Court of Appeals Confirms Korean Arbitration Award; Rejects Counterclaims

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The U.S. Court of Appeals for the Ninth Circuit has upheld a Korean arbitration ruling.  In the case, the plaintiff sued to enforce an arbitration award from the Korea Commercial Arbitration Board (“KCAB”).  The contract between the parties called for arbitration in Seoul, Korea, before the KCAB, applying the laws of the Republic of Korea, and stated that an award by the KCAB would be final and binding upon both parties.  The trial court granted summary judgment for the plaintiff to confirm the award and the defendant appealed.

On appeal, the Ninth Circuit explained that courts shall confirm foreign arbitration awards unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”).  The New York Convention identifies seven defenses to enforcement, which are: (1) the arbitration agreement is invalid under applicable law; (2) the losing party was unable to present its case; (3) the decision is outside the scope of the arbitration agreement; (4) the proceedings did not comply with the arbitration agreement or laws of the country in which the proceeding took place; (5) the award is not yet binding or has been set aside; (6) the dispute is not subject to arbitration under the laws of the country in which the arbitration occurred; (7) enforcement violates public policy.

The defendant raised several arguments against the arbitration award.  All of the arguments, and its affirmative defensives, however, dealt with the merits of the case and not one of the seven defenses in the New York Convention.  Importantly, the court found the defendant’s counterclaims were barred by res judicata because they should have been presented in the Korean arbitration proceedings.  Therefore, the court affirmed judgment in favor of the plaintiff.

Given this decision, companies should ensure that they understand the arbitration clauses in their international business contracts, understand the rules of the arbitration body, realize they are binding regardless of where the arbitration occurs, and present any available counterclaims in the arbitration proceedings.

Disclaimer: This Litigation and Dispute Resolution Law Alert is provided for informational purposes only and is not intended to serve as or provide legal advice relating to a particular matter. If you would like to discuss a litigation, arbitration or dispute matter please contact Jon P. Yormick, Managing Attorney, [email protected], Jason B. Desiderio, Associate,[email protected], or Nicholas A. Panagopoulos, II, Associate, [email protected], or call toll free 
(U.S. and Canada) at +1.866.967.6425.

 

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