Represented Euro Apex in an appellate proceeding for enforcement of a Dutch arbitral
2016.04.07.
Yulchon successfully represented Euro Apex B.V., a Dutch manufacturer of heat exchangers, in an appellate proceeding for enforcement of a Dutch arbitral award against a Korean defendant, a manufacturer of similar products.
Apex sought an enforcement decision for an arbitral award rendered under the Netherlands Arbitration Institute Arbitration Rules (the "Award"), which ordered the defendant (i) to transfer all of the patents it acquired using Apex"s technology, and (ii) to pay a daily monetary penalty for nonperformance of injunctive order if it fails to transfer the patents. Central to the dispute was whether a daily monetary penalty ordered by an arbitral tribunal can be enforced in Korea. This was an issue of first impression in Korea. The Incheon District Court, the court of the first instance, allowed enforcement of the Award which ordered a daily monetary penalty and the defendant appealed against the decision.
In the appellate proceeding in the Seoul High Court, the defendant argued that an arbitral tribunal cannot order a daily monetary penalty, and the Award which orders such a penalty cannot be enforced under Korean law since it is contrary to the public policy under Article V(2)(b) of the New York Convention.
However, the Seoul High Court dismissed the defendant"s appeal, accepting all of Yulchon"s arguments as follows:
i) A daily monetary penalty ordered by an arbitral tribunal is not against the Korean Civil Execution Act or any other laws of Korea;
ii) Even if a daily monetary penalty is against law, it does not necessarily mean that such a penalty is contrary to the public policy of Korea; and
iii) The amount of the daily monetary penalty ordered by the Award is not excessive since the total accrued amount was not ordered to be paid from the beginning but the amount was to grow if a party keeps failing to comply with an injunctive order.
In conclusion, the Seoul High Court ruled that the Award can be enforced in Korea as there is no ground to refuse enforcement of an arbitral award ordering a daily monetary penalty under the New York Convention.
This decision by the appellate court is another indication of Korean court"s arbitration-friendly attitude.
Young Seok Lee, Jeong Hye Ahn and So Young Jeong of Yulchon"s International Dispute Resolution Team represented Apex in this case.
