• Journal of Arbitration Studies
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• v.19 no.2
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• pp.95-126
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• 2009

One of the controversial issues in investor-state investment arbitration is the interpretation of "umbrella clause" that is found in most BIT and FTAs. This treaty clause requires on Contracting State of treaty to observe all investment obligations entered into with foreign investors from the other Contracting State. This clause did not receive in-depth attention until SGS v. Pakistan and SGS v. Philippines cases produced starkly different conclusions on the relations about treaty-based jurisdiction and contract-based jurisdiction. More recent decisions by other arbitral tribunals continue to show different approaches in their interpretation of umbrella clauses. Following the SGS v. Philippines decision, some recent decisions understand that all contracts are covered by umbrella clause, for example, in Siemens A.G. v. Argentina, LG&E Energy Corp. v. Argentina, Sempra Energy Int'l v. Argentina and Enron Corp. V. Argentina. However, other recent decisions have found a different approach that only certain kinds of public contracts are covered by umbrella clauses, for example, in El Paso Energy Int'l Co. v. Argentina, Pan American Energy LLC v. Argentina and CMS Gas Transmission Co. v. Argentina. With relation to the exhaustion of domestic remedies, most of tribunals have the position that the contractual remedy should not affect the jurisdiction of BIT tribunal. Even some tribunals considered that there is no need to exhaust contract remedies before bringing BIT arbitration, provoking suspicion of the validity of sanctity of contract in front of treaty obligation. The decision of the Annulment Committee In CMS case in 2007 was an extraordinarily surprising one and poured oil on the debate. The Committee composed of the three respected international lawyers, Gilbert Guillaume and Nabil Elaraby, both from the ICJ, and professor James Crawford, the Rapportuer of the International Law Commission on the Draft Articles on the Responsibility of States for Internationally Wrongful Acts, observed that the arbitral tribunal made critical errors of law, however, noting that it has limited power to review and overturn the award. The position of the Committee was a direct attack on ICSID system showing as an internal recognition of ICSID itself that the current system of investor-state arbitration is problematic. States are coming to limit the scope of umbrella clauses. For example, the 2004 U.S. Model BIT detailed definition of the type of contracts for which breach of contract claims may be submitted to arbitration, to increase certainty and predictability. Latin American countries, in particular, Argentina, are feeling collectively victims of these pro-investor interpretations of the ICSID tribunals. In fact, BIT between developed and developing countries are negotiated to protect foreign investment from developing countries. This general characteristic of BIT reflects naturally on the provisions making them extremely protective for foreign investors. Naturally, developing countries seek to interpret restrictively BIT provisions, whereas developed countries try to interpret more expansively. As most of cases arising out of alleged violation of BIT are administered in the ICSID, a forum under the auspices of the World Bank, these Latin American countries have been raising the legitimacy deficit of the ICSID. The Argentine cases have been provoking many legal issues of international law, predicting crisis almost coming in actual investor-state arbitration system. Some Latin American countries, such as Bolivia, Venezuela, Ecuador, Argentina, already showed their dissatisfaction with the ICSID system considering withdrawing from it to minimize the eventual investor-state dispute. Thus the disagreement over umbrella clauses in their interpretation is becoming interpreted as an historical reflection on the continued tension between developing and developed countries on foreign investment. There is an academic and political discussion on the possible return of the Calvo Doctrine in Latin America. The paper will comment on these problems related to the interpretation of umbrella clause. The paper analyses ICSID cases involving principally Latin American countries to identify the critical legal issues arising between developing and developed countries. And the paper discusses alternatives in improving actual investor-State investment arbitration; inter alia, the introduction of an appellate system and treaty interpretation rules.

• Journal of Arbitration Studies
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• v.21 no.1
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• pp.73-86
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• 2011

Today's arbitrations see themselves as the most effective scheme for dispute resolution in a variety of transactional context. While some kind of ADR system was already introduced in Korea as of 2007 with revision of the Consumer Basic Law, consumers' needs in dispute resolution remain unmet. Recently one consumer arbitration case divides the U.S. Supreme Court. Of course, the result of the case is expected to affect tens of millions of arbitration agreements in the States which has the most developed scheme in consumer arbitrations. While Arbitration clauses in adhesion contracts are not automatically held to be substantively unconscionable, Class action waivers are one of the most controversial issues in consumer arbitration. In this study, with the theoretical background of consumer arbitrations general, and contractual defenses against adhesive contracts, reviewed are U.S. federal courts' attitudes toward certain consumer arbitration agreements including the class arbitration waiver. Moreover, several issues in AT&T case are examined for practical implications for consumer dispute resolution. All of these are expected to initiate further research to find some guidelines for the proper status and operation of consumer arbitration here in Korea.

• Journal of Arbitration Studies
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• v.18 no.2
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• pp.149-171
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• 2008

The purpose of this paper is to examine the Measures against Risks in International Investment Agreement: focusing on Umbrella Clause and MIGA. Umbrella Clauses have become a regular feature of international investment agreements and have been included to provide additional protection to investors by covering the contractual obligations in investment agreements between host countries and foreign investors. The meaning of umbrella clauses is one of the most controversial issues with which international arbitral tribunals have been recently confronted with while adjudicating investment disputes brought before them MIGA issues guarantees against non-commercial risks for investments, such as: currency transfer restrictions, expropriations, war and civil disturbances and breach of contract by host governments, and the case that the investor obtains an arbitration award or judical decision for damages and is unable to enforce it after a specified period. Furthermore, MIGA undertakes a wide range of mediation activities designed to remove obstacles to the flow of foreign direct investment in its developing member countries.

• Journal of Arbitration Studies
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• v.24 no.2
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• pp.137-160
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• 2014

These days, in line with the increase of opportunities in our country's firms to do transaction, large-scale M&A and investment with foreign firms incorporating arbitration clauses in the contracts have become general practice. Recently, Singapore has come to the fore as a place of arbitration and, particularly, Singapore International Arbitration Center (SIAC) was assessed as the favored international arbitration institution uniquely in Asia at the 2010 International Arbitration Survey: Choices in International Arbitration, along with the ICC, LCIA, and AAA/ICDR. Therefore, the country's firms need to understand properly the international arbitration procedure of Singapore. This study examines the international arbitration system of Singapore, focusing on the arbitration procedure of the SIAC. The Center revised arbitration rules twice in 2010 and 2013, and established the Court of Arbitration of SIAC in April 2013 for the first time in Asia in pursuit of stricter neutrality and promptness. It further seeks to run the arbitration procedure fairly by selecting a third country's people as an arbitrator, while its arbitration expenses are cheaper than those of the ICC. The study believes that for the country's international arbitration institutions such as the KCAB to jump forward as a world-class international arbitration institution, the Korean government should render positive support to them, learning from Singapore which does not spare any political and financial assistance to cultivate international arbitration institutions. On the other hand, KCAB should also try hard to improve in the aspects of neutrality, fairness, and promptness and to be selected as a trustworthy international arbitration institution by firms in Asian countries.

• Journal of Arbitration Studies
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• v.16 no.1
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• pp.187-217
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• 2006

This study has the purpose to investigate other countries' arbitrator systems to compare with the current KCAB's system and to find their merits and demerits so that we can make up for the demerits of KCAB's arbitrator system and to make the most use of its merits. The most important factor of arbitral procedure is the arbitrator. If we compare clauses related with the arbitrator to KCAB's arbitration rules, expand the merits of it and apply the merits of other arbitrating organs, KCAB's arbitration can avoid criticism which it has got so far while it was handling the international cases. Also, we may need to grow up the role of the executive office in the range of respecting the self-government of the concerned party for the rapid proceeding of arbitral procedure. According to the foreign countries' international arbitration rules, they go with the process that they firstly give the concurrence period to the concerned parties, especially related with the arbitral procedure such as selection of arbitrator or filling the vacancy of the arbitrator, and as for the concerned party who doesn't fulfill within that period, the arbitrating organ or the other one corresponding to the pertinent arbitrating organ in case of the ad-hoc arbitration rules fulfill instead.

• Journal of Arbitration Studies
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• v.27 no.1
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• pp.3-35
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• 2017

For recent years, several disputes between Korean consumers and multinational companies have arisen. Since the disputes were big and material that children's safety was at issue, a question started if Korean law properly has protected consumers' rights against multinational companies. While the Korean legal society tried to legislate punitive compensation with this concern, the U.S. Supreme Court reached an interesting case law regarding consumer contracts. A recent trend on consumer contracts in the United States shows that general terms have arbitration clause with class action waiver. As much as international arbitration has worked as the most effective resolution in international commercial disputes, the concept is still foreign and the experts are not approachable to lay individual consumers. However, class action in arbitration can hugely help for lay individual consumers to bring a case before arbitration tribunal. California courts consistently showed the analysis that the practical impact of prohibiting class action in arbitration clause is to ban lay individual consumers from fighting for their rights. However, the Supreme Court held that the arbitration clause shall be enforced as parties agree even if consumers practically cannot fight for their rights in the end. Even though consumer contracts are a typical example of lack of parity and of adhesive contract, the Supreme Court still applies liberalism that parties are equal in power and free to agree. This case law has a crucial implication since Korean consumers buy goods and services from the U.S. and other countries in everyday life. Accordingly, they are deemed to agree on the dispute resolution clauses, which might violate their constitutional right to bring their cases before the adjudication tribunal. This issue could be more important than adopting punitive compensation because consumers' rights are not necessarily governed by Korean law but by the governing law of the general terms and conditions chosen and written by the multinational companies. Thus this paper studies and analyzes the practical reality of international arbitration and influence of arbitration clause with class action waiver with the U.S. Supreme Court and California case laws.

• Journal of Arbitration Studies
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• v.29 no.3
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• pp.39-52
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• 2019

There are various factors to consider when parties to an international agreement draft a dispute resolution clause in their written contract. These factors can be classified into two categories. The first category is about the parties and the nature of the contract, such as the parties' places of business and whether the contract contains a simple transaction or has a complicated nature. The second category is about the applicable rules of the parties' places of business or performance such as the private international law, service of process rules, and enforcement of court judgment and arbitration award rules. When parties to an international contract agree to a litigation, they normally choose a forum court and a governing law. In selecting a forum court and a governing law, the parties must consider private international law, service of process rules, and enforcement of judgement rules of candidate forums. In case the parties agree to an arbitration, they have to choose between institutional arbitration and ad hoc arbitration. For ad hoc arbitration, parties still need to further agree on which arbitration rules to use, and in which place the arbitration shall take place. Mediation involves a similar kind of decision as with arbitration. Traditionally, national courts of the parties' places of business have been used as litigation forums in dispute resolution clauses but, recently, arbitration is being increasingly employed as an alternative dispute resolution method in international contracts. Moreover, there have been international efforts to utilize mediation as a dispute resolution method in international commercial issues. Rather than simply taking a dispute resolution clause provided in a sample written contract, parties to an international contract must carefully consider various relevant factors in order to insert a dispute resolution clause which will work well for a particular contract.

• Journal of Arbitration Studies
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• v.28 no.4
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• pp.153-172
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• 2018

In solving international commercial disputes, arbitration has a unique advantage. Therefore, when most parties sign a charter party, they contain arbitration clauses. Whether the arbitration clause in the charter party can be effectively incorporated into the bill of lading and bind to the third party-bill holder becomes an important issue. Based on the problem above, this paper compares the arbitration system between Korea and China, and discusses the composition of the Chinese Maritime Court and the Chinese court's adjudication of arbitration for foreign countries, which are recognized and enforced in China. What is most important in this study is observing the Chinese case from the beginning of 2000 to the present in order to rule whether the Chinese court can effectively incorporate the arbitration clause in the charter party into the bill of lading, as well as whether it constitutes an effective binding force for third parties and changes in standard of recognition. Finally, through comparative analysis, the study concludes that in China, the arbitration clause in the charter party can be effectively incorporated into the bill of lading, and that the conditions for the third parties can be effectively restrained. There must be several points to be noted when recording the bill of lading. This would then help reduce the legal risks and promote the sustainable development of international transactions.

• Journal of Arbitration Studies
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• v.29 no.1
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• pp.3-29
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• 2019

A franchise business is a business in which the owners, or "franchisors," sell the rights to their business logo, name, and model to third party retail outlets, owned by independent, third party operators, called "franchisees." There are a number of features in franchising or terms in franchise agreements that may lead to disputes between franchisors and franchisees. These disputes may arise because of underlying risks in the franchise relationship, franchise agreement, or conduct of the parties. In this case, ADR is an effective way to resolve disputes in a quicker and often less costly way than having to go to court. If an agreement cannot be reached through mediation, then arbitration becomes the next step to resolving the differences. Whereas mediation is non-binding and focused on facilitating the parties to find a resolution that is acceptable to both, arbitration is binding and may result in a decision that is not acceptable to one of the parties. These situations can be resolved through experienced arbitration as arbitration allows franchisees to settle matters promptly and outside of the public eye. In addition, franchise dispute arbitration is usually less costly than going to traditional court. Considering all of these, reaching an agreement will also have typical clauses that address the issue of dispute resolution. It is again a more efficient process than going through the legal process and courts and is often less costly. By going through arbitration, the parties agree to give up their rights to pursue the dispute in the courts. However, there is a problem that the arbitration prior to the agreement and under the terms would be contrary to the restriction of jurisdiction under the "ACT ON THE REGULATION OF TERMS AND CONDITIONS" in Korea.

• Journal of Arbitration Studies
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• v.15 no.3
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• pp.303-324
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• 2005

Turnkey project in construction which accounts for about $10\%$ of the total annual construction orders in the nation is expected to grow in size as an effort to strengthen international competitiveness and improve quality of construction work. However, problems of turnkey project in construction raise concern for many possible cases of possible claims. Based on the understanding that bidding guidelines which plays a critical role in turnkey project in construction actually contain some unequal clauses and causes for problems which undermine development of turnkey construction and further create possible cases of claims, the paper aims to identify and analyze the unequal clauses and problems contained in the guidelines in order to make suggestions for improvement. Among all the turnkey construction orders that has been placed since 2000 when domestic turnkey project in construction became relatively formulated, 13 constructions costing more than 50 billion won were selected for this study since their construction scale were large enough that the bidding guidelines for them were regarded as containing little difference among one another. In order to enhance construction technology and to prevent claims while trying to achieve the original purpose of Turnkey system, the parties involved in or schedule to take part in Turnkey project including ordering institution, Construction Company and Design Company should make an effort to have more reasonable bidding guidelines drawn up.