Yulchon successfully represented Euro Apex B.V. (“Apex”), a Dutch manufacturer of heat exchangers, in a Supreme Court proceeding for enforcement of a Dutch arbitral award against a Korean defendant, a manufacturer of similar products.
Apex sought an enforcement decision for an arbitral award rendered under the Arbitration Rules of the Netherlands Arbitration Institute (the "Award"), which ordered the defendant (i) to transfer all of the Korean, Indian and United States patents it acquired using Apex’s technology, and (ii) to pay a daily monetary penalty (i.e., an indirect compulsory performance penalty) if it fails to transfer the said patents. Central to the dispute was whether a daily monetary penalty ordered by an arbitral tribunal can be enforced in Korea.
The Incheon District Court, the court of the first instance, allowed enforcement of the Award which ordered a daily monetary penalty and the defendant appealed against the decision. The Seoul High Court, the appellate court, upheld the decision of the Incheon District Court.
The defendant lodged an appeal against the high court decision, and argued before the Supreme Court that the Award ordering a daily monetary penalty cannot be enforced under Korean law since it is contrary to public policy under Article V(2)(b) of the New York Convention, based upon the following grounds:
The Supreme Court, however, dismissed the defendant’s appeal, accepting all of Apex’s arguments as follows:
In conclusion, the Supreme Court ruled that the Award can be enforced in Korea as there is no ground under the New York Convention to refuse enforcement of a foreign arbitral award ordering a daily monetary penalty.
Yulchon, representing Apex, finally obtained an unprecedented Supreme Court decision allowing enforcement of a daily monetary penalty ordered in a foreign arbitral award. This Supreme Court decision is another indication of the Korean courts’ arbitration-friendly attitude.
Sae Youn Kim, Jeong Hye Ahn and So Young Jeong of Yulchon’s International Dispute Resolution Team represented Apex in this case.