2016Na202762 Action for setting aside an arbitral award

Stonton E. L. T. L. L. L.S.T.

South East East Power Development Co., Ltd.

Seoul Central District Court Decision 2015Kahap570969 Decided April 28, 2016

September 30, 2016

December 2, 2016

1. The defendant's appeal is dismissed.

2. The costs of appeal shall be borne by the Defendant.

Purpose of appeal and appeal

With respect to the case No. 13113-009 of Arbitration No. 1313 of the Korean Commercial Arbitration Board between the Plaintiff and the Defendant

The arbitral tribunal shall revoke the arbitral award on August 26, 2015 (attached Form 1).

Purport of appeal

The judgment of the first instance shall be revoked.

The plaintiff's claim is dismissed.

1. Basic facts

The court's explanation on this part is identical to the partial entry of "1. Basic Facts" from 3 to 5th 7th 7th of the judgment of the court of first instance, which excludes the parts of the court of first instance as follows. Thus, this Court's explanation is acceptable in accordance with the main text of Article 420 of the Civil Procedure Act.

In addition, " April 26, 2012" in the third sentence of the third sentence of the judgment of the court of first instance shall be read as " April 30, 2012".

In addition, the term “Korea Commercial Arbitration Board” and “application for arbitration” are added to “the Plaintiff’s rescission of the instant supply contract and seeking restitution following the cancellation of the contract on the ground of nonperformance for which the Plaintiff did not obtain the safety certification of the instant non-facilities.”

After the third main text of the judgment of the court of first instance, "the purport of the application for arbitration of this case was that "the plaintiff would deliver the non-contentious devices of this case from the defendant," and "the plaintiff would pay the defendant 1,852,500 - 271,161,060 - and damages for delay."

In front of the 11th first half of the decision of the first instance court, "the plaintiff was appointed as an arbitrator on May 7, 2013," and "the plaintiff requested extension of 30 days to submit written answers to the Korean Commercial Arbitration Board through three kinds of law firms appointed as an arbitrator on May 7, 2013. The defendant also requested extension of the period for appointment of an arbitrator to the Korean Commercial Arbitration Board on the same day. The Korean Commercial Arbitration Board extended the period for submission of written answers and the period for appointment of an arbitrator on May 8, 2013."

The 4th written decision of the first instance court is that the Plaintiff is subject to safety certification in front of the 7th written decision of the first instance court.

In addition, "for the reasons of negligence in the conclusion of the contract by the defendant, who did not request the plaintiff to purchase the supply contract of this case," and "for the reasons of negligence in the conclusion of the contract of this case" between the 7 and 8 of the same party shall be deleted.

Pursuant to the 5th sentence of the first instance judgment, "No. 1" shall be added to the 6th sentence of the first instance judgment.

2. Determination on the cause of the claim

The reasoning for this Court’s explanation is as follows: (a) the pertinent legal doctrine and the part of “the nature of the dispute resolution clause of this case and the validity as an arbitration agreement” of the 5th to 7th to 19th to the 5th to the 9th 7th 19th am of the judgment of the court of first instance; and (b) therefore, the main text of Article 420 of the Civil Procedure

3. The defendant's argument that the Supreme Court Decision 2004Da42166 Decided November 1, 2004 should not be applied.

1) The Defendant served the instant arbitral application on or around March 8, 2013, and therefore year 2011.

In accordance with Articles 9(1), 19(3) and 50 of the Arbitration Rules of the Korean Commercial Arbitration Board (hereinafter referred to as the "Arbitration Rules"), the Korean Commercial Arbitration Board did not raise any objection to the jurisdiction of the arbitral tribunal within one month from the date of filing an objection to the absence of the arbitral agreement. However, as a result of negotiations, there was a lack of objection to the absence of the arbitral agreement. In light of the above circumstances, the above Supreme Court's decision should not be applied to this case on the ground that the plaintiff's non-existence of the arbitral agreement in the arbitral proceedings of this case is unlawful and inappropriate.

2) Article 9(1) of the Arbitration Rules provides that "the respondent shall submit within 30 days from the date of receipt of the claim from the Secretariat an answer to the purport of the application entered in the application, the place of arbitration, the opinion on the governing law and the language of the arbitration (paragraph 3)" and Article 19(3) of the Arbitration Rules provides that "the objection against the jurisdiction of the arbitral tribunal shall be filed until the submission of a written response to the application in accordance with Article 9 of these Rules," and Article 50 provides that "a party who, even though he knows that the application does not comply with the provisions of these Rules, the arbitration agreement, other rules applicable to the arbitral proceedings, or the direction of the arbitral tribunal, has not raised an objection and continues the proceedings without raising an objection, shall be deemed to have waived the right to raise an objection."

3) However, the submission deadline under Article 9(1) of the Arbitration Rules cannot be deemed as the period during which absolute modifications cannot be made in the course of arbitral proceedings. Article 49 of the Arbitration Rules provides that “The parties may modify the time limit set by this Rule by written agreement.” In addition, the instant arbitral proceedings have been suspended by mutual agreement between the Plaintiff and the Defendant after the KCA extended the submission deadline by June 7, 2013, and the KCA had extended the submission deadline by June 7, 2013, and the suspension of arbitral proceedings had the effect of suspending the progress of the period, like the suspension of the proceedings.

4) Accordingly, the Plaintiff did not submit a written reply within one month from the date of receipt of the instant arbitral application, and did not submit a written reply disputing the validity of the instant dispute settlement provision in the event that the arbitral proceedings were suspended for negotiations and the progress of the submission deadline for the written reply was suspended, and the Plaintiff did not waive an objection as to the jurisdiction of the arbitral tribunal pursuant to Article 50 of the Arbitration Rules.

Therefore, the defendant's above assertion is without merit.

(b) argument that there was arbitration agreement in the negotiation process.

1) The Defendant asserts that the arbitration agreement between the Plaintiff and the Defendant was concluded, since the Plaintiff expressed its intent to resolve the dispute through arbitration in the course of negotiations, as described in attached Form 2, prior to the submission of written response in the instant arbitral proceedings.

2) According to each of the statements in Gap evidence Nos. 1 and Eul evidence Nos. 1 through 22, it is recognized that the e-mail attached to the e-mail that the plaintiff sent to the defendant on July 1, 2013 includes general information and procedural outlines, etc. concerning arbitration as to arbitrator, place of arbitration, language of arbitration, governing law, etc., the plaintiff continuously applied for an extension of the period of suspension of arbitral proceedings for negotiations with the defendant. The plaintiff prepared and presented to the defendant on January 8, 2014, "if the plaintiff and the defendant fail to perform their obligations under the above agreement, the arbitration in this case shall be resumed, and documents requesting the resumption of arbitration to both the plaintiff and the defendant shall be submitted jointly to the commercial arbitration committee."

3) Meanwhile, in full view of the purport of the entire pleadings as seen earlier, the following are examined.

In the event of the commencement of the instant arbitral proceedings at the Defendant’s option, it is necessary for the Plaintiff to suspend the arbitral proceedings in order to proceed with negotiations prior to the procedures under arbitration, judgment, and State Contracts Act pursuant to the dispute resolution clause of this case.

(C) The entry of the e-mail attached to the e-mail No. 1 of July 1, 2013 in the items related to the arbitration as seen earlier in the Section IV.

It is difficult to see that there are more meanings in general information on the vehicle, summary of the procedure, expected cost and duration, etc., and rather, the said attached documents “I. The matters to be consulted on the dispute and the matters to be proposed by the rights of U.S. holders” are stated “the termination of the instant arbitration through a smooth negotiation,” and the Plaintiff’s intent not to reach the progress of the arbitration.

In the event that the negotiation with the defendant on August 6, 2014 with respect to the extension of the period of suspension of the arbitral proceedings, the arbitral proceedings in this case were suspended upon the request of the plaintiff after the extension of the deadline for submission of the reply on May 8, 2013 until June 7, 2013, and the suspension of the arbitral proceedings was deemed to have the same effect as the suspension of the proceedings. The plaintiff requested the extension of the deadline for submission of the reply following the resumption of the arbitral proceedings after the negotiation with the defendant on August 6, 2014 after the extension of the period of suspension of the arbitral proceedings more than 20 times. In light of these circumstances, the expression "the resumption of the arbitral proceedings in this case" used in the draft of the agreement dated January 2, 2014 is merely the meaning of the suspension of the arbitral proceedings to the extent that the plaintiff commences the arbitral proceedings, and it cannot be readily concluded that the plaintiff would waive his/her initial reply by which he/she may raise an objection to the authority of the arbitral tribunal.

In the process of negotiations, when the plaintiff and the defendant's representative received e-mail, the plaintiff and the defendant focused on the conclusion of agreement through negotiations, and the reference or discussion on the arbitral proceedings seems to have been incidental to the necessary scope for the negotiation process.

In full view of the legal principles as seen earlier, Article 8(2) of the Arbitration Act provides that "a written arbitration agreement shall be in writing," and that an arbitration agreement is required under the arbitration agreement, the arbitration agreement is an agreement that excludes the right to a trial. Thus, the arbitration agreement is concluded only when the intention is clearly expressed.

However, the plaintiff consistently asserted that there is no arbitration agreement that is extremely effective in the arbitral proceedings of this case and the litigation of this case.

4) In light of the above circumstances, the facts acknowledged earlier alone indicate the Plaintiff’s intent to resolve the instant dispute according to the arbitral proceedings, or it is difficult to view that the agreement between the Plaintiff and the Defendant was concluded, therefore, the Defendant’s allegation in this part is without merit.

(c) Claim for arbitration agreement under Article 8 (3) 3 of the Arbitration Act;

1) The Defendant asserts that his application for arbitration filed on March 8, 2013 that there exists an arbitration agreement between the parties, and asserts that the agreement was concluded in accordance with Article 8(3)3 of the Arbitration Act by failing to raise an objection by December 19, 2014 when the Plaintiff submitted a written answer.

2) Article 8(3)3 of the Arbitration Act provides that if either party asserts that an arbitration agreement exists in the contents of a document exchanged between the parties, and the other party does not dispute it, it shall be deemed as an arbitration agreement in writing.

According to the statement in Gap evidence No. 2, it is recognized that the defendant asserted that there exists a dispute resolution clause in this case as an arbitration agreement between the parties, stating that "The arbitration is stipulated as a dispute resolution method with respect to any dispute arising in connection with the contract and any related dispute" in the application for arbitration filed on March 8, 2013.

3) As above, the mediation agreement which can be concluded pursuant to Article 8(3)3 of the Arbitration Act is ultimately an arbitration agreement asserted by the defendant in the above application for arbitration, and there is no assertion that there is an arbitration agreement separate from the dispute mediation clause.

In other words, it is inevitable to return to the dispute resolution clause of this case.

4) Therefore, the defendant's head of the above state that the arbitration agreement separate from the dispute resolution clause of this case has been constituted is without merit.

D. The assertion of violation of the good faith principle

The court's explanation on this part is the same as the statement from 11 to 11 of the decision of the court of first instance, except for the following additions, and therefore, this part is cited in accordance with the main sentence of Article 420 of the Civil Procedure Act.

⑤ The instant dispute resolution clause is identical to the general terms and conditions of the contract for construction (amended by Presidential Decree No. 10, Feb. 10, 2001) included in the standard contract for construction (the rules of accounts of the Ministry of Finance and Economy, which was amended on February 10, 2001) under Article 11 of the State Contracts Act, Article 48 of the Enforcement Decree of the same Act, and Article 49 of the Enforcement Rule of the same Act, which are used in concluding a contract to which the State is a party, and it appears to have been presented by the Defendant to the Plaintiff by including them in the instant supply contract. The instant arbitration procedure was commenced upon the Defendant’s choice. In addition, the instant arbitration procedure was suspended upon the Plaintiff’s request. Under such circumstances, the Plaintiff’s defense of non-existence of the arbitration agreement is deemed to be in violation of the principle of no-existence of the arbitration agreement or the good faith, and thus, the Plaintiff would be forced to choose not only the initial litigation procedure in order to avoid such disadvantage, or not the arbitration procedure.

4. Conclusion

Thus, the arbitral award of this case constitutes a case where it deals with a dispute not subject to the arbitration agreement, so it shall be revoked pursuant to Article 36 (2) 1 (c) of the Arbitration Act. Thus, the plaintiff's claim shall be quoted in the grounds for appeal. Since the judgment of the first instance is consistent with this conclusion, the defendant's appeal is dismissed as it is without merit.

Judges of the presiding judge;

Judges Yang Sung-soo

Judge Choi Young-young

1) Article 3 of the instant Additional Contract (Revised Contracts)

② According to the original subscription rate of convertible bonds: 4.5%, and maturity profit guarantee rate: 8% (in annual installments). However, the contract is changed to 2.0%, and maturity profit guarantee rate: 5.0%: 8.0%, according to subparagraph 2 of the principal redemption and interest payment rate, 3.5% per annum, which is the difference between guarantee return rate and surface interest rate, shall be converted to annual installments. However, the contract is changed to 2.0% per annum, which is the difference between guarantee return rate and surface interest rate. In addition, although the contract is changed to 2.0% per annum, which is the difference between guarantee return rate and surface interest rate, it shall be changed to 5% per annual installments.

④ From the investment balance (1,622,454,686 won in the initial contract of this case) under an investment contract of this case (the contract of this case, the amount remaining after deducting the amount of the refund (1,200,000,000 won) prior to the conversion of redemption from the total of 422,454,686 won (65,381,79 won) and the principal (65,381,79 won) recovered according to the arrears situation, shall be substituted with the payment price of convertible bonds underwritten under the same conditions as the original contract of convertible bonds as the original subscription under this contract of this case.

2) Even in the case of the so-called continuing guarantee that guarantees an uncertain obligation arising from a continuous transaction between an obligee and an obligor as well as the case of a general guarantee that guarantees a specific obligation, if an obligee’s exercise of right is not possible to pay it in good faith, it may be exceptionally permissible to limit the liability of a surety. However, to limit the liability under a guarantee agreement that has been established effectively in accordance with the general principles, such as the good faith principle, would pose a serious threat to the principle of private autonomy or legal stability, and thus, it should be extremely exceptionally acknowledged based on the good faith.

Attached Table 1

Text of the Judgment

1. The respondent shall pay to the applicant an amount of 1,852,500 dollars at the same time with the delivery of the devices listed in the separate sheet from the applicant.

2. The applicant's remaining claims are dismissed;

3. The arbitration costs (gold 48,650,418) shall be ten minutes and the one (gold 4,865,042) shall be the applicant's, the other nine (gold 43,785,376) shall be the Respondent's, and the other nine (gold 43,785,376) shall be the end.

A person shall be appointed.

A person shall be appointed.

Attached Table 2

Negotiation Process

A person shall be appointed.

A person shall be appointed.