit their final submissions in response within 21 days of receiving the other party’s defence submissions.

   In this arbitration, Defendant received notifications from Plaintiff on 11 December 1990 that the arbitration was initiated, on 19 December 1990 that an arbitrator was appointed, and thereafter on 7 January 1991 that Plaintiff would wait for Defendant to appoint an arbitrator. Defendant received a notification on 17 January 1991 from the arbitrator regarding his appointment and later on 21 January 1991, a notification concerning an order to submit defence submissions by 18 February 1991. Defendant argues that the series of events in the conduct of the proceedings constitute an instance where a party was not given proper notice of the arbitration proceedings and therefore was unable to present their case, or the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or was not in accordance with the law of the country where the arbitration took place as provided under Article V of the New York Convention.

   We observe that before Plaintiff requested arbitration, documents were exchanged on numerous occasions regarding the demurrage dispute while negotiations occurred. When Bruce Harris was appointed as Plaintiff’s arbitrator, Plaintiff gave Defendant seven days pursuant to the English Arbitration Act to appoint their arbitrator, but they did not respond. As a result, the arbitrator appointed by Plaintiff became the sole arbitrator, who then rendered an arbitral award after giving Defendant an opportunity to submit statements and explanations. As long as this was the case, we find it reasonable to view that even if some of the conduct of the proceedings contravened the rules as Defendant argues, this did not at once constitute grounds to refuse enforcement of the arbitral award.

2. (4)  Defendant explained that in regards to Plaintiff’s request to appoint an arbitrator in the arbitration proceedings, they could not find an arbitrator in London because it was during the holiday season at year-end and New Year’s and also because their offices were closed at the beginning of the year. On 28 December 1990, attorney Philip Yang himself requested Defendant to appoint an arbitrator by 7 January 1991. Then, despite this deadline, on 3 January 1991, he sent an amended notification to Defendant to appoint an arbitrator (p. 219) by the next day. The arbitrator, among other things, also did not follow the time deadline rules concerning the conduct of the arbitration proceedings and also frequently changed the timelines that he himself had set. To allay their suspicions regarding the qualifications, among others, of the arbitrator and Philip Yang, Defendant continuously demanded that Plaintiff provide an acceptable explanation but no explanation was provided. On 7 February 1991, Plaintiff themselves stated they would suspend the arbitration and negotiate the terms. As a result, Defendant did not respond to the arbitration because such negotiations were being conducted. Defendant argues that Plaintiff obtained the arbitral award by forcing the arbitration proceedings and denying Defendant an opportunity to defend themselves. Based on these circumstances, Defendant was unable to present their case under the New York Convention.

   As found above, we observe that on numerous occasions Defendant exchanged correspondence with Plaintiff’s attorney Philip Yang regarding the demurrage dispute and the arbitration proceedings, but Defendant did not raise any objections regarding his power of attorney. We find that Defendant was not unable to present their case merely because (1) Defendant had suspicions regarding the power of attorney; (2) Philip Yang made an inconsistent notification to Defendant while graciously extending the period to appoint an arbitrator after it expired under the English Arbitration Act; or, (3) the arbitrator acted as argued by Defendant. Also, according to Defendant Exhibit Nos. 9 and 10, after Defendant received notification from the arbitrator to submit defence submissions by 18 February 1991, Plaintiff notified on 7 February 1991 that they were willing to devote efforts to suspend the arbitration if a portion of the demurrage was paid. Yet, Defendant did not pay the demurrage at all and only repeated their previous assertion. We do not find any material to substantiate the claim that during the arbitration proceedings Plaintiff notified Defendant that they would suspend the proceedings and resolve the dispute through negotiation but then denied Defendant an opportunity to present their case by continuing with the proceedings. We do not otherwise find any proof regarding grounds to refuse the enforcement of the arbitral award.

1. 2.  Provisions of the Arbitration Act related to this case

   [The court cites Articles 19, 20 25, 29, 32, and 36 of Arbitration Act.]

2. 3.  Arguments and Determinations

   1. A.  Set Aside Grounds under Article 36(2)(i)(d) of the Arbitration Act

      1. (1)  Violation of the Parties’ Agreement Concerning the Scope of the Appraiser’s Work

         1. a)  Plaintiff’s Argument

            The parties and the arbitral tribunal agreed that AA’s scope of work was limited to assisting the tribunal’s understanding through his technical knowledge and did not include reporting findings of fact to the tribunal. Unbeknownst to the parties, the arbitral tribunal had AA prepare an opinion that would influence the arbitral award’s outcome. This violated the agreement between the parties, and the arbitral award should be set aside under Article 36(2)(1)(d) because ‘the arbitral procedure was not in accordance with agreement of the parties, which was not in conflict with a mandatory provision of this Act’.

         2. b)  Determination

            We examine whether the arbitral tribunal violated the agreement between the parties regarding the arbitration proceedings when they had the patent attorney prepare an opinion.

            First, according to Plaintiff Exhibit No. 2-1, the Opinion compared the shape, structure, technical characteristics of the first and second vertical ovens and found that the Second Oven was practically the same as the First Oven. For practical purposes, this could be deemed as an appraisal opinion or the results of an appraisal under which AA reported his findings of fact by applying his professional knowledge to the specific facts.

            (p. 222) No evidence, however, exists to establish that the arbitral tribunal had AA prepare a ‘written appraisal or appraisal report’.

            Instead, the arbitral tribunal did not order AA to conduct an appraisal of the First and Second Ovens. AA accordingly did not conduct an appraisal of the First and Second Ovens. The arbitral tribunal expressed its opinion that it would be inappropriate to have a technical appraisal of the issues raised in the arbitration proceedings, particularly regarding whether the First and Second Ovens were the same. In the end, they decided not to conduct an appraisal.

            Based on the foregoing evidence as well, the arbitral tribunal requested AA to prepare an opinion after the end of the hearings but did not specifically instruct him as to what should be included. Based on his own independent determination, AA prepared the foregoing opinion taking into consideration such matters as the evidence submitted during the arbitration proceedings and arguments, and submitted it to the arbitral tribunal. Considering together these points, we hold that the arbitral tribunal only had AA prepare an opinion as an expert advisor.²⁷

            Furthermore, we do not find that the arbitral tribunal violated the agreement of the parties regarding AA’s scope of work because they had him prepare an opinion as an expert advisor.

            In other words, Article 20 of the Arbitration Act states that the parties may agree on the arbitration procedures, unless it is contrary to mandatory provisions of the Act. Absent such an agreement, the arbitral tribunal may conduct arbitration in such manner as it considers appropriate pursuant to the Act. Unlike litigation procedure where the procedural law is strictly applied, we conclude that the provision should be interpreted to recognize the parties’ autonomy and the arbitral tribunal’s wide discretion regarding the arbitration proceedings as long as the tribunal does not treat a party in a discriminatory fashion. Therefore, as long as party agreement does not prohibit, we interpret the provision to allow the arbitral tribunal to appoint an expert advisor during the arbitral proceedings to submit a written explanation or opinion or set forth an explanation or opinion.

            We also note the foregoing established facts and evidence and the following circumstances:

            • (1)  The arbitral tribunal notified the parties that they would appoint an appraiser or expert advisor to help them understand the technical sections. Based on the recommendations of the parties, they appointed AA as the appraiser and expert advisor. They left open the decision whether his role would be the role of a normal appraiser or would serve merely as an expert advisor who would present his expert opinion to the tribunal. (In contrast, Plaintiff argues that the parties and arbitral tribunal agreed that when AA was appointed his scope of work would be limited to supplementing the understanding of the tribunal through his professional knowledge and would not involve reporting his finding of fact. Yet, we find this difficult to establish based solely upon Plaintiff Exhibit Nos. 8-1 and 8-2 and Defendant Exhibit No. 1; given that evidence to prove otherwise does not exist, we do not find this credible);

            • (p. 223) (2)  When AA attended the hearing, asked questions to the parties concerning technical issues and offered advice and explanations to the arbitral tribunal, both parties did not raise any objections thereof;

            • (3)  When the arbitral tribunal was considering whether to adopt Plaintiff’s request for an appraisal concerning the First and Second Ovens at the end of the hearing, they informed the parties again that they would consider AA’s opinion to the extent that it would help them in forming their inner conviction.²⁸

         Considering together these points, we do not find that the arbitral tribunal calls for AA to prepare an opinion after the hearing was contrary to the agreement regarding the AA’s scope of work. We conclude that this part of Plaintiff’s argument is groundless.

      2. (2)  Error for the Arbitration Procedures not being in Accordance with the Arbitration Act

         1. c)  Plaintiff’s Argument

            Even if AA’s preparation of the Opinion was not contrary to the parties’ agreement, the Opinion was a written appraisal. The arbitral tribunal had to notify both parties about it pursuant to Article 25 of the Arbitration Act because it served as a basis for the award. Plaintiff further contended that even if the Opinion was not a written appraisal as provided under Article 25(4), the arbitral tribunal still had to notify both parties about the expert opinion, such as the one provided by the expert advisor, that they sought to rely upon as a basis for the award. Despite this, the arbitral tribunal did not make such a notification. Therefore, the arbitral award should be set aside pursuant to Article 36(2)(i)(d) because ‘the arbitration procedures … were not in accordance with (the Arbitration) Act’.

         2. d)  Determination

            Article 25(5) of the Arbitration Act provides that a written appraisal or documentary evidence that an arbitral tribunal seeks to employ as the basis of an award must be notified to both parties. We find it reasonable to conclude that this provision aims to in essence guarantee the party’s right to present and defend their arguments by giving them an opportunity to state their opinions on the method of evidence that acts as the source of the tribunal’s formation of their inner conviction. We do not find it convincing that the Opinion can be considered a written appraisal that is a means of evidence under Article 25(5). In other words, as provided above, we conclude that in essence the Opinion could be deemed an appraisal opinion or the result of an appraisal by AA. At the same time, the arbitral tribunal did not order an appraisal from AA or instruct him to prepare an appraisal report. They only asked AA to prepare an opinion as an expert advisor. As found above, he wrote the foregoing Opinion based on his independent determination. As long as the arbitral tribunal did not order an appraisal, we do not find that such an opinion could be deemed a ‘written appraisal’ that is a means of evidence under Article 25(4) just because the opinion in essence contains material that could be considered an appraisal opinion or the results of an appraisal of the expert advisor. Therefore, we conclude that Plaintiff’s argument that the award should be set aside because the Opinion is a written appraisal as provided under Article 25(4) is groundless.

            (p. 224) We next consider whether an error exists based on the failure to follow the arbitration proceedings pursuant to the Arbitration Act because the Opinion and expert report were not provided to the parties. The Arbitration Act does not contain a provision concerning expert reports. Article 23(1) of the revised 2011 KCAB International Arbitration Rules provides that ‘the arbitral tribunal may appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal and communicated to the parties’. Paragraph 3 states that ‘[u]pon receipt of the expert’s report, the arbitral tribunal shall send a copy of the report to all parties and shall give the parties an opportunity to comment on the report’.

            Yet, the 2011 International Arbitration Rules only entered into force on 1 September 2011 and only applies to arbitration agreements entered into after the effective date where the disputed matter is an international arbitration. The License Agreement and arbitration agreement were entered into on 21 January 2000 and thereby the pre-amendment 1996 KCAB Arbitration Rules apply to this arbitration. The pre-amendment 1996 KCAB Arbitration Rules do not contain a provision concerning expert reports. Thus, among other things, the Arbitration Act and arbitration rules that applied at the time of the arbitration do not contain a provision concerning expert reports. We cannot conclude that an error exists that ‘the arbitration procedures … were not in accordance with the (Arbitration) Act’, which are set aside grounds under Article 36(2)(1)(d) under Act, simply because the arbitral tribunal did not notify the parties about the Opinion.

1. 3.  Determination Concerning Defendant’s Arguments

   1. B.  Determination

      Article V(2) of the New York Convention provides that the grounds for refusing enforcement arise when ‘recognition or enforcement of the award 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 public policy of the enforcing country will recognition and enforcement be refused.²⁹

      We find herein no documentation to conclude that only Defendant Exhibit Nos. 3-1, 2 and Exhibit No. 5-1 are genuine and that Defendant Exhibit Nos. 1-1 to 8 are false. Additionally, we find no evidence that National Shipping Co. Spa is not a state-owned enterprise but rather just a local agent of Plaintiff, or that Entreprise Portuaire de Skikda, who prepared Defendant Exhibit No. 3-2 and Exhibit No. 5-1, is the Skikda port authority, a public entity.³⁰

      Furthermore according to Plaintiff Exhibit Nos. 5, 6, and 7, we find it difficult to conclude that the arbitrator’s decision to not admit Defendant’s submission of evidence due to excessive lateness was unjustified or biased. Dismissal of late challenges and defences is also recognized under our Civil Procedure Act. Therefore, based only upon the evidence submitted by Defendant, we do not find sufficient basis to recognize that the arbitral proceedings were conducted in a manifestly unfair manner such that only Plaintiff arguments were unilaterally accepted based on false documents submitted by Plaintiff. As we find no evidence that the enforcement of the award would be contrary to the public policy of Korea, we hold that Plaintiff’s above argument is without merit.

1. 4.  Defendant’s Argument Related to Refusing Enforcement of the Arbitral Award

   1. D.  Determination

      1. (1)  Defendant’s Argument Related to Document Production

         We first consider the arbitral tribunal’s decisions on 10 May 2006 and 5 June 2006, the background, and the Arbitral Award. We also consider the fact that during the arbitral proceedings Defendant did not specifically mention or specifically point out which documents Plaintiff should have produced under the 10 May 2006 decision³¹ even after they received Plaintiff’s documents on 26 May 2006 pursuant to the 10 May 2006 decision. We find it difficult to hold that Plaintiff did not comply with the arbitral tribunal’s 10 May 2006 decision with regard to the remaining matters other than the design standard drawing of the oil separator indicated below. We also find it difficult to conclude that the arbitral tribunal’s failure to take any measures against Plaintiff infringed Defendant’s right to present their case.

      2. (2)  The Argument regarding the Oil Separator’s Design Standard Drawing

         According to the facts established above, Plaintiff sent, among the documents that they had to produce under the arbitral tribunal’s 10 May 2006 decision, the design standard drawing of the oil separator only to the arbitral tribunal and not to Defendant. We find it difficult to conclude that Plaintiff manifestly infringed Defendant’s right to present their case based only on the circumstance that Plaintiff provided the design standard drawing of the oil separator only to the arbitral tribunal and not to Defendant based on the following reasons: ① according to the Technical Assistance Agreement, Plaintiff did not have an obligation to provide Defendant technological information under which it was bound by confidentiality undertakings to a third party; ② based on the OEM agreement that Plaintiff submitted, and the testimony of Defendant employee ‘D’ and Defendant’s designated technician ‘E’, the arbitral tribunal determined that the information related to the oil separator that Defendant requested from Plaintiff was information that Plaintiff was bound by confidentiality undertakings to a third party; such determination was also not made based on the design standard drawing of the oil separator; and, ③ Article 344(1)(3)(c) of the Civil Procedure Act provides an exemption from the obligation to produce documents if the ‘subject matter falls under professional or technical secrets’, and Article 347(4) further stipulates that ‘the court may, if deemed necessary for determining whether a document is subject to the obligation under Article 344, demand that the person holding such document present it. In this case, other persons should not be able to view the document’. The court thereby has a procedure to inspect the documents without the participation of the other parties.(p. 227)

      3. (3)  Defendant’s Argument Regarding the S-Engine Oil Filter

         Based on the facts established above and the background behind the dispute between Plaintiff and Defendant regarding the S-Engine oil filter, the parties’ arguments and corroboration during the arbitral proceedings, and the Arbitral Award, we find that the issue regarding the defect in the S-Engine oil filter design that Plaintiff had initially provided to Defendant is a matter concerning Plaintiff’s breach of the Technical Assistance Agreement that Defendant themselves argued. Accordingly, we hold it difficult to find that Defendant’s right to present its case was manifestly infringed because this issue was not raised during the arbitral proceedings as now argued by Defendant.

      4. (4)  Conclusion

         Therefore, we hold that Defendant’s argument that the grounds to refuse recognition and enforcement under New York Convention Article V(1)(b) exist because Defendant’s right to present its case was manifestly infringed during the arbitral proceedings is unwarranted.

Also, Defendant asserts that during the arbitration proceeding, they requested that the tribunal order Plaintiff to produce the contract and various correspondence that Plaintiff exchanged with Harry Fox. They sought to prove that Plaintiff knew about Harry Fox’s deceitful acts and had actually manipulated everything from behind. The arbitral tribunal did not accept their request just because Claimant did not agree thereof. This violated the California Code of Civil Procedure that guarantees procedural rights. According to Defendant, this meets the grounds to refuse recognition and enforcement of the arbitral award either under Article V(1)(b) of the New York Convention, when the party against whom an award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present her case, or under Article V(1)(b), when the composition of the arbitral authority or the arbitral procedure was not in accordance with the law of the country where the arbitration took place.

We observe that the parties do not contest that the arbitration proceeded based on the AAA’s Commercial Arbitration Rules pursuant to the provisions of the US–Korean Commercial Arbitration Agreement. We consider together Defendant Exhibit No. 1 and the overall oral arguments to recognize the fact that the AAA’s Article 31 provides in essence that the arbitrator shall determine the relevance of the evidence offered in the presence of the arbitrator and the parties, except where a party chooses not to attend or has waived the right to be present. No evidence exists to contradict this fact. This arbitration (p. 228) provision grants arbitrators wide discretion regarding whether to admit evidence. In exercising this discretion, we find they are not strictly bound by law. Furthermore, as found above, the parties respectively claimed a confirmation and a set aside of the arbitral award at the Santa Clara County Superior Court in California. As a result, the court rendered a confirmation judgment. In light of the fact that the foregoing judgment has already been confirmed, we deem it difficult to find, as argued by Defendant, that the tribunal’s decision to not accept the request to produce documents constituted an infringement of the right to be heard or violated the California Code of Civil Procedure, which are grounds to refuse enforcement of an arbitral award. We rule that Defendant’s foregoing defence is unwarranted.

Defendant then argues that in essence Plaintiff’s claim for an enforcement judgment with respect to the confirmation judgment should not be allowed because, under Article 203(4) of the Civil Procedure Act, mutual reciprocity does not exist between Korea and the state of California. The Uniform Foreign Money Judgments Recognition Act that California adopted only requires, as conditions for recognition and enforcement, that foreign judgments be impartial judgments that do not contradict due process, that jurisdiction exist, that there be proper notice, that the judgments not be obtained by fraud, and that they not be contrary to public policy. We deem that under the Article 203(4) of the Civil Procedure Act, mutual reciprocity exists, and we do not accept Defendant’s foregoing arguments.

1. C.  Whether the Arbitral Award was based on Forged Evidence

   1. 1)  Defendant’s claim

      Plaintiff agreed to lend USD 1 million to Defendant on July 2008 and August 2008, respectively, for a total of USD 2 million, at an annual interest of 5 per cent under the condition that the repayment period would be mutually negotiated every year. In return for the financial support, Defendant agreed to provide Plaintiff the advertising rights for two advertisements in the infield and outfield fences for three years as well as the exclusive operating rights to one store near first base. They agreed to repay the entire USD 2 million to Plaintiff by the end of 2008. Defendant did not sign a contract to transfer its stake of shares to Plaintiff, and the section in each investment agreement that provided for the transfer of stocks was forged and falsified.

   2. 2)  Determination

      1. a)  When recognition and enforcement of an arbitral award contravenes the public policy of Korea, recognition and enforcement may be refused not only when the (p. 229) award breaches public policy but also when the procedure involved in rendering the award breaches public policy.

         Under the pretext of reviewing whether the award was deceitfully obtained, a court cannot completely re-examine the correctness of an arbitral tribunal’s substantive determinations such as their finding of facts and application of the law and then set aside the award by finding it was deceitfully obtained by fraudulent means. Yet, if all of the following factors can be satisfied, then an arbitral award can be set aside on the grounds that it contravenes Korean public policy to enforce it: (1) it can be definitely established by clear and convincing evidence that the party requesting enforcement of the arbitral award engaged in punishable, fraudulent acts during the arbitral proceedings; (2) the counterparty, through no fault of their own, could not assert a defence thereof during the arbitration proceeding because they did not know of the requesting party’s fraudulent acts; and (3) the requesting party’s fraudulent acts were significantly related to the issues in the arbitral award.³²

         We observe and recognize the following when we combine together Plaintiff Exhibit Nos. 7, 9–11, the court appraisers’ appraisal results, and the overall oral arguments:

         1. (1)  Material does not exist to establish that the investment stake section in each investment agreement was clearly forged or falsified;

         2. (2)  Defendant sufficiently argued that in essence the share transfer section in each investment agreement was forged through the following: (a) when they filed their request for arbitration, they argued ‘at that time, Respondent (Plaintiff) took all the original documents (of each investment agreement) so including whether they were authentic the Claimant (Defendant)…’, (b) in their 7 August 2012 written submission, they argued ‘Claimant (Defendant) again did not review in detail or confirm such matters as the specific content of each agreement (each investment agreement) and did not know whether the agreements were really drafted or made on site’, (c) in their 17 September 2012 written submission, they argued that they ‘have suspicions concerning the authenticity of page 1 of the investment agreement that contains the share transfer section’ (as a result, it was possible to request an appraisal of the seal, among other things, based on the assertion of forgery during the arbitral proceedings); and,

         3. (3)  The arbitral proceedings were conducted three times on 14 August 2012, 18 September 2012, and 6 November 2012. Concerning Defendant’s foregoing arguments, the arbitral tribunal recognized that Defendant did put their seal on each investment agreement so all the documents were presumed authentic. They determined that in essence no evidence existed otherwise that they were not authentic. In light of these points, we do not find it convincing that circumstances existed to totally re-examine the correctness of the arbitral tribunal’s substantive determinations such as their finding of facts and application of the law and that grounds to refuse recognition and enforcement (p. 230) exist because the proceedings for rendering the arbitral award breached public policy.

            We find this part of Defendant’s arguments also groundless.

      2. b)  We next observe whether the share transfer section of each investment agreement was forged. As provided above, the parties drafted Loan Agreements on 4 June 2008 and 28 August 2008 to lend USD 1 million, respectively, totalling USD 2 million. We do not find it convincing that the share transfer section of each investment agreement was forged and conclude that this part of Defendant’s assertion is groundless. We decide in light of the following circumstances where we combine together the facts established above, Plaintiff Exhibit Nos. 2, 5, 6, and 8, Defendant Exhibit Nos. 3-2, 4-2, and 6 and the overall oral arguments:

         1. (1)  Around January 2008, Plaintiff engaged in discussions with the representative director E of Defendant to invest in the baseball team F (the predecessor of the baseball team C) that Defendant managed at the time. Plaintiff received from E an offer to invest KRW 3 billion (USD 2.6 million) to obtain 10 per cent of Defendant’s shares but instead made a counterproposal (Plaintiff Exhibit No. 8) to invest KRW 1 billion (USD 870,000) for 20 per cent of its shares. As a result, on 6 July 2008, Plaintiff redrafted the investment agreement (Defendant Exhibit No. 6) under which they would invest KRW 1 billion (USD 870,000) and receive 20 per cent of Defendant’s shares by the end of the month, but E and others would be granted the right to repurchase half of Plaintiff’s shares within six months. Thereafter, on 14 July 2008, the investment agreement (Plaintiff Exhibit No. 1-1, Defendant Exhibit No. 3-1) was redrafted. In the process, the provision concerning the right to repurchase was deleted from the contract and the timing of the share transfer was changed to the end of October 2008. On 29 August 2008, an investment agreement (Plaintiff Exhibit No. 1-2, Defendant Exhibit No. 4-1) was drafted with the same provisions. We find the share transfer in return for the investment was a core subject of the negotiation from the investment proposal stage, and this was reflected in the drafting of each of the foregoing investment agreements.

         2. (2)  Plaintiff paid Defendant USD 1 million on 4 July 2008 and on 28 August 2008, respectively. Defendant paid Plaintiff KRW 99 million (USD 86,000) on 6 July 2008 and KRW 79 million (USD 69,000) on 28 August 2008, respectively, as part of the difference that arose from the US and Korean currencies. In total, therefore, Plaintiff paid Defendant KRW 1 billion (USD 870,000) twice for a total of KRW 2 billion (USD 1.7 million) as provided under the investment agreements.

         3. (3)  Defendant argues that Plaintiff took the original copies of both investment agreements, allowing him to forge the share transfer section (in contrast, Plaintiff states that each party took one copy of the originals). In addition to the signature at the end of each investment agreement, a seal was made over the edges of each adjacent page to prevent, among other things, forgery and falsification on the spot. Then, both agreements were placed adjacently and the parties signed and sealed across both agreements. We find it difficult to understand how Plaintiff was to retain all the original documents, including Defendant’s copies. Furthermore, we cannot find any special reason for Plaintiff in particular to possess all of the originals.

         4. (p. 231) (4)  Article 4 of the advertising contract (Defendant Exhibit No. 3-2 and 4-2) that was drafted between the parties provided that rights (fence advertisement rights) Defendant granted to Plaintiff would remain valid from the execution date of the contract until Plaintiff acquired 5 per cent of Defendant’s shares and was premised on Plaintiff acquiring Defendant’s shares.

         5. (5)  Defendant admits that they placed their seal on both investment agreements. In terms of the appraisal, they acknowledge that the thumbprint next to the name of Defendant’s representative director E on page 2 of the 6 July 2008 investment agreement (Defendant Exhibit No. 6) and the signature next to the name of Defendant’s representative director E on page 3 of the 29 August 2008 investment agreement (Defendant Exhibit No. 4-1) are identical to E’s thumbprint and signature. But Defendant cannot comment on whether the section in the prior page is the same.

         6. (6)  Defendant argues that in essence that they would not transfer 40 per cent of their shares for the extremely low price of KRW 2 billion (USD 1.7 million). Defendant faced financial difficulty because, among other things, they did not receive the promised contribution from Woori Tobacco, the main sponsor at the time the investment agreements were drafted. Instead, they received notification that Woori Tobacco waived their right as a sponsor. They were in a situation where they urgently needed investment capital, particularly because, among other things, the deadline to pay the first initiation fee of KRW 2.4 billion (USD 2.1 million) to the Korea Baseball Organization (KBO) was imminent.

   Therefore, even if we accept Defendant’s argument that their shares were undervalued, we do not find it convincing that the transfer of their shares in that situation would be difficult to predict or without basis.

1. 2.  Whether Examination of the Parties Occurred before the Arbitral Award

   The lower court first cited the court of first instance’s findings. Accordingly, the purpose of Article 8(1)³³ of the 1998 Arbitration Act that provides ‘[b]efore the arbitral award is rendered the parties must be examined’ is for the arbitrator to receive testimony and evidentiary material when rendering an arbitral award. The provision does not require that the parties themselves must be examined but that if a party’s representative exists then the representative may be examined instead.

   In the arbitral proceedings herein, the attorneys who served as the parties’ representatives attended all of the hearings and presented their arguments and materials. The arbitrators conducted their examination by asking the parties’ positions through their representatives. The lower court found that the arbitral proceedings herein could not be considered a situation where the parties were not examined without a legitimate reason as provided under Article 13(1)(4)³⁴ of the 1998 Arbitration Act. Based on the evidence in the record, we hold that the lower court’s fact-finding and determinations are justified, and that they did not commit an error of law, as argued in the final appeal, through such means as omitting party examination or based on the grounds to set aside the arbitral award.

1. 4.  Determination Concerning Defendant’s Argument

   [(1) covered in para. 5.34; (2) covered in para. 4.22; (4) covered in para. 9.94](p. 233)

1. (3)  Defect in the Examination Procedures

   Defendant further argues that without any justified reason the Japan Shipping Exchange did not hear from Defendant who had not appointed an attorney such that this constitutes grounds to set aside the arbitral award.

   We observe that Article V(1)(b) of the New York Convention provides that if a party that receives an unfavourable award did not receive proper notice of the appointment of the arbitrators or the arbitration proceeding or for other reasons was unable to present their case in the arbitration proceedings, grounds to refuse enforcement of an award exist. This provision concerns procedural guarantees and the guaranty of the right to be heard in the arbitration and seeks to ensure the procedural fairness of the arbitration. The determination shall be made based on the Korean law (lex fori) and regulations, where the arbitral award is being recognized and enforced. The Korean 1973 Arbitration Act provides in Article 8(1) that the arbitrator must examine the parties before rendering an arbitral award and states in Article 13(1)(4) that when a party was not examined for ‘legitimate reasons’ during the arbitration proceedings this will serve as a ground to set aside the award.

   If we consider the arbitration proceedings in this case, we find no evidence to establish that Defendant’s right to be examined or other rights to participate in the arbitration proceedings were unjustly infringed. Instead, based on a comprehensive review of Plaintiff Exhibit No. 1 (Arbitral Award), Defendant Exhibit No. 3 (Interlocutory Award), the testimony of witness Myeong-Hak Park and the overall oral arguments, we find the following: (1) Defendant adopted a stance toward the Japan Shipping Exchange that rejected the arbitration because the arbitration clause in the voyage charter party was invalid; (2) they only submitted written statements protesting the continuation of the arbitration proceedings on several occasions; (3) they did not submit an answer or other written memorials; (4) they did not appoint a representative; (5) they did not once attend a hearing at the Japan Shipping Exchange; and, (6) the Japan Shipping Exchange conducted the arbitration proceedings based on the view that Defendant waived their opportunity to be heard from the arbitrators. In light of these circumstances, we hold that Defendant themselves waived the opportunity to be heard by rejecting the initiation of the arbitration. We cannot find that their right to be examined was unjustly denied. We thereby rule that the third foregoing argument is unwarranted.

1. 3.  According to the reasoning of the lower court’s judgment and the record, the lower court found it reasonable to conclude that Plaintiff was also granted an equal opportunity to submit opinions and references with regard to the second appraisal that occurred during the arbitration proceedings. Plaintiff asserted errors in the results of the second appraisal (p. 234) and the arbitral award that relied upon them. In the end, these assertions merely amounted to faulting the results of the appraisal and the excessiveness amount in the arbitral award based on them. We find that the lower court rejection of Plaintiff’s argument was justified because the arbitration proceedings did not violate the Arbitration Act. We find no errors such as a failure to deliberate, as argued in the final appeal.

1. 2.  Second Issue in the Final Appeal

   According to the lower court’s judgment, Defendant requested arbitration based on the following grounds: (i) an implicit agreement existed that Plaintiff would be responsible for any VAT imposed on the payment of goods if it was later determined that the transaction did not qualify for a zero tax rate; (ii) due to Plaintiff’s delay in renouncing the tax exemption, Defendant incurred considerable damages because they were not able to receive the zero tax rate and had to pay the VAT; (iii) Defendant argued that they unjustly paid the VAT for the transaction that the tax office imposed and that Plaintiff benefited from the amount that was paid. Defendant alternatively made claims for the contracted amount, compensation for damages³⁶ and unjust enrichment.

   Plaintiff denied Defendant’s claim for the amount stipulated under the agreement. Among other things, they argued that the goods supply contract did not contain an (p. 235) agreement about who was responsible for the VAT, and thereby the VAT was included in the price for the goods thereof. Any claim for the payment of the goods thereby expired based on the short three-year extinctive prescription period under Article 163(6) of the Civil Act.

   Based on the lower court’s finding of facts, we hold it reasonable to find that Plaintiff’s argument during the arbitration proceeding concerning the completion of the extinctive prescription was directed at Defendant’s claim for the VAT out of the contracted amount. We find that Plaintiff’s argument concerning the completion of the extinctive prescription did not include the claim under the different cause of action for the VAT out of the compensation for damages.³⁷

   Therefore, we hold the lower court’s determination was justified when they found it difficult to recognize that Plaintiff made an objection during the arbitration proceedings based on extinctive prescription concerning the claim for compensation for damages.

   We find that the lower court judgment did not commit an error of law regarding the extinctive prescription as argued in the final appeal.

   At the same time, the Supreme Court precedents cited by Plaintiff in the final appeal are different from the present case in terms of their context and purpose and are not appropriate for application in the present case.

   The remaining arguments in the final appeal question the finding of facts, which serve the exclusive competence of the original court of first instance, and are not lawful grounds for a final appeal.

   Therefore, we hold that the arguments in this part of the final appeal are unwarranted.

The argument that arbitration proceeding should have occurred first must be made prior to the oral arguments on the merits of a case. We find that if Defendants did not submit such an objection and in essence engaged in oral arguments on the merits, they may not (p. 236) make such a defence before addressing the merits⁴⁰ after an examination of the merits has begun.⁴¹ In this case, we observe that Defendants did not make any arguments that arbitration proceedings should have occurred first while submitting briefs numerous times and testifying and in essence engaging in oral arguments in 15 hearings held over one year and six months at the court of first instance. The record clearly provides that only later, during the 6th and 7th hearings of the lower court, did Defendants finally submit a defence before addressing the merits that arbitration should have occurred first. The lower court should have rejected Defendant’s defence before addressing the merits but instead accepted it contrary to the foregoing legal principles and dismissed the action in its entirety. Therefore, we hold that the lower court committed an error of law concerning the timing of submitting a defence before addressing the merits. We find the assertion that point this out is warranted.

Plaintiff requests an enforcement judgment for the arbitral award herein through this action. Defendant argues that the Arbitration Committee⁴² violated Article 23(2) of the Korea Chamber of Commerce and Industry’s Commercial Arbitration Rules (‘Arbitration Rules’) on notification of the hearing date by belatedly sending to them notification for the 14 May 1970 third hearing on 12 May 1970. Defendant argues they eventually received the notification for the foregoing third hearing after it was held and thereby grounds to set aside the award thereby exist under Article 13(1)(1) of 1966 Arbitration Act.⁴³ Defendant contends that when grounds to set aside an arbitral award exist, Plaintiff cannot request an enforcement judgment from the court and their action herein is unjustified.

Regarding this point, based on Plaintiff Exhibit No. 4 (arbitration rules), Plaintiff Exhibit No. 6-1 (post card), Plaintiff Exhibit No. 6-2 (mail delivery verification), Defendant Exhibit No. 1-2 (request for arbitration), Defendant Exhibit No. 1-3 (arbitration submission agreement), Defendant Exhibit No. 1-11 (notification), and the overall oral arguments, we observe that Plaintiff and Defendant agreed to refer the case regarding the request for compensation damages to the Korea Commercial Arbitration Committee (‘Arbitration Committee’) for arbitration under the Korea Chamber of Commerce and Industry’s Commercial Arbitration (p. 237) Rules (‘Arbitration Rules’). Based on this submission agreement for arbitration, the arbitration proceedings were conducted. Under Article 23(2) of the Arbitration Rules, the Arbitration Committee was supposed to notify the hearing date to the parties no later than 5 days prior to the hearing date. Despite this, the Arbitration Committee belatedly sent notice of the hearing date set for 14 May 1970 to Defendant on 12 May 1970. This notification was delivered to Defendant on 13 May 1970 and no evidence exists to prove otherwise. We find that the foregoing notification was improper because it infringed the Arbitration Rules.

At the same time, according to Plaintiff Exhibit No. 4, we find that Article 39 of the Arbitration Rules provides that if a party had known or could have known that the Arbitration Rules or a requirement therein were not followed but did not raise a written objection accordingly and continued with the arbitration then they will be deemed to have renounced their right to object thereof. Based on Defendant Exhibit Nos. 1-12 (approved documents) and 1-13 (examination protocol⁴⁴) and the overall oral arguments, as seen above, Defendant did receive the notification for the third hearing on 13 May 1970 the day before the hearing, and they knew or could have known the fact that the notification violated the Arbitration Rules. Despite this, Defendant did not raise an objection in writing and also failed to attend the hearing. The foregoing hearing proceeded without Defendant’s attendance, and no evidence exists to prove otherwise. We find that Defendant renounced their right to object. Therefore the arbitration award was rendered according to lawful procedures. We do not find set aside grounds under the Arbitration Act as argued by Defendant and hold Defendant’s foregoing defence is unwarranted.

Defendant further argues that grounds to set aside the foregoing arbitral award exist based on Article 422(4)–422(9) of the 1963 Civil Procedure Act⁴⁵ as provided under Article 13(1)(5) of the Arbitration Act and that Plaintiff’s request herein is unjustified. Based on all of Defendant’s substantiation, however, we find no evidence to hold that grounds to set aside exist as argued by Defendant and thereby also hold Defendant’s foregoing defence is unwarranted.

1. 3.  Relevant Provisions

   1. A.  Recognized Facts

      1. 1)  [The court first cited Article 17 of the Arbitration Act.]

      2. 2)  The Arbitration Act was amended through Act No. 6083 of 31 December 1999 and comprehensively adopted the 21 June 1985 UNCITRAL Model Law on International Commercial Arbitration (‘Model Law’). Article 17 of the Arbitration Act incorporated Article 16⁴⁶ of the Model Law.⁴⁷

      3. 3)  The UNCITRAL Report⁴⁸ regarding Article 16 of the Model Law explains as follows:

         1. A)  During the process of drafting Article 16 of the Model Law, no differences of opinion existed in adopting the statement ‘the arbitral tribunal has the power to rule on its own jurisdiction’, the so-called principle that an arbitral tribunal may review its own jurisdiction (Kompetenz-Kompetenz of the arbitral tribunal), and that an arbitral tribunal’s decision on its authority will be subject to court control.

         2. B)  Yet, regarding the method and timing of court control, divergent views were raised. Under one view, court control over a tribunal’s ruling on jurisdiction should be contested only in proceedings to set aside an arbitral award to prevent abuse by a party for purposes of delay or obstruction of the proceedings.⁴⁹ Under another view, it should be permitted at an early stage to prevent an unnecessary waste of time and cost in the arbitration proceedings.⁵⁰ In the end, it was decided that the arbitral tribunal was given the choice to rule on a plea regarding its jurisdiction either as a preliminary question or together in an award on the merits. A compromise view was adopted so that if a tribunal decides as a preliminary question, then a party could instantly seek a request of a court review thereof. The report also adopted the view that such a court review would be final and would not be subject to a challenge.

         3. C)  As a result, Article 16(1) of the Model Law provides that ‘the arbitral tribunal may rule on its own jurisdiction’, while Article 16(2) concerns ‘a party’s plea (p. 239) that the arbitral tribunal does not have jurisdiction’, and Article 16(3) provides that ‘any party may request court review if the arbitral tribunal rules as a preliminary question’.

         4. D)  Article 16(2) of the Model Law provides that in regards to a party’s plea that the arbitral tribunal does not have jurisdiction ‘[a] plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings’. The initial draft of this part provided that ‘[a] plea that the arbitral tribunal is exceeding the scope of its authority shall be raised promptly after the arbitral tribunal has indicated its intention to decide on the matter alleged to be beyond the scope of its authority’.⁵¹ Concern was expressed that interpretative confusion could occur regarding the meaning of ‘the arbitral tribunal has indicated its intention to decide on the matter alleged to be beyond the scope of its authority’. To make it more precise, it was changed to the above. It was explained that ‘as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings’ was meant to include not only cases where an arbitral tribunal examined evidence relating to a matter outside its scope of authority, but also cases where one party raises an argument in its written or oral statements relating to a matter outside the tribunal’s scope of authority.⁵²

         5. E)  At the same time, Article 16(3) of the Model Law provides that ‘[t]he arbitral tribunal may rule on a plea referred to in para (2) of this Article either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty days after having received notice of that ruling, the court specified in Article 6 to decide the matter, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award.’ If an arbitral tribunal rules on a party’s plea as a preliminary question, then the party may request a court to review the arbitral tribunal’s jurisdiction, but the court’s decision is not subject to appeal. According to the above report, the provision that a court’s decision regarding a review under Article 16(3) cannot be appealed was derived from the provision of Article 13(3) of the Model Law.⁵³ The report explains that to make the meaning of ‘the court’s decision concerning a challenge (which decision shall be final)’ in Article 13(3) of the Model Law even clearer, the wording was amended to ‘which decision shall be subject to no appeal’.⁵⁴

   2. B.  Interpretation of Article 17 of the Arbitration Act

      1. 1)  Interpretation of Article 17(3) of the Arbitration Act

         [The court first cites Article 17(3) of the Arbitration Act.]

         (p. 240) We comprehensively consider such factors as the Arbitration Act’s wording, the legislative process and purpose and note the following factors:

         1. (1)  Article 17(3) of the Act does not provide that ‘the arbitral tribunal is “making a decision or act” exceeding the scope of its authority … during the arbitral proceedings’ but rather provides that the ‘arbitral tribunal is exceeding the scope of its authority … during the arbitral proceedings’;

         2. (2)  Furthermore, the plea thereof ‘shall be raised as soon as the matter … is raised during the arbitral proceedings’ and does not provide that the arbitral tribunal must make a decision or act on the matter;

         3. (3)  Article 17(3) of the Act is an adoption of Article 16(2) of the Model Law which provides that ‘[a] plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings’. The UNCITRAL Report, based upon which the Model Law was drafted, explains that the meaning of ‘as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings’ in Article 16(2) includes not only cases where an arbitral tribunal examines evidence relating to a matter outside its scope of authority, but also cases where one party makes an argument in its written or oral statements relating to a matter outside the tribunal’s scope of authority; and,

         4. (4)  Article 17(2) of the Act provides in a general provision regarding a party’s plea that it ‘shall be raised by not later than the submission of the statement of defence’, and it does not provide as a condition for the plea regarding the arbitral tribunal’s authority that the tribunal must exercise its authority.

         We find it reasonable that the meaning of ‘[a] plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings’ in Article 17(3) of the Act should be interpreted as when an issue arises, whether a tribunal has jurisdiction, the party contesting it must immediately raise an objection. During the arbitration proceedings, an issue may arise, for instance, when a tribunal exercises or attempts to exercise their authority ex officio or when a party makes an assertion concerning the tribunal’s authority. As a result, we find that when an issue arises during the arbitration proceedings whether a tribunal has jurisdiction, the arbitration parties must immediately raise an objection, and the parties do not have to wait for the tribunal to exceed their authority to make a plea.

      2. 2)  Interpretation of paragraphs 5 and 6 of Article 17 of the Arbitration Act

         We comprehensively consider the wording of paragraphs 5, 6, and 8 of Article 17 of the Arbitration Act, the legislative process and purpose of the Model Law and our Arbitration Act. When a plea exists under Article 17(3), the arbitral tribunal has the discretion to rule on the plea either as a preliminary question or in the arbitral award on the merits.⁵⁵ If the arbitral tribunal decides that it has authority as a preliminary question, the party making the plea under paragraph 3 may request a court to review the tribunal’s authority.(p. 241)

      3. 3)  Conditions to Request a Court Jurisdiction Review under Article 17 of the Arbitration Act

         As a result, for a party to request court review of whether an arbitral tribunal exceeded its authority under Article 17 of the Arbitration Act, the following three factors must be fulfilled: (i) the arbitral tribunal exceeded the scope of its authority during the arbitration proceedings; (ii) a party immediately raised an objection; and, (iii) the arbitral tribunal rendered a decision on the party’s objection hereof as a preliminary question.

      4. 4)  Interpretation of paragraph 8 of Article 17 of the Arbitration Act

         At the same time, Article 17(8) of the Arbitration Act provides that a court’s review over a request for a review under Article 17(6) of the Act cannot be appealed. When Article 17(8) of the Act adopted Article 16(3) of the Model Law, which stipulates that the ‘(court’s) decision … shall be subject to no appeal’, we find that the Act provided that ‘no appeal⁵⁶ shall be filed’ with the expectation that a party would submit a request for a court’s review on the tribunal’s authority and the court would try the case in the form of a court decision.

         An issue exists as to whether an appeal is possible when, as in this case, the court tried the case in the form of a court judgment. Yet, in light of the following facts, we find it reasonable that Article 17(8) of the Act which provides that ‘no appeal shall be filed against the review of the authority which is conducted by a court following a request’ should be interpreted to mean that a trial concerning a court’s review of a tribunal’s authority cannot be appealed regardless of whether it takes the form of a court decision, judgment or other method:

         1. (1)  taking together the legislative process and purpose of Article 17(8) and the content of Model Law that our Arbitration Act adopted as provided above, and the meaning of arbitration as an agreement among parties to resolve disputes between them not by a court’s judgment but by a private means of dispute resolution pursuant to an arbitral award, we note that parties have already relinquished their right to trial to a certain degree. Based on this premise, Article 6 of the Act provides that in matters governed by the Act courts shall not intervene except where so provided under the Act;

         2. (2)  Article 17 of the Act only permits judicial review when an arbitral tribunal decides as a preliminary question that it does have jurisdiction.⁵⁷ If a tribunal does not decide a party’s plea as a preliminary question, then the party cannot request judicial review from the court. In light of this, we do not find that a party’s right to trial is unjustly restricted because a court’s judicial review under the Act is considered one level of review that is final and not subject to appeal; and,

         3. (3)  Article 17 of the Act is the result of a compromise between seeking to prevent abuse by a party for purposes of delay or obstruction of the proceedings and unnecessary waste of time and cost in the arbitration proceedings.

   (p. 242) Furthermore, in light of its legislative purpose, even if a court does not in practice review an arbitral tribunal’s authority because they find that the party’s request for a court review did not meet the conditions for a review or the party did not meet the standing requirements, in a similar fashion, we find it reasonable to conclude that a challenge against such a court’s trial will not be permitted.

2. 2.  Determination Regarding the Lawfulness of the Appeal

   Regarding Plaintiff’s action against Defendants that requests a review of the arbitral tribunal’s authority according to Article 17(6) of the Arbitration Act, the court of first instance found the action against Defendant KCAB was unlawful because they lacked standing to be sued. They also found that the action against Defendant Westinghouse was unlawful because it did not meet the prerequisite conditions for a court’s review of an arbitral tribunal’s authority under Article 17(6). We hold a different view regarding the part of the court of first instance’s determination concerning Defendant Westinghouse and the prerequisite conditions for a court’s review of an arbitral tribunal’s authority under Article 17(6). Nevertheless, we hold that Article 17(8) considers a court of first instance’s determination in a review over a tribunal’s authority is final and not subject to appeal. We therefore rule that Plaintiff’s appeal herein is unlawful because it was brought contrary to Article 17(8).