Whether a court may apply to the court for suspending the progress of arbitral proceedings by means of a provisional disposition, by asserting that the arbitration agreement is void or void, or that the implementation thereof is impossible (negative)

In light of the language, content, and structure, etc. of Articles 6, 9, and 17 of the Arbitration Act, insofar as the Arbitration Act strictly limits the case in which a court may participate in the arbitral proceedings to “matters prescribed by the Arbitration Act” and does not provide for a provisional disposition suspending the progress of arbitral proceedings, it shall not be deemed that a court files an application with the competent court for suspending the progress of arbitral proceedings by means of a provisional disposition, arguing that the arbitration agreement is nonexistent, invalidated, or invalidated, or its implementation is impossible (hereinafter “non-existence, invalidation, etc. of the arbitration agreement”).

Meanwhile, Article 10 of the Arbitration Act provides that “A party to an arbitration agreement may file an application for preservative measures before or during the commencement of arbitral proceedings with the court.” This provision aims to ensure the effectiveness of arbitral awards by allowing a court to file an application for preservative measures in order to prevent changes in the current state before an arbitral award is rendered with respect to a dispute which is the subject matter of an arbitration agreement, or to avoid significant damage or imminent danger that may affect the disputed legal relationship. Therefore, Article 10 of the Arbitration Act does not serve as the grounds for filing an application for a provisional disposition seeking suspension of arbitral proceedings with the court on the grounds that there is no arbitration agreement or invalidation thereof.

Articles 6, 9(1) and (3), 10, 17(6), 36(1), 36(2)1(a), (c), 37, and 38 of the Arbitration Act; Article 300(2) of the Civil Execution Act

Korea Southern Development Co., Ltd. (Bae & Yang LLC, Attorneys Lee Dai-soo et al., Counsel for the defendant-appellant)

Hyundai Construction Co., Ltd. and two others (Law Firm LLC, Attorneys Yoon Yong-pop et al., Counsel for the plaintiff-appellant)

Seoul High Court Order 2017Ra20809 dated October 10, 2017

All reappeals are dismissed. The costs of reappeals are assessed against the re-appellant. Of the indication of the party to the judgment of the court below, the “representative director ○○○” shall be corrected as the “representative director ○○○○○”.

The grounds for reappeal are examined.

The key issue of the instant case is whether the court can file a petition with the court for suspending the progress of arbitral proceedings by means of a provisional disposition, asserting that the arbitration agreement has no effect or is null and void.

Article 6 of the Arbitration Act provides that “Except as otherwise provided in this Act, a court shall not be involved in any matter pertaining to this Act” and limits the scope of a court’s involvement in arbitral proceedings to “cases provided in this Act”. This is to ensure the independence of arbitral proceedings, which are conducted outside the court, systematically.

Article 9(1) of the Arbitration Act provides that “If a lawsuit is instituted in respect of a dispute which is the subject matter of an arbitration agreement and the defendant raises a defense that the arbitration agreement exists, the court shall reject the lawsuit: Provided, That this shall not apply in cases where the arbitration agreement is nonexistent, invalidated, or performance thereof is impossible (hereinafter “non-existence, nullity, etc. of the arbitration agreement”).” Article 9(3) of the Arbitration Act provides that “A Tribunal may commence or proceed with arbitration proceedings or make an arbitral award even in cases where the lawsuit is pending in court”. This is premised on the premise that a person who asserts the non-existence, nullity, etc. of the arbitration agreement may bring a lawsuit concerning a dispute which is the subject matter of the arbitration agreement even if the arbitration proceeding is pending, and the court may determine the non-existence, invalidation, etc. of the arbitration agreement in the litigation proceedings, the arbitral tribunal may independently commence and proceed the arbitration proceedings without being affected by the pending litigation proceedings.”

Meanwhile, Article 17(6) of the Arbitration Act provides that a court may directly intervene in the arbitral proceedings before an arbitral award is rendered. In other words, when a party raises an objection against the power of the arbitral tribunal, the arbitral tribunal may decide whether to have the power as a preliminary question (Article 17(1) through (5) of the Arbitration Act). Where a party dissatisfied with the decision files an application for examination of the power of the arbitral tribunal with a court within 30 days from the date the decision is notified, the court shall examine the power of the arbitral tribunal accordingly (Article 17(6) of the Arbitration Act).

An objection to an arbitral award after the arbitral award has been rendered by the arbitral tribunal may be raised only by means of filing a lawsuit for setting aside the arbitral award with the court (Article 36(1) of the Arbitration Act). A court may set aside the arbitral award if the agreement is null and void, or if the arbitral award deals with a dispute not relating to the subject matter of the agreement, or deals with a matter beyond the scope of the agreement (Article 36(2)1(a) and (c) of the Arbitration Act). In a case where a party to whom the arbitral award was rendered files an application for a decision to grant or enforce an arbitral award pursuant to Article 37 of the Arbitration Act, the court may examine whether the agreement has been reached in the proceeding (Articles 37 and 38 of the Arbitration Act).

In light of the language, content, and structure, etc. of Articles 6, 9, and 17 of the Arbitration Act, insofar as the Arbitration Act strictly limits the cases where a court may participate in the arbitral proceedings to “matters prescribed by the Arbitration Act” and does not provide for a provisional disposition suspending the progress of the arbitral proceedings, it is not permitted to file an application with the court for suspending the progress of the arbitral proceedings by the method of provisional disposition, by asserting the absence or invalidity of the arbitration agreement, unless the arbitration agreement provides for a provisional disposition suspending the progress of the arbitral proceedings

Meanwhile, Article 10 of the Arbitration Act provides that “A party to an arbitration agreement may file an application for preservative measures before or during the commencement of arbitral proceedings with the court.” This provision aims to ensure the effectiveness of arbitral awards by allowing a court to file an application for preservative measures in order to prevent changes in the current state before an arbitral award is rendered with respect to a dispute which is the subject matter of an arbitration agreement, or to avoid significant damage or imminent danger that may affect the disputed legal relationship. Therefore, Article 10 of the Arbitration Act does not serve as the grounds for filing an application for a provisional disposition seeking suspension of arbitral proceedings with the court on the grounds that there is no arbitration agreement or invalidation thereof.

The order of the court below to the same purport is justifiable in accordance with the above legal principles. The court below did not err by violating the Constitution, Acts, orders or rules, thereby affecting the conclusion of the judgment.

Therefore, all reappeals are dismissed, and the costs of reappeals are assessed against the losing party. Of the parties to the judgment of the court below, there is an obvious clerical error in some indications, and it is corrected as per Disposition by the assent of all participating Justices.

Justices Kim Chang-suk (Presiding Justice)