KCAB signed a Memorandum of Understanding (MoU) with the Korea Federation of Small and Medium Business (KBIZ) on 19 August 2020, to support small and medium businesses in Korea that have commercial disputes with foreign companies due to the COVID-19 pandemic by partially covering the fees incurred in appointing an arbitration counsel.
Since the COVID-19 became a global pandemic, small and medium businesses in Korea have frequently faced commercial disputes such as foreign companies’ unilateral cancellation of orders without prior notice or objection to transfer payment in compliance with the contract. Those affected businesses are recently leaning on the arbitration system instead of the court system. Unlike the court system that has a three-trial system and takes at least 5 years to reach a final judgment, arbitration has a single trial system and takes about 6 months on average to reach a final decision with award that is also legally binding and enforceable.
Therefore, under the MoU, KCAB will help small and medium businesses use a dispute resolution in dealing with commercial disputes, and KBIZ will partially finance the counsel fees for the eligible businesses. If a small or medium business submits a Request for Arbitration to KCAB, it may receive up to 50% of the counsel fees with a cap of KRW 15,000,000. The eligible businesses that are interested in applying for this financial support need to submit required documents to KBIZ within 60 days after filing the Request for Arbitration to KCAB. For those small and medium businesses that have already appointed a counsel and submitted the Request for Arbitration before 20 August may still be eligible for the financial support, if they apply within 60 days after the effective date of the MoU.
At the signing, Mr. Ho Won Lee, President of KCAB, said: “There are a lot of small and medium businesses that are not utilizing the arbitration system due to the lack of in-house counsels. The financial support from KBIZ will enable those businesses to deal with commercial disputes through professionals effectively.”
Mr. Ki-Mun Kim, President of KBIZ, also commented: “We will actively seek out solutions for small and medium businesses that have been left out of the arbitration system due to high expenses of legal service.”