[1] The standards for determining whether an arbitration clause is effective as an arbitration contract

[2] In the so-called selective arbitration clause, where a party actively claims the absence of an arbitration agreement and objects to the resolution through arbitration, the validity as an arbitration agreement (negative)

[3] The case holding that the contract amount fixed by an international tender does not violate Article 19 of the Act on Contracts to Which the State is a Party

[1] In light of the provisions of Articles 1, 2(1), 2(2), and 3 of the former Arbitration Act (amended by Act No. 6083 of Dec. 31, 199), an arbitration agreement takes effect upon written agreement to settle all or part of a dispute which arises or may arise between the parties in connection with a legal relationship under the private law, by arbitration without resorting to a court ruling. Thus, in order to deem the specific arbitration clause to be effective as an arbitration agreement, it shall be determined by comprehensively taking into account specific circumstances, such as the concept of arbitration under the Arbitration Act, the nature or method of the arbitration agreement, and the circumstances in which the parties made the arbitration clause.

[2] The dispute between the same buyer and the supplier shall be settled by a judgment or arbitration in accordance with the laws of the buyer's country (the dispute to be settled by a court decision or arbitration). The selective arbitration clause, such as "the dispute to be resolved by a dispute", shall be effective as an arbitration contract only when a party to a contract for the supply of goods selects the other party to arbitration procedures, not a judgment, and requests dispute resolution in accordance with such procedures, and the other party without any particular objection, and the other party participates in the arbitration proceedings. Therefore, if the other party actively objects to the dispute resolution by arbitration in response to the claim for arbitration, the other party shall not be deemed to have the validity of an arbitration contract, if the other party objects to the dispute resolution by arbitration by actively asserting that there is no arbitration agreement in the reply to the claim for arbitration.

[3] The case holding that, considering the contents of related laws such as the Act on Contracts to Which the Government is a Party, the characteristics of the contract for foreign goods, the special agreement for the supply of goods, and the details of the special agreement for the fixed contract amount under the contract for foreign goods through an international tender, the fixed contract amount is valid under the agreement between the parties to the contract for foreign goods through an international tender, and it cannot be deemed null and void under Article 19 of the Act on Contracts to Which the State

[1] Articles 1 (see Articles 1 and 8 of the current Arbitration Act), 2 (see Articles 3 and 8 of the current Arbitration Act), 3 (see Article 9 of the current Arbitration Act), 1 (see Articles 1, 3, and 8 of the current Arbitration Act) of the former Arbitration Act (amended by Act No. 6083 of December 31, 1999), 3 (see Articles 1, 2, and 19 of the current Arbitration Act), 7, 11 (2) of the former Foreign Capital Purchase Contracts Act (amended by Presidential Decree No. 15187 of December 31, 1996)

Republic of Korea (Law Firm Pacific, Attorneys Kang Yong-sik et al., Counsel for the plaintiff-appellant)

Co., Ltd. (former Trade Name: Rolling Stock Co., Ltd.) (Law Firm Square, Attorneys Jeong-hwan et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2001Na73093 delivered on November 28, 2002

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

1. Regarding ground of appeal No. 1

Article 1 of the former Arbitration Act (amended by Act No. 6083, Dec. 31, 199; hereinafter the same) provides that the purpose of this Act is to promptly settle disputes under private law, not by a court ruling, but by an arbitrator’s ruling, by agreement between the parties. Article 2(1) of the Arbitration Act provides that an arbitration agreement shall take effect upon an agreement between the parties to settle all or part of disputes which occur, or may arise, in connection with legal relations under private law (hereinafter referred to as an “argument agreement”). Article 2(2) of the former Arbitration Act provides that an arbitration agreement shall be written or signed by the parties to the agreement, or exchanged letter or transfer stating that an arbitration clause shall be written or exchanged, and Article 3 provides that the parties to the arbitration agreement shall comply with an arbitration award: Provided, That such arbitration agreement shall take effect only when the arbitration agreement becomes null or void or performance becomes impossible, and thus, the parties to the arbitration agreement shall be deemed to have agreed in writing to resolve all or part of the disputes arising out of the terms and conditions of arbitration agreement or in writing.

In light of the records, Article 28(1) of the General Conditions for the Supply of Goods provides that "the purchaser and supplier shall make every effort to resolve any difference and dispute arising in connection with the contract or contract in a direct and official manner." Paragraph (2) of the same Article provides that "If the dispute between the purchaser and the supplier is not settled until 30 days have passed from the commencement date of such non-public negotiation, one party may demand that the dispute be settled in accordance with the official dispute resolution method and method specified in the special terms of the contract (i) if the dispute has been settled by the buyer and the supplier (i.e., the e., the e. party to the dispute resolution in the dispute resolution of the e., the e., the e. party to the dispute and the e.g., the e., the e., the e. party to the dispute to which the request for arbitration had been made, for the reasons that there is no special terms of the contract or the e.g., the e., dispute resolution method and nationality of the plaintiff to arbitration.

The decision of the court below is justified in rejecting the defendant's defense on the ground that the selective arbitration clause of this case is not effective as an arbitration contract, even though there is no somewhat inappropriate explanation in the decision of the court below, and there is no error of law such as misunderstanding of facts or misunderstanding of legal principles as to the validity of the selective arbitration clause.

2. Regarding ground of appeal No. 2

Article 1 of the Act on Contracts to Which the State is a Party (hereinafter referred to as the "State Contract"), provides that the purpose of this Act is to facilitate the smooth execution of contracting activities by providing for the aforesaid basic matters concerning the contracts to which the State is a party. This Act provides that contracts to which the State is a party, such as government procurement contracts by international tender, contracts to which the State is a party (including contracts which become sources of revenue) shall apply, and the head of each central government agency or the public official in charge of contracts shall adjust the contract amount as prescribed by the Presidential Decree if it is necessary to adjust the contract amount due to price fluctuations, design or other changes in the terms and conditions of the contract, and the State Contracts Act provides that such contract amount shall be excluded from the scope of the government procurement contracts, acts related to participation in tendering, acts related to tender announcement, and acts related to the determination of the successful bidder, and shall be excluded from the existing provisions of the Act on Contracts to Which the State is a Party.

In full view of the contents of the relevant Acts and subordinate statutes, such as the State Contracts Act, the characteristics of the foreign goods contract, the contents of the instant special agreement for the supply of goods, and the details of the special agreement for the establishment of such special agreement, etc., the fixed contract amount of the instant case is valid as it is in accordance with the agreement between the parties to the foreign goods contract by international tender, and it cannot be deemed null and void as it is in violation of Article 19 of the State Contracts Act, which provides for the adjustment of contract amount due to price fluctuation, and as long as the special agreement for the fixed contract amount of this case is effective, it cannot be deemed null and void as it is in violation of the above provision. Thus, the judgment of the court below to the same purport is just

3. As to the third ground for appeal

According to the reasoning of the judgment below, the court below rejected the defendant's assertion that the fixed contract amount clause of this case is invalid as it violates Article 6 (1), (2) 1, and subparagraph 1 of Article 11 of the Regulation of Standardized Contracts Act because the fixed contract clause of this case is a provision which has lost fairness against the good faith and unfairly unfavorable to the customer, and it is a provision which excludes or limits the customer's right of defense, offset, etc. under the provisions of law without any justifiable reason. The court below rejected the defendant's assertion that the contract amount of this case is invalid as it is in violation of Article 6 (1), (2) 1, and subparagraph 1 of the Regulation of Standardized Contracts Act, etc.

4. As to the fourth ground for appeal

According to the reasoning of the judgment below, the court below rejected the defendant's assertion that the plaintiff's act of unfairly discriminatinging domestic bidders and dealing with the price of goods and services in Korean currency is null and void as it is against Article 23 subparagraph 1 of the Monopoly Regulation and Fair Trade Act, since the plaintiff could estimate the price of the goods and services in Korean currency at the time of bidding for the goods supply contract in this case against the bidder's monetary or US US US dollars, and the price of the goods and services in this case's price of the goods and services can be estimated only in Korean currency, regardless of whether the goods and services are supplied or supplied from domestic or foreign countries, and there is no ground to believe that the Fair Trade Commission's corrective order or penalty surcharge can be imposed on the enterpriser. In light of related Acts and subordinate statutes and records, the judgment of the court below is justified and there is no error in the misapprehension of legal principles as to the Monopoly Regulation and Fair Trade Act as alleged in the ground of appeal.

5. Ground of appeal No. 5

In light of the records, the court below rejected the claim by the defendant that the contract amount of this case should be increased in KRW 28,370,28,171 under the principle of trust and good faith or change of circumstances, on the ground that the contract amount of this case is part of the area of private autonomy and it should be maintained as agreed, and that the contract amount of this case should not be adjusted in accordance with the principle of trust and good faith or change of circumstances merely because the contract of this case was damaged by sudden increase in exchange rates after the contract of this case was estimated in Korean won under the contract of this case and the contract of this case suffered loss from exchange rates of KRW 60 billion following the conclusion of the contract of this case, and there is no error in the misapprehension of legal principles as to the principle of trust and good faith or change of circumstances, as otherwise alleged in the ground of appeal.

6. Conclusion

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

Justices Shin Shin-chul (Presiding Justice)