Practice Notes

Practice Notes provide a transparent and thorough guideline for the users. The following two Practice Notes were issued on January 1, 2018.

KCAB Practice Note on Arbitration Cost

• 1. When does this practice note apply?

  • 1.1 This Practice Note applies to arbitrations in which the Arbitration Costs are to be determined in accordance with Chapter 7 and Appendices 1 and 2 of the KCAB International Arbitration Rules 2016 (the "Rules").
  • 1.2 The interpretation of this Practice Note is at the discretion of the Secretariat.
  • 1.3 Unless otherwise defined in this Practice Note, all defined terms have the meaning assigned to them in the Rules.

• 2. What costs will I need to pay?

  • 2.1 The parties are jointly and severally liable for the Arbitration Costs, which consist of the filing fees, the administrative fees and the fees and expenses of the arbitrators, in accordance with Article 50*. Please see Section 9 below for further detail on each of these categories of costs.

• 3. When will I need to pay?

  • 3.1 The Secretariat will request a sum of money to be advanced by the parties to cover the Arbitration Costs (other than the filing fee) in accordance with Article 51* (the "Advance on Costs"). The request will be made when the Secretariat notifies the parties of the commencement of the arbitration proceedings.
  • 3.2 The Advance on Costs shall be paid in equal shares by the parties in the manner and within the period of time determined by the Secretariat, usually a cash deposit by bank transfer, to arrive in KCAB's account within 15 days of the date of the Secretariat's request.
  • 3.3 The Advance on Costs may be adjusted by the Secretariat at any time during the arbitration, by way of further requests. Such further requests will be made as soon as practicable. In the event of a counterclaim, the Secretariat will make requests for further advances, as soon as practicable after such counterclaim.

• 4. What happens if a party fails to pay the advance on costs?

  • 4.1 If the Advance on Costs is not paid in full to the Secretariat within the time period specified in the request, the Secretariat will inform the parties in order that one or another of them may make the required payment. If the Claimant and Respondent fail to pay the Advance on Costs, or any adjustment by the Secretariat in accordance with the preceding paragraphs, the Secretariat may, after consultation with the Arbitral Tribunal, if constituted, suspend or terminate the proceedings, in accordance with Article 51(5)*.
  • 4.2 Generally, where a party fails to pay the Advance on Costs within the specified period, the Secretariat will request the other party to deposit the non-paying party's share of the Advance on Costs within 15 days, failing which the Secretariat will make a final request for the Advance on Costs by a deadline applicable to both parties.

• 5. How will the advance on costs be held by kcab?

  • 5.1 The Advance on Costs shall be held by the Secretariat in one of two bank accounts:

    (A) Foreign currency (USD/EUR): Korea Exchange Bank (SWIFT CODE: KOEXKRSE) -Trade Center Branch, Seoul, 172-JSD-100069; or

    (B) Korean currency (KRW): Woori Bank (SWIFT CODE: HVBKKRSE) - Trade Center Branch, Seoul, 424-05-001415.

  • 5.2 VAT (Value Added Tax) can be exempted in case of overseas remittance made to the Korea Exchange Bank account in USD or EUR.
  • 5.3

    The details of which can be found at: http://www.kcab.or.kr/jsp/kcab_eng/arbitration/arbi_35_ex.jsp

• 6. Who will ultimately be liable for the arbitration costs?

  • 6.1 In principle, the Arbitration Costs are borne by the unsuccessful party. However, in accordance with Article 52(1)*, the Arbitral Tribunal may apportion the Arbitration Costs in any manner it deems appropriate, taking into account the circumstances of the case.

• 7. Who will ultimately be liable for the arbitration costs?

  • 7.1 In accordance with Article 53*, the legal costs and other necessary expenses incurred by the parties shall be allocated by the Arbitral Tribunal in the final Award. This may include legal fees, and costs for experts, interpreters, transcribers and witnesses.

• 8. What happens to remaining advance on costs at the end of a case?

  • 8.1 The Secretariat will refund any remaining Advance on Costs, without interest, to the party or parties who paid such Advance on Costs, in accordance with Article 51(7) and 51(8)*.

• 9. What are the different elements of arbitration costs?

  • 9.1 Filing fees
    • 9.1.1 The Claimant is required to pay a non-refundable filing fee of KRW 1,100,000 (including VAT) with its Request for Arbitration (“Request”), in the amount specified in Appendix 1, Article 1(1)*. The same applies to any counterclaims.
    • 9.1.2 For a claim or counterclaim where amount in dispute is KRW 200 million or less, an exemption of the filing fee should apply pursuant to Appendix 1, Article 1(1)*. However, if any of the claim or counterclaim amount is revised to individually exceed KRW 200 million, the filing fee shall not be exempted.
    • 9.1.3 If the Claimant fails to pay the filing fee when the Request is submitted, the Secretariat will request the Claimant to pay the filing fee within 15 days of such request. If the Claimant fails to make the payment within this period, the Secretariat may send a final request to the Claimant to pay the outstanding filing fee. If the Claimant fails to pay the filing fee within the time period stated in the final request, the Secretariat may terminate the arbitration proceedings and notify the Claimant.
  • 9.2 Administrative fees
    • 9.2.1 The parties are required to pay administrative fees in accordance with the schedule set out in Appendix 1, Article 2*. The parties are jointly and severally liable for these administrative fees in accordance with Article 50(2)*.
    • 9.2.2 Further to Appendix 1, Article 2(3)*, in cases where the Request has been withdrawn or the case has been terminated before issuance of the final Award, the Secretariat may partially refund the administrative fees at its discretion.
  • 9.3 Amount of arbitrators' fees
    • 9.3.1 Arbitrators' fees are governed by Article 50 and Appendix 2*.
    • 9.3.2 The Secretariat will provisionally fix the amount of arbitrator’s fee. Generally, the amount will be the average of the minimum and maximum amounts specified in Appendix 2, Article 1(1)*, based on the amount in dispute determined in accordance with Appendix 1, Article 2(2)*. The Secretariat may make adjustments to the amount of the fees at any stage during or at the conclusion of the arbitration.
    • 9.3.3 Where the Arbitral Tribunal is made up of three arbitrators, unless otherwise agreed among the arbitrators, by default, the presiding arbitrator will receive 40%, and each co-arbitrator will receive 30% of the total fees.
  • 9.4 Payment of arbitrator’s fees
    • 9.4.1 The arbitrator is required to submit an invoice for the arbitrator’s fees to the secretariat within 30 days after the closure of the arbitral proceedings.
    • 9.4.2 The secretariat will pay the arbitrators' fees from the advance on costs deposited by each of the parties in accordance with article 51*, after the issuance of the final award. If the amount held by the secretariat is insufficient for this purpose, the secretariat will request a further deposit.
    • 9.4.3 If the arbitration procedure is terminated before the final award, or if an arbitrator is replaced, the secretariat will pay such fees to the arbitrator(s) as it deems appropriate, under appendix 2, article 1(3)*.
    • 9.4.4 Where an arbitrator is replaced in accordance with article 15*, the secretariat will determine the fees payable to the replaced arbitrator and the newly appointed arbitrator, in consideration of the circumstances of the case.
  • 9.5 Arbitrator’s expenses
    • 9.5.1 The arbitrator’s reasonable expenses will be reimbursed pursuant to Article 50*.
    • 9.5.2 For Arbitrators residing outside of country where the hearing is held, the secretariat will provide USD 800 per day including one day before and after the hearing. This amount includes accommodation, food, domestic transportation costs, communication costs and cancellation costs due to changes in the hearing schedule that are not caused by the arbitrator's personal reasons.
    • 9.5.3 For Arbitrators residing outside of the country where the hearing is held, reasonable actual expenses covering travel expenses for air fares (at most business class), ship fares, railway fares, car-hire costs for travelling between countries are additionally reimbursable at cost, where the arbitrator is travelling from and returning to their place of residence. When an arbitrator travels out of his place of residence for hearing purposes, his travel expenses will be limited to roundtrip fares for travelling between the arbitrator's place of residence and the place of the hearing.
    • 9.5.4 For arbitrators residing in the same country as the hearing is held who travel domestically for arbitration purposes will be reimbursed for his reasonable actual expenses including accommodation, food, and domestic transportation costs.
    • 9.5.5 Where an arbitrator is replaced in accordance with Article 15*, the Secretariat may determine the expenses payable to the outgoing arbitrator.
    • 9.5.6 The expenses of the Arbitral Tribunal shall not be included in the calculation of the amount of the arbitrators' fees under paragraph 9.3 above.

• 10. How to apply for emergency measures?

  • 10.1 Application for Emergency Measures
    • 10.1.1 In accordance with Article 32*, a party seeking conservatory and interim measures may, in concurrence or after the submission of the Request but before constitution of the Arbitral Tribunal, apply in writing to the Secretariat for conservatory and interim measures by an emergency arbitrator ("Emergency Measures").
  • 10.2 Arbitration Costs for Emergency Measures
    • 10.2.1 If the applicant fails to pay the administrative fee of KRW 3 million according to Appendix 1, Article 3*, and the emergency arbitrator's fee of KRW 15 million according to Appendix 2, Article 3*, together with the application for emergency measures, the Secretariat will request the applicant to make payment within 7 days of such request.
    • 10.2.2 If the applicant fails to pay within this period, the Secretariat may make a final request for payment within 7 days. If the applicant fails to pay after the final request, the proceedings for emergency measures will be terminated.

• 11. What are the costs in expedited procedure?

  • 11.1 Administrative Fees in Expedited Procedure
    • 11.1.1 In cases where the amount in dispute is KRW 200 million or less, the administrative fees shall be charged according to the table below. For such cases, the administrative fees set out in Appendix 1, Article 2* shall not apply.

      Amount in Dispute	Administrative Fees
      Up to KRW100,000,000	Amount in Dispute x 0.45% [minimum KRW50,000]
      From KRW 100,000,001 to KRW 200,000,000	KRW 450,000 + 0.3% x [Amount in Dispute - KRW 100 million]

  • 11.2 Arbitrator's Fees in Expedited Procedure
    • 11.2.1 Notwithstanding the section 9.3 above, during expedited proceedings where the amount in dispute is less than KRW 200 million, the arbitrator will be paid the minimum amount specified in the arbitrator's fee table under Appendix 2, Article 1(1)*.

• 12. How to apply foreign exchange rate?

  • 12.1 The foreign exchange rate applicable in calculating the amount in dispute shall be either basic exchange rate or arbitrated basic exchange rate published by the Bank of Korea as of the date when Request for Arbitration has been received by the secretariat

KCAB Practice Note on Appointment of Arbitrators

• 1. When does this practice note apply?

  • 1.1 This Practice Note applies to arbitrations under the KCAB International Arbitration Rules 2016 (the "Rules").
  • 1.2 This practice note does not apply in respect of Emergency Arbitrators as set out in Appendix 3*.
  • 1.3 The interpretation of this Practice Note is at the discretion of the Secretariat.
  • 1.4 Unless otherwise defined in this Practice Note, all defined terms have the meaning assigned to them in the Rules.

• 2. How many arbitrators will there be in the arbitral tribunal?

  • 2.1 The number of arbitrators may be determined in the following ways:

    2.1.1 STEP ONE : The parties may agree between themselves whether to have one or three arbitrators in the arbitral tribunal.

    2.1.2 STEP TWO : If there is no agreement between the parties on the number of arbitrators, the Secretariat may determine the number, having regard to the general rule in Article 11* that disputes are to be heard by a sole arbitrator. The Secretariat may seek comments from the parties concerning the number of arbitrators as follows:

    (A) the Secretariat will request the parties' comments at the point at which the Secretariat acknowledges receipt of the Request for Arbitration.

    (B) the Secretariat will grant both parties the opportunity to submit these comments within 30 days; and

    (C) either party may make an application for an extension of time limit to submit comments on the number of arbitrators. In accordance with Article 9(2)*, the Secretariat may grant an extension once only for a period of 30 days.

  • 2.2 The Secretariat will then determine whether the number of arbitrators shall be one or three, taking into account:

    2.2.1 the intention of the parties;

    2.2.2 whether the disputed amount exceeds KRW 3 billion;

    2.2.3 the complexity of the dispute; and

    2.2.4 any other relevant considerations.

• 3. Who chooses the arbitral tribunal?

  • 3.1 Sole arbitrator
    • 3.1.1 STEP ONE : Where a sole arbitrator is chosen following the process set out in section 2 above, the parties shall aim to jointly nominate a sole arbitrator in accordance with Article 12(1)*.
    • 3.1.2 If the parties fail to nominate an arbitrator within 30 days, the Secretariat may, if requested by a party, once grant an extension of 30 days.
    • 3.1.3 STEP TWO : If the parties still fail to nominate an arbitrator within the time limit, the Secretariat shall select an arbitrator pursuant to Article 12(1)*, and in accordance with the procedure set out in section 5 below.
  • 3.2 Three Arbitrators
    • 3.2.1 STEP ONE : Where a three person tribunal is chosen following the process set out in section 2 above, the parties shall each nominate an arbitrator in accordance with Article 12(2)* (or, where there are multiple claimants and/or respondents, Article 12(3)*).
    • 3.2.2 If the parties fail to nominate the arbitrators within the 30 days' time limit, the Secretariat may, if requested by a party, once grant an extension of 30 days.
    • 3.2.3 STEP TWO : If the parties still fail to nominate an arbitrator within the time limit, the Secretariat shall select an arbitrator pursuant to section 5 below.
    • 3.2.4 STEP THREE : The nominated arbitrators, once confirmed by the Secretariat, shall jointly nominate the third arbitrator.
    • 3.2.5 STEP FOUR : If the arbitrators fail to nominate a third arbitrator, the Secretariat shall select the third arbitrator pursuant to section 5 below.

• 4. How does a party nominate an arbitrator?

  • 4.1 If a party nominates an arbitrator, the arbitrator nomination form (or in the case of a sole arbitrator, a nomination agreement) shall be submitted to the Secretariat with the name, address, current position, contact details, and other relevant details of the arbitrator.
  • 4.2 If the parties or the arbitrators (as the case may be) nominate an arbitrator, and such arbitrator refuses to accept his or her nomination, the Secretariat shall, on no more than one occasion, request the parties or the arbitrators to nominate a new arbitrator within 15 days of such request.

• 5. How does the secretariat appoint an arbitrator?

  • 5.1 The Secretariat maintains a panel of arbitrators, which contains more than 300 international experts.
  • 5.2 If the Secretariat appoints an arbitrator in accordance with section 3.1.3, 3.2.3 or 3.2.5 above, the Secretariat shall appoint an arbitrator, taking into account the following:

    5.2.1 the prospective arbitrator’s experience, availability, nationality and residence;

    5.2.2 any request from either party that the sole arbitrator or chair of the tribunal be of a different nationality to that of the parties, in accordance with Article 12(4)*;

    5.2.3 the appointee's ability to draft awards and conduct proceedings effectively; and

    5.2.4 the KCAB's Code of Ethics for Arbitrators.

  • 5.3 If the Secretariat is requested by a party to appoint an arbitrator whose nationality is different to the nationalities of the parties as set out at section 1.1 above, the Secretariat shall inform the other party of this request and provide an opportunity for the other party to respond within 7 days of receipt of the request.

• 6. How are nominations confirmed?

  • 6.1 Upon receipt of an arbitrator nomination form or agreement from the parties or the arbitrators (as the case may be), the Secretariat shall request the nominated arbitrator to accept the appointment, and complete a statement of acceptance, a statement of impartiality and independence and a CV.
  • 6.2 If the Secretariat determines that it is appropriate for the nominated person to act as an arbitrator, the Secretariat shall, without delay, notify the parties and the arbitrators that the nomination is confirmed. If this happens, the Secretariat shall enclose the arbitrator's statement of acceptance, statement of impartiality and independence, and CV.
  • 6.3 If the Secretariat determines that it is clearly inappropriate for the nominated person to act as an arbitrator, the Secretariat may request the parties and the arbitrators to submit comments on the nomination of the arbitrator within 7 days of such request.
  • 6.4 If the Secretariat refuses to confirm the nomination of an arbitrator, the Secretariat shall notify the parties and the arbitrators of its refusal, and shall request the parties or the arbitrators who nominated the unconfirmed arbitrator to nominate a new arbitrator within 15 days of such request.
  KCAB Practice Note on Appointment of Arbitrators

• 7. What duties do arbitrators have?

  • 7.1 Once appointed, the arbitral tribunal shall consult with the parties and prepare a procedural timetable containing the following information:

    7.1.1 main procedural issues in dispute;

    7.1.2 number of hearings and expected dates;

    7.1.3 timetable as to evidence, covering submission of evidence, document production, witness statement, on-site inspection, expert’s report and other evidential methods;

    7.1.4 expected date for submission of the arbitral award; and

    7.1.5 any other essential information on other aspects of the proceedings.

  • 7.2 The chair of an arbitral tribunal or a sole arbitrator will complete a record of hearings, signed or sealed, which together with the arbitral award, shall be submitted to the Secretariat. However, a record of hearings does not need to be submitted if the following can be established by other written documents.

    7.2.1 place, date and time of the hearings;

    7.2.2 names of attendees including the names of the arbitrators, parties, representatives and witnesses;

    7.2.3 name and submission date of documents; and

    7.2.4 other required information.