Where an arbitrator selected by a party refuses to perform his/her duties, the validity of the arbitration agreement, and in such case whether the arbitrator may be appointed or replaced pursuant to Article 4(4) and (5) of the Arbitration Act (negative)

If a party to an arbitration agreement has appointed a specific person as an arbitrator in the arbitration agreement, it is the intent of the parties who have concluded the arbitration agreement that the specific person intends to receive the arbitration award. Thus, if the party refuses to perform his duties as an arbitrator, the arbitration agreement shall lose its validity or is impossible to perform. Meanwhile, Article 4(4) and (5) of the Arbitration Act provides that if the party to the arbitration agreement gives notice to the other party to appoint or replace the arbitrator and the other party fails to comply with it, the court shall appoint or substitute the arbitrator at the request of the party who has given the highest notice, it shall not apply to cases where either party to the arbitration agreement has the right to appoint an arbitrator, or where the party fails to appoint an arbitrator or the arbitrator appointed by that party refuses to perform his duties as an arbitrator.

[Defendant-Appellant] Plaintiff 1 and 4 others (Attorneys Oat-jin et al., Counsel for defendant-appellant)

The receiver of Hanyang Co., Ltd.

Seoul High Court Decision 95Na25925 delivered on November 22, 1995

The appeal is dismissed. The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

1. An arbitration is based on the principle of private autonomy under an arbitration agreement, which aims to promptly resolve a dispute under private law, rather than by a judgment of the parties, and not by a decision of the parties (see Supreme Court Decision 88Meu183, 184, Jun. 13, 1989). In applying an arbitration agreement, the parties’ intent should be respected and strictly interpreted within a reasonable scope. If a specific person is appointed as an arbitrator under an arbitration agreement, it is the intent of the parties who entered into the arbitration agreement. Thus, if a specific person refuses to perform his duties as an arbitrator, the arbitration agreement is invalid or impossible. Meanwhile, Article 4(4) and (5) of the Arbitration Act provides that a party to the arbitration agreement notifies the other party of the appointment or substitution of an arbitrator and the other party fails to comply with such demand, and that the court selects or substitute an arbitrator at the request of either party shall appoint an arbitrator if the party refuses to perform his duties as the arbitrator or the party has already appointed an arbitrator.

In this regard, the court below is just in holding that the arbitration contract of this case does not constitute a case where a court can appoint or substitute an arbitrator under Article 4 (4) and (5) of the Arbitration Act even if the above Seoul Special Metropolitan City Mayor refuses to perform its duties as an arbitrator, since it appoints a specific person called the Seoul Special Metropolitan City Mayor Mayor as an arbitrator under the arbitration contract, and there is no error of law such as the theory of lawsuit. Therefore

2. The arguments are that in the event of an objection against the court's decision on the replacement of an arbitrator, an appeal shall be brought in accordance with the Non-Contentious Case Litigation Procedure Act. However, the plaintiffs' lawsuit of this case is in accordance with the provisions of Article 13 of the Arbitration Act that an arbitral award may bring an action for cancellation in a case where the arbitral award is not made pursuant to the arbitration contract.

3. Therefore, the appeal is dismissed, and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Ahn Yong-sik (Presiding Justice)