An insider’s perspective on the Korean Commercial Arbitration Board’s International division

KCAB International Secretary General Steve Kim discusses KCAB International’s mission, initiatives, and future. Steve is joined by Reed Smith’s New York international arbitration partner J.P. Duffy.

Transcript:

Intro: Hello and welcome to Arbitral Insights, a podcast series brought to you by our international arbitration practice lawyers here at Reed Smith. I'm Peter Rosher, global head of Reed Smith's international arbitration practice. I hope you enjoy the industry commentary, insights and anecdotes we share with you in the course of this series, wherever in the world you are. If you have any questions about any of the topics discussed, please do contact our speakers. And with that, let's get started. 

J.P.: Welcome back to the next episode of Arbitral Insights in which we'll discuss the Korean Commercial Arbitration Board's International Division with Steve Kim, who's KCAB’s International Secretary General. I'm J.P. Duffy. I'm an international arbitration partner based in New York that acts as both counsel and arbitrator in international arbitration, seated around the world under a variety of governing laws and arbitral rules. I'm qualified in New York, England and Wales and the DIFC courts in Dubai where I previously practiced. I routinely represent clients and arbitrations involving Korea and East Asia and I also had the good fortune to be listed on the KCAB International arbitrator roster. With me today is Steve Kim, who's the Secretary General of KCAB International uh where he oversees the daily operations as well as global marketing. He's qualified in the US state of New Jersey and started his career at the AAA ICDR back in 1998 where he served as the director for seven years. Steve then moved to Korea to be in-house counsel for Samsung. After five years of that, he recognized the importance of sales and marketing. So he became a country manager for an IP management company, then head of Korea for a large EU based law firm until he was invited to join the KCAB in 2022. We're thrilled to have Steve today and to have his insight. Steve welcome and uh thank you for joining today. 

Steve: Thank you very much for inviting me. 

J.P.: Great. Well, with that, let's jump right into our discussion and let me start by giving some background on KCAB International for uh for those that aren't as familiar with it. KCAB International is an international arbitration institution that was established in 2018. It's an independent division of the Korean Commercial Arbitration Board, which was itself established in 1966 and specializes in administering international arbitrations in a cost effective and time efficient manner, pursuant to the streamlined processes. KCAB International seeks to be a premier International Dispute Resolution Center in Asia and beyond and has a truly international presence in 2016 in recognition of the fact that Los Angeles has the highest Korean population in the world outside of Korea. KCAB opened its first foreign office in LA. In 2017, KCAB International opened its second overseas office in Shanghai in the PRC. And lastly in 2019 KCAB International opened an office in in Hanoi in Vietnam, making it the first foreign arbitral institution to have an office in Vietnam. Um So clearly KCAB International has a global reach. So Steve, let me ask you a question about that. Then do all of KCAB International's offices administer cases? 

Steve: No. Uh the Seoul headquarter office handles all of the case administration. Uh This is to streamline the process and have one centralized control tower. Uh We are looking into the possibility of one of our overseas offices having the capability of managing and handling case information at this moment. 

J.P.: Excellent. And does the KCAB International administer both international and domestic cases or, or just one? 

Steve: KCAB international focuses only on international matters. The domestic arbitration cases are handled by KCAB, the headquarter. Uh number wise, typically four or 500 cases per year with uh 60 to 100+ international cases per year for the international division. 

J.P.: And Steve, I think we said this earlier but KCAB International is a truly independent organization, correct? 

Steve: Right. That is correct. Uh It is an independent division of KCAB headquarters. Uh It is a separate division that handles only international arbitration cases. 

J.P.: Great. And we we talked a bit about caseloads. How many cases did KCAB International administer in 2023 for international matters? Steve: We administer roughly close to 60 cases and, and that's out of about 400+ overall cases that were handled by KCAB itself. 

J.P.: From what industries did those cases come from, Steve? 

Steve: For industry wise, construction typically takes at least 30% of our cases. Um General commercial transaction. Uh We are seeing an increased caseload coming in from the IT sector. Obviously, Korea is a very, you know, technologically focused and advanced country. Uh and then trade and entertainment um entertainment because of the confidentiality that the arbitration carries. So a lot of a lot of your K-pop stars that you are aware of uh uses arbitration to handle their disputes. 

J.P.: Wow, that's really, that's really great. Now, in the IT sector, is there any particular subsector within it that you see more cases of? 

Steve: We are seeing you know, a lot of our cases are under the it or your typical commercial contract disputes if I could try to actually categorize that because Samsung LG and Hyundai focus on their specialized sub sectors like semiconductors, automobiles, uh and a lot of the subcontractor issues, um cross border uh you know, trade disputes includes anything standard from non payment of services to defective goods on that. So a lot of the high tech cases, we're seeing more and more coming in as well as what we call the hyper innovative sector, which is Artificial Intelligence, platform business, you your next generation display next generation internet platforms. Those are uh coming in. Uh you know, we're hearing rumors that they are coming in the pipeline and we expect to see that on our platform on our arbitrary institution platform for the next two years as well. 

J.P.: Wow, that's uh that's an impressive development. Now, Steve, you mentioned as well and obviously we don't want to um we don't want to violate any confidentiality. You mentioned K-pop stars as part of the entertainment caseload. What about TV and film as those are pretty important industries in Korea. 

Steve: Right. They are um they are very important. What's happening is that the domestic division will see a lot of those cases uh because of a lot of the transactions between the entertainment companies uh and broadcasting companies here in Korea uh cross border wise, we do see them. Um So uh you know, the TV, companies that are, let's say, reaching out to Indonesia or Thailand where K-pop is very, very popular uh to develop projects and those projects did not go forward as planned or didn't go in the direction that the parties were, were hoping for. So we see some of those yeah, transactions and disputes as well. 

J.P.: Wow, interesting. Now you mentioned a few different countries that, that are relevant to the, to the entertainment industry. What countries were the top five users for KCAB International in 2023? 

Steve: Typically the top five are China, the United States, Thailand, Hong Kong. Uh and then we see the same percentage of the cases being filed in from Japan, Italy. So the top three are typically China, US, and Thailand and sometimes Vietnam will come in uh as well. Uh But then we do see some unexpected tourists like Italy. Yeah, coming in uh with few cases uh to take the top 10 spot as well. 

J.P.: Just out of curiosity, why, why Italy? 

Steve: Korea does, you know, I mean, you kind of have to take two steps back and, and think how Korea operates, you know, our main brand is as import export, right? So, uh and certainly Korea is one of to say the larger market for the global brands uh that are often generated in countries like France or Italy. And, you know, these are brands that, that, you know, anybody would recognize immediately. Uh and Korea surprisingly does take at least the top five markets for a lot of those top global brands, you know, whether that's cosmetics, whether that's fashion. Uh and you know, with that much transaction, we do see uh in some years, a focused amount of cases coming in from that particular jurisdictions. 

J.P.: So it's really a function of, of trade patterns and, and economic patterns. 

Steve: That's correct. That's uh that's a good way of putting it. I, you know, I mean, when uh if the economy is strong and when, if the spending power is very high, uh we, we do tend to see more transactions and certainly because of that naturally, more disputes. 

J.P.: Interesting. Well, then let me ask, is there, is there a case profile for which KCAB international is best suited? 

Steve: We like to think that, you know, obviously, you know, based on the history of the case administration that we've done, you know, we handle all kinds of cases. But because Korea is known for large scale construction cases, um very high profile it cases, you know, those are some one of our specialties as well and where we are along with the United States, one of the few countries that are left that has the capability of building nuclear power plants and whatnot. So, you know, those are some of our specialties that we like to think that KCAB has, you know, the capacity to handle. 

J.P.: Well, those are certainly, certainly impressive markets. Um And it sounds like KCAB International really has a pretty broad reach but are there particular market segments that it's really trying to target at the moment. 

Steve: For me, you know, you gave a brief introduction of, of, of myself, you know, in the beginning portion of this podcast, one of the reasons why I even put in there, that where I personally thought sales and marketing was important for even someone with the legal, you know, training the lawyer myself uh is for me to be able to reach out to an an appeal uh to that segment of the market, even if we are uh a, a traditional arbitration institution. Right. So, you know, the particular market segment that I'm actually targeting at this moment is the mid to mid large secondary tertiary uh and the the hyper innovative uh you know, market segment here in Korea as well as abroad. And the reason is that um so much of our economy is now moving on platforms that we have not seen in, let's say 10 years ago. Uh And all of those segments have a subset or sublayers of, you know, service providers or technology development. And that is, you know, that is going to be significant one way or the other. Uh And is it gonna, it's gonna take to say a good portion of this uh foreseeable future in terms of how the global economy is going to move. And for me to be able to say, you know, KCAB International is a good case administration center or good, you know, arbitration center may be good for the very specialized practitioners like yourself J.P. Uh you know, to listen to but to, to an everyday, you know, businessman or CEO that's running a mid to mid size or start up companies in, in the technology sector that doesn't really appeal to that. So, you know, I wanna be able to actually do something that's going to attract new users. Um And you know the way that I'm doing that is appealing arbitration or talking about arbitration without talking about arbitration. So if I could actually approach them and say, you know, we have a network of, you know, hundreds if not thousands of experts and hundreds of international law firms with global expertise that we, we are not necessarily necessarily are going to talk about legal technicality, but rather, you know, gain insight from those experts in terms of how the market is moving. What are some of the bigger players, you know, what are they coming to law firms or what are they asking for? Right. And without having to give answers and you don't necessarily have to even give the audience the answers to some of those questions is for the audience members to extrapolate um from the questions that they're asking to someone like you or to your M&A group or your transaction groups that they could formulate Uh if you know that big ABC company or the well known, you know, global companies asking that question, we should also be concerned with that issue as well, right. So by transforming the arbitration institution to more of a knowledge center, uh more of a practical guidance center that I think is going to be able to be, be able to appeal and attract the new market segments which I want to attract as well. 

J.P.: Wow, that's a, that's a really clear strategy and a really well thought out one and I appreciate your, your sentiment about keeping things less technical for, for non lawyers. And I'm going to use that as a segue now to jump into some of the more technical matters for the lawyers that are going to be listening in. Steve, it's my understanding of the current rules took effect in 2016 for practitioners like myself, what are some of the salient features of those rules? 

Steve: So, one of the first things that I noticed when I came in and, you know, I've been looking at the rules for some time now, even before I became Secretary General, is it, it really depends on which language the the rules were written in first and then how it was translated. And from a purely us practitioner, a very Americanized Korean American perspective, when I read the rules, it, it reads like it was written in Korean and then it was translated into English. And as, as best of the job that they did, I still feel that there are some gaps in the translation which could actually affect the interpretation or the accuracy of that. So that's one of the larger pictures that we're actually dealing with at this moment. And then, you know, you go down to the subset of that. Uh we're trying to clarify certain aspects, things like jointers, uh emergency arbitration. And we're trying to actually more clearly define the roles of the institution, authority of the institution to make certain decisions so that there is no or there is minimize confusion if there are multiple issues that are coming in, converting into, uh you know, into the institution or that particular issue at, at the same time. Things like third party funding, you know, which is not widely used here in Korea because of various domestic rules and regulations. But you know, we have to be in, we have to be mindful that there are most major jurisdictions are actively using that. Most major institutions have already addressed that in their rules as well. So that is something that we're looking at as well. The role of our International Arbitration Committee or International arbitration advisors, which is very similar to your other institutions, international arbitration courts and their roles and functions and how they should then should we say contribute to the efficiency of the arbitration, you know, here at KCAB International as well. So those are, you know, some of the larger and smaller salient features that we're trying to address for our upcoming revision. 

J.P.: So, Steve, when, when are those upcoming revisions expected to come out? 

Steve: One of the things that we do have to go through here in Korea is that we're aiming to actually have this, you know, revised and basically be able to announce to the public in the first quarter of or the first half of 2025. Now, as you may have, you know, seen from other institutions whenever they actually, you know, take on or initiate any set of rules revision that takes anywhere between 18 months to 2 to 3 years. So we, we're no different. This is a very long term project, but our initial goal is to have something announced in the first half of 2025 because we do need to have the Korean Supreme Court to review this as well. 

J.P.: Interesting. So you would have to go, you, you have a few different stakeholders that, that have to weigh in. I guess it sounds like that. 

Steve: That's correct. I mean, you know, the domestic, you know, rules are also being revised at the same time. So, you know, we kind of have to go hand in hand although, uh you know, we, we operate completely differently and you know, there are different aspects of rules revision on that. But, you know, we do have to be mindful and be respectful to the Domestic Rules revision as well as as you mentioned. Uh there is that final stage uh where the Korean Supreme Court will review and ask questions and comment on on the draft revision that which we're gonna be submitting to them as well. 

J.P.: Well, that's great with that level of involvement. It sounds like the rules will be, will be state of the art and, and very, very well thought out. 

Steve: That's exactly what we're trying to do. 

J.P.: It's a good objective. Well, let me shift gears a bit then and, and just talk a bit about what KCAB International is doing in the US. You've obviously come from the AAA ICDR and you've got a lot of experience there. What is your role in promoting KCAB International in the US? And what would you see as the biggest accomplishment there since that's, since that's begun? 

Steve: Personally. I like to think that my career took a very interesting turn and I, I took a more of a parallel legal career rather than J.P. And someone like you who took on a more more traditional law firm career or, you know, if I could generalize it in that way. So me having started in with AAA ICDR back in 1998 the earlier days gave me a chance to see the market and the size of the market when everyone was talking about International arbitration. This is 20 years ago, right? Um So I always had this notion that whatever we do or whatever I do at KCAB, we need to have KCAB International needs to have a bigger footprint and bigger impact uh in the US market. And one of the things that first things that I did was to utilize our office in LA to do more noise marketing, just just be able to say we're here and for us to, you know, not necessarily approach the Korean population that's based in LA or anywhere else in the US. That's one thing. But my philosophy is if I approach a US company, a large US company, and if their first question is what's KCAB? Then we have an issue there. So that's one of the first challenges that, that I want to address here, right? It's, it's, it's the elevation of our brand, right? So I always tell big companies here in Korea, we know that when you're dealing with a US company, it's not easy for you to actually try to actually have KCAB International uh written into your arbitration clause because they may actually say no or they may just not know much about KCAB International, right? So that's one of the first things that I want to actually, you know, overcome. So one of the biggest accomplishment in United States is for us to get more actively involved with the California arbitration guys. We know that California is a very large economy. Um It is, it is an important market although I, I'm a New York boy myself. Yeah, I grew up in, in California as well. So we started getting very actively involved with their arbitration promotion activities so that we could have either direct or indirect elevation of our brand through their activities as well. I also at the same time, kept in close touch with all my colleagues at AAA ICDR and all of my other institutional colleagues in the US for the US market as for the New York market. I mean, that is, that's the original market, right. So I had our director at LA office fly to New York to participate in the New York Arbitration week. You know, we regularly send out messages or the news bits to our friends and colleagues based in, in the US just to make sure that we are still bleeping, bleeping on their radar as well. Right. So my big accomplishment is to get our foot in the door and make an entry into the California arbitration market. At the same time trying to have our big US, corporations or the US clients and users to not to have to ask what's KCAB. So that's where I am at this moment. 

J.P.: That makes a lot of sense. And you know, one of the, one of the easiest ways to do that sometimes is to educate and deputize practitioners to, to go out and really talk to their clients directly as well about an institution like KCAB International. So one of the questions I would have about that then is you obviously would have practitioners serving as arbitrators. What does KCAB International's arbitrator roster look like? 

Steve: So J.P., you've been in this industry long enough to know that international arbitration um as popular and as widely known as it is, it is a still very exclusive, very specialized field of law. So there are limited number of practitioners and arbitrators and you know, at least the way I see it you know, compared to the size of the market there, KCAB international um arbitration arbitrator roster encompasses most of your well known, well respected the go to arbitrators that you and, and everyone else is familiar with, you know, and we also have our specialty, you know, subsector arbitrators, you know, that are more well versed and Korean or civil law as well. So we have 634 arbitrators at this moment. We review the arbitrator application on a yearly basis as well as our entire panel on a yearly basis as well. Uh And then we also have um 73 new mediators that were newly appointed, which we could talk about a little later on about the mediation program. 

J.P.: That's great. Where, where do most of the arbitrator roster members come from? Are there particular jurisdictions? And, and how many jurisdictions do they hail from? 

Steve: Yeah, I from my, from my memory, I think roughly 30% will come from Korea or nearby regions and then the remainders are actually fairly wide, widely spread apart. And obviously, you know, because uh international arbitration has the largest, largest markets in the US and as well as in Europe. So we have a number of people, you know, from that as well. So I would say I'm gonna have to double check but 30 30 30 so 30 for 30 from the Asia jurisdiction, 30 from the US and the nearby jurisdiction and 30 from the the European jurisdictions as well. 

J.P.: When you mentioned as well, some arbitrators that have specialty subsector experience. What are, what are some of those specialties that that KCAB International can offer to, to users? 

Steve: Right. So one of the issues that have been to say, actively debated and discussed is the balance between civil law, common law or you know, legal system that the users are not familiar with. So the subsector that I mentioned obviously also encompasses their skill sets and whether that's technology, whether that's uh you say platform business or any type of skill sets that are not to say widely available to your typical commercial arbitrators. Our subsector also means that we have arbitration that have robust set of experience dealing with both civil law, common law or hybrid mixture of thereof. Uh So that we could actually offer those arbitrators to users who may be from the US or more more from a common as gen and where their counterpart is from a civilized jurisdiction or some other, you know, legal system jurisdiction. 

J.P.: Wow, that's, that's a really, that's a really targeted approach that seems to make a lot of sense. And, you know, we obviously have an awful lot that we could keep talking about. And I, I think what I'd love to do is reserve my right to uh to bring you back for another, for another episode in the future to discuss mediation and, and some of these role developments that you've been talking about. So I think I'm gonna do that. But let me, let me start to get towards our, our conclusion then and talk a little bit about what we're gonna see. Looking ahead as sort of a precursor to that episode. If there's something that you'd like to see KCAB International accomplished in 2024? Keeping in mind that we're actually now solidly into it. What, what would that be? 

Steve: You know, I want KCAB International to use a phrase, you know, that are widely known in the to the US audience is to be your friendly neighborhood arbitration institution. So here, here are things that, that I want to accomplish. But as you know, as a secretary general, I also have to set realistic expectations and goals for myself and my team as well. Sure, we, we would love to be able to say that we're a global scale or globally recognized, you know, arbitration institution. The truth is that there are, you know, certain roads that we need to travel certain steps that we need to take in order for us to be able to truthfully claim that, right? And, and one of that is, you know, is brand elevation and I'm gonna keep coming back to this, you know, the brand recognition, uh brand elevation is so that people don't have to ask as I mentioned, what's KCAB, right? I want them to ask what are the rules like, how many specific type of cases that have, they had? You know, the questions that you would ask, you know, if you were to be, you know, as we say, dealing with another major institution or with, with a particular set of clients that, that you're actually representing on that as well. The other thing is looking ahead is I'm gonna continue my path to make KCAB International more act, more like a sales organization, meaning that I want them to actually, I want us to approach clients, be able to appeal to the clients in a way that, that they would actually, that they wouldn't actually need us for. So that is coming back to becoming a center for knowledge and information rather than just case management Center. Case management obviously is our core service. That's something that we actually have to nail it down. Do well, you know, be accurate, be cost efficient, uh you know, and be, be confidential and all of that, but that only has a limited, you know, should we say uh scope of appeal to, you know, a certain audience, I want to attract a wider audience by us actually utilizing our network of ex experts uh and professors and lawyers like yourself to talk to our clients, our potential clients about this is how things are moving, this is how the industry is shaping up to be. These are what our biggest clients are asking and what they are worried about, right? So I'm I'm sharing it with you so that you could actually inform like your business strategy and actually, you know, make to say an elevated state and, and enhanced strategy uh to become a better business, you know, in that very competitive field that you're in. 

J.P.: Well, it sounds like there are great things on the horizon and I think we will have to have you back to discuss those some more in the future because I'm really intrigued as I know the audience is to hear more about those developments as they play out. But I think for now that probably should conclude our discussion because we've covered a lot of really valuable ground. I want to thank our guest, Steve Kim of KCAB International for his invaluable insights. And I want to thank you the audience for listening. You should feel free to reach out to Reed Smith or to Steve Kim about today's podcast with any questions you might have. And we look forward to having you tune in for future episodes in the series, including a follow up one that we're gonna have to do with Steve because some of these developments are really, are really marvelous. So Steve, thank you again. And we look forward to having you back. 

Steve: Great. Thanks very much. 

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