South Korea: A Dispute Resolution: Arbitration Overview
Introduction
International arbitration continues to remain a prevalent method of dispute resolution in Korea, triggering high-stakes disputes involving multinational corporations and investors. Korean parties continue to be among the most active users of international arbitration, contributing to a rise in the complexity and diversity of cases, as well as the increasing use of emerging arbitration institutions.
Increase in Complex Arbitration with Parallel Domestic Litigation
International arbitration practice in Korea continues to be exposed to more complex arbitration cases that require not only effective representation in arbitration proceedings but also parallel domestic litigation. This trend reflects the increasing involvement of sophisticated parties from multiple jurisdictions with assets across different jurisdictions and the strategic efforts of experienced counsel to secure efficient resolution and enforcement. It has now become common for counsel teams to collaborate across different jurisdictions and employ innovative legal strategies and procedural tactics to navigate such complex disputes.
For example, a growing number of parties are pursuing parallel court litigation alongside arbitration often through injunctions, civil lawsuits or criminal proceedings in domestic courts. Enforcement proceedings have also become increasingly complex with parties resisting enforcement of arbitration award by presenting more intricate challenges related to procedural issues and the tribunal’s authority to render certain decisions, rather than relying solely on traditional public policy arguments. In cases involving partial awards, enforcement proceedings often run concurrently with arbitration proceedings, raising additional disputes over confidentiality – such as the extent to which information can be shared – and whether, or how, a decision in one proceeding should influence the outcome of a related but separate case.
Diversification of Dispute Matters
As international arbitration cases involving investment funds and cryptocurrency-related disputes continue to rise globally, this trend is also becoming increasingly prominent in Korea.
Shareholder disputes involving PE investors – covering issues including governance rights, valuation disagreements, exercise of put options and exit strategies – have intensified, particularly following failed IPOs driven by geopolitical uncertainties. Disputes between general partners (GPs) and investors/limited partners (LPs), as well as conflicts between asset management companies and investors, and multi-class fund disputes are also growing.
In recent years, numerous hedge funds have brough Investor-State Dispute Settlement (ISDS) cases against South Korea, leading to subsequent domestic proceedings in the UK and Singapore. A landmark development occurred in November 2025, when Korea achieved a complete victory in an ISDS case that has continued for 13 years against a US private equity fund, An ICSID annulment committee overturned a 2022 award, finding the original tribunal violated Korea’s due process rights by relying on evidence from a separate International Chamber of Commerce (ICC) commercial arbitration to which Korea was a not a party. This rare full annulment – one of only seven publicly recorded in ICSID’s history as of 2024 – marks a significant precedent for Korea and the broader ISDS landscape, setting a benchmark for future annulment strategies aligned with global arbitration standards.
The cryptocurrency sector is also seeing an increasing number of international arbitration cases involving Korean parties, primarily due to the uncertain legal status of virtual assets and the lack of clearly established domestic regulations. Arbitration is often preferred for the parties’ ability to appoint arbitrators with sector-specific expertise.
These diversified cases present challenges related to both jurisdiction and merits, often concerning complex contractual issues intertwined with relevant industry practices. For example, multi-class fund disputes typically involve multiple parties across different jurisdictions, different rights and obligations across different classes of investors, and arbitration agreements under multiple contracts. Similarly, cryptocurrency disputes frequently involve virtual asset service providers structured across multiple jurisdictions to navigate regulatory frameworks and taxation policies, making it complex to identify the appropriate counterparty with enforceable assets.
Such complexities often cause significant delays in dispute resolution; prompting greater interest in mechanisms such as consolidation of arbitrations, provisional measures, and strategic co-ordination between arbitration and other judicial proceedings.
Increased Use of Emerging Arbitral Institutions
While international arbitration has traditionally been dominated by major institutions such as the ICC, London Court of International Arbitration (LCIA), Singapore International Arbitration Centre (SIAC), and Hong Kong International Arbitration Centre (HKIAC), there has been a noticeable rise in disputes administered under the rules of emerging arbitral institutions. Notably, arbitral bodies such as the Vietnam International Arbitration Centre (VIAC), the Thailand Arbitration Center (THAC), and the Philippine Dispute Resolution Center Inc. (PDRCI) are seeing increased engagement from South Korean entities as regional arbitration frameworks continue to evolve.
This trend aligns with Korea’s growing foreign direct investment (FDI) in the region. VIAC, in particular, has gained traction among South Korean parties involved in cross-border disputes in Vietnam. In 2020, Korea was among the top three foreign users of VIAC-administered arbitration. By 2022, South Korean entities were involved in approximately 20 cases, representing 7% of VIAC’s total 292 cases, and ranking Korea among the top four foreign users. The growing use of VIAC arbitration underscores the deepening economic ties between South Korea and Vietnam.
As Korean companies continue expanding their presence in the ASEAN region, arbitral institutions in these jurisdictions are expected to play an increasingly vital role in cross-border dispute resolution. The rising caseload of these arbitral institutions highlights the need for arbitration practitioners to enhance their expertise in relevant arbitration rules, domestic laws, and regulatory frameworks.
Recent Revisions to KCAB International Arbitration Rules
The Korean Commercial Arbitration Board (KCAB) has released 2026 KCAB International Arbitration Rules, which will come into effect on 1 January 2026. The new rules represent the first comprehensive revision since 2016 and aim to enhance transparency, efficiency and technological advancement, positioning Korea as a competitive arbitration hub in Asia. Key changes include, among others, the establishment of the KCAB International Arbitration Court (similar to leading institutions such as ICC and SIAC), broader expedited and simplified procedures, and new provisions introducing integration of mediation options. This overhaul reflects a strategic shift toward global best practices, requiring counsel, arbitrators, and parties to adapt their strategies to a more structured and streamlined arbitration environment.
Conclusion
The evolving landscape of international arbitration in Korea reflects broader global trends, including the increasing complexity of disputes, diversification of subject matter and the expanding role of emerging arbitral institutions. As Korean businesses continue to expand their global footprint, their reliance on international arbitration is expected to grow, reinforcing the importance of staying abreast of relevant arbitration developments to deal with the challenges, adopt best strategies and seize new opportunities.