2015 Gohap 564421 (Arbitral Award)

2016 plus 515198 (Counterclaim) Judgment

A

Korean Bank, Inc.

November 24, 2016

December 13, 2016

1. With respect to the case No. 1411-0234 of the KCAB between the Plaintiff (Counterclaim Defendant) and the Defendant (Counterclaim Plaintiff), the arbitral award in the attached Form No. 1415, supra, shall be revoked.

2. The defendant (Counterclaim plaintiff)'s counterclaim is dismissed.

3. The costs of lawsuit are assessed against the Defendant-Counterclaim Plaintiff by aggregating the principal lawsuit and counterclaims.

The main office is as set forth in the Disposition.

Counterclaim: Compulsory execution based on the arbitral award under Paragraph (1) of this Article shall be permitted.

A principal lawsuit and a counterclaim shall be deemed simultaneously.

1. Facts of recognition;

A. Status of the parties

The plaintiff (Counterclaim defendant, hereinafter referred to as the "Plaintiff") is 2 years of Russia who runs the business of leasing commercial buildings, construction business, etc. in the Hesia, the main business of which is the business of fishing and fishery processing, and thereafter, the defendant (Counterclaim plaintiff; hereinafter referred to as the "defendant") is the trust company of Kalsia Asset Management Co., Ltd. (hereinafter referred to as the "Calsium Asset Management") established in accordance with the former Act on Business of Operating Indirect Investment and Assets.

(b) Joint and several sureties B and the Agreement on Adjustment of Guarantee Obligations of this case

1) On April 4, 2007, the Russia Corporation C (hereinafter referred to as the “C”) borrowed 40 billion won from Defendant (the status of the trust business entity of this Fund) and Kassia Asset Management (the status of the collective investment business entity of this Fund), and on the same day, B (hereinafter referred to as the “B”) as Russia Corporation (hereinafter referred to as the “C”) jointly and severally guaranteed the above loan obligations.

2) On May 29, 2013, B, Defendant, and Kas Asset Management entered into an agreement to adjust all the guaranteed liabilities owed by B to Defendant according to the above joint and several sureties (hereinafter “instant agreement to adjust the guaranteed liabilities”), and the main contents relating to the instant case are as follows:

Article 2 (Adjustment of Guarantee Obligations) (1) (B) recognizes that the amount of the guaranteed obligation owed to the defendant under the joint and several guarantee agreement is equivalent to KRW 57,083,463,053 according to the loan agreement of the Kininish Arbitration Court established by the judgment of November 1, 2011. (2) The parties agree to adjust the guaranteed obligation of paragraph (1) to KRW 23 billion in accordance with the terms and conditions set out in this agreement. (3) The defendant and Kinch Asset Management agree to exempt the remainder of the guaranteed obligation of paragraph (2) if the amount provided in the above paragraph (2) has been paid by B in accordance with the terms and conditions set out in this agreement. For greater certainty, when the agreement has been violated or terminated before the payment of the terms and conditions set forth in this agreement is terminated or terminated, the guaranteed obligation shall be fulfilled.Article 7 (Joint and Several Guarantee) plaintiffs shall be interpreted separately from the defendant and Kinish Asset Management Board and the plaintiff shall be determined separately from the jurisdiction of the Republic of Korea under the Agreement and the Agreement.

C. The Plaintiff’s joint and several guarantee agreement

On May 29, 2013, pursuant to Article 7 of the Agreement on the Adjustment of Guarantee Obligations, the Plaintiff entered into a joint and several guarantee agreement with the Defendant and can jointly guarantee the performance of the obligation of B (hereinafter referred to as “joint and several guarantee agreement”), and the main contents of the instant case are as follows.

Article 2 (Joint Guarantee) The plaintiff shall give advice and guarantee to the performance of the obligation under Article 3 for the defendant and Ksc Asset Management as set forth in the Agreement on the Adjustment of Guarantee Obligations.Article 3 (Refund of Joint and Several Guarantee Obligations) ① The plaintiff shall reimburse the corresponding part of the obligation under Article 3 (Refund of Joint and Several Guarantee Obligations) (1) The plaintiff shall deposit the repayment in the deposit account opened in the name of the defendant's entrusted business division within five business days from the date of conclusion of this Agreement: 50 million won; 50 million won within 6 months from the date of conclusion of the Agreement: 12 months from the date of conclusion of the Agreement: 10 billion won: within 24 months from the date of conclusion of the Agreement; 708 (B Bankruptcy) B; 1. The plaintiff shall bear all responsibility with respect to the bankruptcy proceedings under the Agreement on the Settlement of Joint and Several Guarantee Obligations; and 3. The plaintiff shall cooperate with the court in the process of the Agreement on the Settlement of Bonds and Guarantee, regardless of whether it is necessary to grant all of the obligation under its jurisdiction.

D. The instant additional agreement

On July 23, 2013, the Plaintiff, B, Defendant, and Kas Asset Management entered into an additional agreement to partly modify the terms of the instant guaranteed debt adjustment agreement and joint and several guarantee agreement (hereinafter referred to as “instant additional agreement”), and the main contents relating to the instant case are as follows.

Article 5 (Change in Time Limit for Repayment of Joint and Several Obligations) The date of the conclusion of the agreement prescribed in Article 3(1) of the Joint and Several sureties Agreement shall apply by changing the date of the conclusion of this Agreement into the date of the conclusion of this Agreement.The Agreement on the Adjustment of Guarantee Obligations concluded on May 29, 2013 (Notice) and the Request and Notification under this Agreement shall be sent to the following address by registered mail, mail, facsimile, or e-mail, according to their aptitude. All notifications shall be deemed to have been received on the date of delivery if they are sent by mail, or on the date of delivery if they are sent by mail by facsimile or e-mail if they are sent by mail, and on the date of confirmation of collection if they are sent by facsimile or e-mail. Each Party shall immediately notify the other party if their contact address is changed, and the disadvantage of the person to be notified of the failure to notify shall be responsible.B and the address of the plaintiff: The Seoul Young-gu DD Building Act and the court ① this Agreement shall be interpreted and applied to disputes arising under jurisdiction over the exclusive jurisdiction over the Agreement.

E. Progress and Determination of the instant arbitration

1) On November 28, 2014, the Defendant filed an application with the Plaintiff for arbitration seeking payment of joint and several sureties under the instant joint and several sureties Agreement and the Additional Agreement (hereinafter referred to as the “instant arbitration”) by the Korea Commercial Arbitration Board No. 1411-0234.

2) After receiving the Defendant’s application for arbitration, the KCAB sent to the Plaintiff a public notice of “the receipt of an application for arbitration and a request for the performance of arbitral proceedings” on December 9, 2014. The Plaintiff received the above public notice on January 11, 2014, and the main contents thereof are as follows.

1. The arbitration case for which the Defendant filed against the Plaintiff was accepted with the KCA on December 5, 2014 by the KCAB as the Arbitration No. 1411-0234 on December 5, 2014.2. The KCA has sent the list of candidates necessary for the constitution of the arbitral tribunal, and the KCAB shall indicate the order of appointment No. 1 through No. 5 in the column of the KCA, and the KCAB shall submit five copies of the Answer to the KCA within 15 days from the date of receipt of the notification.3. The plaintiff shall submit five copies of the Answer to the KCA within 15 days from the date of receipt of the notification of the 01 notice to the KCA and state the time for the KCAB. On November 12, 2014, the list of candidates (return) for the principal arbitrator’s experience on April 1, 2014.

3) On December 24, 2014, the Plaintiff appointed an arbitrator’s agent. On December 26, 2014, the Plaintiff submitted a list of the candidates, stating that “I will submit to the Korea Commercial Arbitration Board a letter of delegation and the list of candidates for appointment in the following numbers:

4) The KCAB constituted the arbitral tribunal on January 2, 2015, according to the list of candidates submitted by the Plaintiff and the Defendant, and notified the Plaintiff and the Defendant of the name, nationality, present status, and address of the appointed arbitrators.

5) On January 2, 2015, the Korea Commercial Arbitration Board decided the first hearing date on January 26, 2015 and notified the Plaintiff and the Defendant of the first hearing date on January 10, 2015. On January 16, 2015, the Plaintiff filed an application for change of the hearing date on the grounds that time is necessary for preparing the hearing, such as where relevant documents, etc. are in a Russian language, and the Korea Commercial Arbitration Board changed the first hearing date to February 16, 2015 upon the said application.

6) Upon submitting a written answer to the Korean Commercial Arbitration Board on February 5, 2015, the Plaintiff asserted that the composition of the arbitral tribunal in accordance with the International Arbitration Rules (Entry into force on September 1, 201, 201, hereinafter the same shall apply) is unlawful as it goes against the arbitration agreement and the arbitration rules between the parties, as the Plaintiff is Russia and its principal place of business is Russia, and thus, the instant arbitral award is subject to the application of the International Arbitration Rules (Entry into force on September 1, 201, hereinafter the same shall apply). Moreover, the Plaintiff demanded that the instant safety defense be dismissed.

7) On July 14, 2015, Korea Commercial Arbitration Board (hereinafter “Korea Commercial Arbitration Board”) took full part in the hearing, and conducted an arbitral award on July 14, 2015, applying the International Arbitration Rules as an international arbitration. As such, there is a problem in the composition of the arbitral tribunal under the Domestic Arbitration Rules, and the Plaintiff’s right to raise an objection should not be immediately raised pursuant to Article 50 of the International Arbitration Rules, and the Plaintiff rejected the Plaintiff’s principal safety defense and made an arbitral award in the attached Form and in the attached Form (hereinafter “instant arbitral award”).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 4, 6, 8, 12, 18, Eul evidence Nos. 8 through 15, and the purport of the whole pleadings

1. Summary of the parties’ assertion

A. The plaintiff

The instant arbitral award is filed between the Plaintiff and the Defendant who has his habitual residence in any place other than the Republic of Korea and constitutes an international arbitral case, and the arbitral tribunal is constituted in accordance with the International Arbitration Rules, contrary to the agreement of the parties, and thus, the arbitral tribunal is constituted in accordance with the domestic arbitral rules. Accordingly, the instant arbitral award should be revoked in accordance with Article 36(2)1 (d) of the Arbitration Act. (i)

B. Defendant

1) The Plaintiff has a domicile in Korea in the instant agreement on the adjustment of the guaranteed debt, joint and several sureties agreement, and additional agreement (hereinafter referred to as the “instant agreement on the adjustment of the guaranteed debt”). Thus, the instant arbitration constitutes a domestic story and thus the appointment of an arbitrator made pursuant to the domestic arbitration rules is lawful.

2) Even if the instant arbitration constitutes international arbitration and the International Arbitration Rules apply to the arbitrator’s selection procedure, the appointment of arbitrator under the domestic arbitration rules was not a matter of the jurisdiction of the arbitral tribunal, but a matter of violation of the parties’ agreement concerning the arbitral proceedings, thereby losing the Plaintiff’s right to raise an objection.

3) Therefore, compulsory execution based on the instant arbitral award against the Plaintiff should be permitted by the Defendant.

3. Determination

A. Whether the arbitration of this case is subject to the International Arbitration Rules

1. Relevant provisions

The definitions of terms used in the Rules of Article 2 (Definitions) of the International Arbitration Rules are as follows:4. International Arbitration means any of the following arbitration. (a) If one or more parties have a place of business outside the Republic of Korea at the time of the arbitration agreement, the place of business means any of the following items: (a) if one or more parties have a place of business outside the Republic of Korea. (b) In the case of a party who has one or more places of business, the principal place of business, or in the case of a party who has no place of business, the place of business, or in the case of a party who has no place of business, the principal place of business, or in the case of a party who has one or more places of business, the said rules shall apply to any of the following subparagraphs. In this case,

2) According to the relevant provisions, in order for the instant arbitration to be subject to international rules as an international arbitration, one or more parties shall have a place of business outside the Republic of Korea at the time of the conclusion of the arbitration agreement, and the concept of a place of business includes habitual residence. In full view of the purport of the entire arguments in the evidence Nos. 6, 17, and 18, the Plaintiff was holding considerable shares in C, B, and E, a Russia corporation at the time of concluding the instant joint and several guarantee agreement, and it is reasonable to recognize that the Plaintiff had a domicile in Russia for 200 days each year from 209 to 2014. Accordingly, the instant arbitration is governed by the International Arbitration Rules pursuant to Article 3(1)2 of the International Arbitration Rules. Accordingly, according to Article 7 of the Additional Agreement, the Defendant asserts that the Plaintiff’s domestic address should be determined within the Republic of Korea as to the instant arbitration agreement, and thus, its domestic address should be rejected.

According to the statement in Gap's 3th floor, it is recognized that the plaintiff stated "410 of the building in Yeongdeungpo-gu Seoul Metropolitan Government" at the address where the plaintiff is requested or notified pursuant to the Boll Debt Adjustment Agreement, etc. of this case.

However, in light of the following circumstances, Article 2 subparag. 4 and 5 of the International Arbitration Rules provides that whether an international arbitration falls under Article 2 subparags. 4 and 5 of the International Arbitration Rules shall be determined on the basis of whether one of the parties has a place of business or habitual residence outside the Republic of Korea, and the instant agreement on the adjustment of the guaranteed obligation of this case clearly specifies the Plaintiff’s address as “F of the Eurian Eurine Eurine Eurine Eurine Eurine Eurine Eurine Eurine Eurine Eurine Eurine Eurine, and such domestic address appears to be stated for the convenience of notification, the above recognition alone does not lack to deem that the Plaintiff has a temporary address in the Republic of Korea in relation to the above joint and several sureties, and there is no other room for recognition. Accordingly, the Defendant’

(iii) Opinions

Therefore, the instant arbitral award, as an international arbitration, shall be constituted by the arbitral tribunal in accordance with the International Arbitration Rules, was constituted pursuant to Article 21 of the Domestic Arbitration Rules. Thus, the instant arbitral award constitutes a ground for revocation of the arbitral award, barring any special circumstance, where the composition of the arbitral tribunal or the arbitral proceedings do not comply with the agreement between the parties.

(b) Whether the Arbitral Tribunal has lost its right to object;

1. Relevant provisions

Article 5 (Loss of Right to Object) (1) of the Arbitration Act shall be removed if the parties fail to raise an objection without delay, or if the arbitration proceedings are conducted without raising an objection within the fixed period of time. (2) The procedures for appointing arbitrators shall be determined by agreement between the parties. (1) The Tribunal may decide on any objection with respect to its powers and the existence or validity of the arbitration agreement. (2) Any objection with respect to the powers of the Tribunal shall be raised by the date of submission of a written reply with respect to the merits. (2) If the parties have appointed an arbitrator or participated in the arbitration proceedings, the Secretariat shall appoint an arbitrator within 12 (Appointment of Arbitrators) of the International Arbitration Rules or within the extended period of time permitted by the Secretariat. (2) If the parties have agreed to resolve a dispute with respect to an arbitrator, the Secretariat shall appoint, within 3) the arbitrator or the Secretariat within the fixed period of time fixed by the Secretariat, one arbitrator or within 10 (1) of the parties have not agreed to appoint an arbitrator whose appointment has been made by the two arbitrators.

2) Whether the plaintiff has lost his right to raise an objection

On February 5, 2015, the Plaintiff filed an objection to the constitution of the arbitral tribunal with this safety defense. We examine whether the Plaintiff’s objection exceeds the time limit to raise an objection.

A) Whether Article 17(2) of the Arbitration Act is applied

The plaintiff asserts that Article 17 (2) of the Arbitration Act shall apply as a matter of the arbitral tribunal's power to make an award, in violation of the parties' agreement on the composition of the arbitral tribunal or the appointment procedure of the arbitrator.

However, "Objection to the Powers of the Arbitral Tribunal" in Article 17 (2) of the Arbitration Act refers to an objection to whether the Arbitral Tribunal has the legal authority to make a decision on the case in question, and it is difficult to interpret as including any objection to the defect in the composition of the Arbitral Tribunal. Thus, the defect that the Arbitral Tribunal in this case was constituted in accordance with the domestic arbitral proceedings, other than the international arbitral proceedings, shall not be considered as a matter of the legal authority of the Arbitral Tribunal.

Rather, Article 12 of the Arbitration Act provides that the procedure for appointing an arbitrator shall be determined by an agreement between the parties, and Article 5 of the Arbitration Act provides that if a party fails to raise an objection without delay even though he/she knows any violation of this Act or any agreement between the parties on arbitral proceedings, he/she shall lose his/her right to raise an objection, and that the procedure for appointing an arbitrator shall be deemed to be included, an objection to the procedure for appointing an arbitrator shall be governed by Article 5 of the Arbitration Act and Article 50 of the International Arbitration Rules.

B) Whether an objection under Article 5 of the Arbitration Act and Article 50 of the International Arbitration Rules has been lost

In light of the following circumstances, it is difficult to view that the Plaintiff was aware that the pertinent procedure was in violation of the agreement between the parties during the process of appointing the arbitrator in this case. Therefore, even if the Plaintiff filed an objection to the composition of the arbitral tribunal on February 5, 2015, which was subsequent to the process of appointing the arbitrator, and filed an objection to the composition of the arbitral tribunal, it does not seem that the right to file an objection was lost.

(1) The loss of the right to file an objection under Article 5 of the Arbitration Act is for the stabilization of arbitral proceedings and the economy. Even if the composition of the arbitral tribunal is not a mandatory provision under the Arbitration Act, the arbitral award has the same effect as the final and conclusive judgment of the court between the parties, and thus, it is recognized as a serious exception to the right to a trial under law by a judge as stipulated by the Constitution and laws. In the case of international arbitration, the parties and the respondent appoint one arbitrator for their own interest and the third arbitrator for their own interest and the third arbitrator for their own interest are selected by agreement of the two appointed arbitrators, and in the case of domestic arbitration, there is a difference in the procedures for selecting the chairman and the arbitrator in the order of re-list among the parties expressing their desired order, and the appointment of the arbitrator constitutes grounds for revocation of the arbitral award as a matter of the constitution of the arbitral tribunal. Therefore, the loss of the right to file an objection within the arbitral tribunal should be determined carefully.

(2) The time when the Plaintiff submitted a written reply on February 5, 2015 and raised an objection to the constitution of the arbitral tribunal does not run as of the first hearing date for the instant arbitral award, and there is little risk of undermining the stability and economy of arbitral proceedings, whereas the Plaintiff, Russia, from the standpoint of the Plaintiff, who is a Russia, shall undergo an examination and a ruling by the arbitral tribunal illegally constituted in accordance with the domestic arbitral procedure, so the defect in the appointment procedure does not seem to be

(3) On December 11, 2014, the Plaintiff appears to have been aware that the instant arbitration procedure is underway in accordance with the domestic arbitration rules by receiving not only the instant arbitration but also the list of the candidates and the domestic arbitration rules that are affected by the notification of receipt of the application for arbitration and the request for implementation of the mid-to-material requirements from the Korean Commercial Arbitration Board. However, in light of the fact that the instant arbitration is domestic arbitration or international arbitration or the method of selecting the arbitrator, the Defendant is the applicant of the instant arbitration, the Defendant is a domestic bank, the Plaintiff is the respondent, but the Plaintiff is the Respondent but is the Respondent, and there is no difference between the Korean national and Russia and the Korean national. In light of the fact that both the address and the place of delivery are described in the written application of the instant arbitration, it seems that not only the Korean Commercial Arbitration Board, but also the Plaintiff’s side did not know the fact that the instant arbitration constituted international arbitration at the time of appointing the arbitrator.

(4) In light of the fact that Article 17(2) of the Arbitration Act provides that a party may raise an objection to the authority of the arbitral tribunal by the time he/she has appointed or participated in the procedure for appointing an arbitrator, whereas Article 5 of the Arbitration Act provides that he/she shall lose his/her right to raise an objection if he/she does not raise an objection without delay, the right to raise an objection shall be deemed to have been extinguished. However, even if Article 5 of the Arbitration Act provides that a party fails to raise an objection even though he/she was aware of the violation of the provisions of this Act or the agreement between the parties on arbitral proceedings, the right to raise an objection shall be lost. Thus, if the Plaintiff had known that the procedure violated the International Arbitration Rules at the time of the appointment of the arbitrator, it is difficult to deem that the right to raise an objection has been lost even if he/she raised an objection against the defect in the composition of the arbitral tribunal at the time of submission of

(5) The Defendant asserts that the application of the International Arbitration Rules, as alleged by the Plaintiff, is a party to the agreement, and that the arbitration in this case constitutes an international arbitration, and thus, cannot be inferred to apply the International Arbitration Rules. However, considering the following, it is difficult to conclude that the instant arbitration in this case constitutes an international arbitration solely on the ground that the Korea Commercial Arbitration Board has exclusive jurisdiction over the instant arbitration agreement, etc., but does not explicitly agree on whether the instant arbitration constitutes a domestic arbitration or an international arbitration or the appointment procedure, and that the international arbitration rules are included in the agreement between the parties are in accordance with Article 3(1) of the International Arbitration Rules, and even according to those provisions, the instant arbitration ought to be determined first by the interpretation of Article 2 subparag. 4 and 5 of the International Arbitration Rules, and whether the instant arbitration in this case constitutes an international arbitration ought to be determined pursuant to the interpretation of Article 2 subparag. 5 of the International Arbitration Rules. Considering the fact that the Plaintiff is a party to the instant arbitration agreement.

3) Sub-decisions

Therefore, the defendant's assertion that the plaintiff lost his right to raise an objection because he did not immediately raise an objection to the composition of the arbitral tribunal during the arbitral proceedings of this case is groundless.

4. Conclusion

Therefore, the arbitral award of this case shall be revoked because the composition of the arbitral tribunal or arbitral proceedings under Article 36 (2) 1 (d) of the Arbitration Act did not comply with the agreement between the parties that do not go against the mandatory provisions of this Act, and the arbitral award cannot be approved or executed due to the above grounds for revocation (Article 38 of the Arbitration Act). Thus, the plaintiff's claim of this case is justified, and the defendant's claim of this case against the counterclaim of this case is dismissed on the ground that it is without merit. It is so decided as per Disposition.

Judge Lee Jae-hee

Judges Lee Jae-in

Judges Kim Jong-Un

1. The Plaintiff is also seeking the revocation of the arbitral award under Article 36(2)2 (b) of the Arbitration Act, since the recognition or enforcement of the instant arbitral award is contrary to the good public morals and other social order of the country to which the recognition or enforcement was made. However, as seen earlier, as long as the arbitral award in this case was revoked under Article 36(2)1 (d) of the Arbitration Act, it does not determine the grounds for revocation.

Text of the Judgment

1. The respondent (the plaintiff) is the applicant (the defendant)

(a) 15,00,000,000 won and 5,000,000,000 won among them shall be 18% per annum from January 24, 2014 to the date of full payment, and 10,000,000 won from July 24, 2014 to the date of full payment;

B. Upon arrival of July 24, 2015, the amount of KRW 7 million,00,000,000 and the amount at the rate of 18% per annum from July 24, 2015 to the date of full payment.

sub-payment.

2. The applicant's remaining claims are dismissed.

3. The costs of arbitration shall be borne by the respondent (Plaintiff).