Summary
Because the bases for recognition and enforcement differ between foreign arbitral awards to which the Convention applies and those to which it does not, the system of grounds for refusal to be used cannot be determined while it remains undetermined whether the Convention applies.
6.1The Standard by Which the Path Opens
The effects between the parties, the action for setting aside, and the recognition and execution decision are kept separate, and the grounds for refusing recognition of a domestic award are preserved. Upon the premises left by this section, a scene opens in which creditor A seeks to execute, against the domestic property of debtor B, a foreign court document. Yet the mere fact that it was rendered abroad does not by itself settle which system of recognition is to be applied. What recognition rule applies to a foreign arbitral award? That question narrows down to asking, while standing at the door of domestic enforcement, on what standard the passage that is to be opened now should be determined.
Article 39 of the Arbitration Act, which corresponds to this question, sets out its text in two paragraphs. Paragraph (1) provides that the recognition or enforcement of a foreign arbitral award to which the Convention on the Recognition and Enforcement of Foreign Arbitral Awards applies shall be in accordance with that Convention, and paragraph (2) provides that, as regards the recognition or enforcement of a foreign arbitral award to which that Convention does not apply, Article 217 of the Civil Procedure Act, Article 26 (1) and Article 27 of the Civil Execution Act shall apply mutatis mutandis (Article 39 of the Arbitration Act). This text presupposes the foreign arbitral award that is its object and the act of its recognition or enforcement, and states that the system to be applied is divided according to whether the Convention applies.
This basis and the conclusion of this section lie on the same line. Where the applicable system for a foreign judgment or arbitral award, the conditions for recognition, and permission for domestic enforcement are in place, the entrance to this relief opens. Here, the branch of Convention application means the criterion that divides the system of recognition to be applied to a foreign arbitral award. The reason that the step of first drawing this branch must be separated from the next step, at which the specification of the claim and the possibility of defense open the gate, is that the former is a question of determining which rule to set forth, while the latter is a question of determining whether this claim stands upon this stage under that rule. If the earlier branch is not established, there is no standard at all for the later comparison.
The strongest counterargument aims at the point that verification of the applicable treaty and reservations raises costs. The concern that respecting foreign adjudication may leave the right of defense of domestic parties and public policy insufficiently protected also touches upon this inconvenience. The fact that the time and materials required to verify the scope and reservations of the Convention burden both the party seeking enforcement and the party defending against it cannot be erased. Even so, the answer to this counterargument is that, without verifying whether the Convention applies, the list of grounds for refusal cannot be completed at will. If whether the Convention applies remains undetermined, the system of grounds for refusal to be used cannot be fixed either, and therefore the list cannot be filled in beforehand merely on the ground that the cost is great.
Returning to the synthetic scene, the only confirmed fact is that A seeks to execute against B's domestic property on the strength of a foreign court document. Whether this document is a foreign arbitral award, and whether the award is subject to the Convention, are not determined in this scene. If the document in question is confirmed to be not a foreign judgment but an arbitral award, then, among the execution judgment and the execution decision, the applicable route and basis must be chosen anew, and this shows only the branching of the route and does not determine the nature of the document in question. Accordingly, the state in which the materials necessary for the applicable convention and reservations and the requirements for recognition have not been confirmed remains undetermined. This indeterminacy does not itself mean an inability to obtain relief; it merely marks the boundary that, at the present juncture, it cannot be determined which system of grounds for refusal will be set forth.
The conclusion permitted by this section is narrow. Because a foreign arbitral award to which the Convention applies and an award to which it does not apply rest on different bases for recognition and enforcement, one must first pass through the branch of whether the Convention applies before the entry criteria of this relief can be compared. What is not permitted is filling in the list of grounds for refusal without verification, and reading the lack of materials as an inability to obtain relief is not the conclusion of this section either.
6.2The Conditions That Block Relief
As set out earlier, the effects between the parties, the action for setting aside, and the recognition and execution decision have been kept separate, and the grounds for refusing recognition of a domestic award have been preserved as they stand. Now, in the scene where creditor A seeks to execute, against the domestic property of debtor B, a foreign court document, the analysis examines, on the premise that it is an arbitral award, under what conditions the route of relief is blocked.
The text corresponding to this question is Article 39 of the Arbitration Act. Here the subject is the domestic court that takes a foreign arbitral award as the object of recognition and enforcement; the act is the recognition or enforcement of the foreign arbitral award; and the condition is whether that award is subject to the Convention.
Because the basis of recognition and enforcement diverges according to this condition, whether the Convention applies becomes a branch that cannot simply be passed over. A foreign arbitral award to which the Convention applies and an award to which it does not apply rest on different bases for recognition and enforcement, and accordingly the place where grounds for refusal may be sought also differs depending on which side is taken. The term "branch of Convention application" means precisely this criterion that divides the system of recognition to be applied to a foreign arbitral award. If this distinction does not hold, the judgment that the route of relief is closed where a foreign judgment lacks the essential requirements for recognition, or where a statutory ground for refusal of recognition of the arbitral award in question is established so that permission for domestic enforcement cannot be obtained—that is, where any one of the statutory requirements is not satisfied—also cannot properly stand.
The counterargument that verification of the applicable treaty and reservations raises costs aims at the point that the task of examining, one by one, whether the Convention applies and its reservations in order to respect foreign awards may contribute insufficiently to protecting the right of defense of domestic parties and public policy while merely increasing costs. The dissatisfaction that respecting foreign adjudication may leave the right of defense of domestic parties and public policy insufficiently protected operates alongside it. Even so, the list of grounds for refusal cannot be completed at will without verifying whether the Convention applies. The circumstance that verification is costly does not confer the authority to skip a branch that remains undetermined, and this leaves in place, if anything, the unease about protecting the right of defense and public policy that the counterargument pointed out.
In the synthetic scene, the only fact relevant to this question is that creditor A seeks to execute against debtor B's domestic property by means of a foreign court document. This scene has taken a foreign judgment as its premise, and if the document in question is confirmed to be not a foreign judgment but an arbitral award, then, among the execution judgment and the execution decision, the applicable route and basis must be chosen anew. From the scene alone, it is not determined whether A's document is a foreign arbitral award to which the Convention applies or an arbitral award to which the Convention does not apply. As record items, the kinds (certified copy of the judgment or award, finality, service and appearance, applicable convention, grounds for recognition, execution judgment or decision) have been fixed, but the materials necessary for the applicable convention and reservations or for the requirements for recognition have not been confirmed. Accordingly, the matter of whether the Convention applies remains undetermined.
What this section permits goes no further than saying that the system of recognition and enforcement of foreign arbitral awards is divided on the standard of the branch of Convention application, and that if that branch is not determined the system of grounds for refusal to be used is not determined either, so that the route of relief is closed where the statutory requirements are not satisfied. What it does not permit is completing the list of grounds for refusal without verifying whether the Convention applies, or a judgment that goes beyond the undetermined materials and concludes as though the requirements for recognition have been met. The state in which the legal route remains open must be distinguished from the actual results of payment, delivery, or recovery, and a lack of materials does not immediately mean an inability to obtain relief.
6.3The Boundary That Remains When There Is No Data
Creditor A seeks to execute, against the domestic property of debtor B, a foreign court document. The mere fact that the document A invokes was rendered abroad does not determine which system of recognition the domestic court will apply in admitting it. In such a situation, the questions now posed are what recognition rule applies to a foreign arbitral award, and where the boundary of what cannot be determined for want of materials lies.
Article 39 of the Arbitration Act lays down two diverging routes for the recognition and enforcement of foreign arbitral awards. Article 39 (1) of the Arbitration Act provides: "The recognition or enforcement of a foreign arbitral award to which the Convention on the Recognition and Enforcement of Foreign Arbitral Awards applies shall be in accordance with that Convention" (Article 39 of the Arbitration Act). Paragraph (2) branches out by providing that, for a foreign arbitral award to which that Convention does not apply, Article 217 of the Civil Procedure Act, Article 26 (1) and Article 27 of the Civil Execution Act shall apply mutatis mutandis (Article 39 of the Arbitration Act). The subjects spoken of here are not the arbitral tribunal that rendered the foreign arbitral award, but the party seeking its recognition and enforcement and the domestic court examining it, and the act referred to is the domestic recognition or enforcement of that award.
What this provision establishes is the branching of routes, not the content of the grounds for refusal. The branch of Convention application means the criterion that divides the system of recognition to be applied to a foreign arbitral award. Because awards to which the Convention applies and awards to which it does not are assigned different bases within the same provision, so long as which side an award falls on is not determined, not even which list should be set as the standard of examination can be specified. This question, however, is confined to the recognition rule to be applied to a foreign arbitral award and the boundary of what cannot be determined for want of materials, and separately fixing other requirements for recognition is not within the province of this section. Here, therefore, operates the distinction that matters for which the materials of adjudication are not specified are left undetermined, as distinct from impossibility.
The strongest counterargument aims at procedural costs and the protection of the right of defense. That is, the procedure of verifying the applicable treaty and reservations increases costs and delay, and if foreign adjudication is respected as it stands, the right of defense of B, a domestic party, and public policy may be insufficiently protected. For B, the increase in cost and the uncertainty remain as burdens in themselves. Yet the answer that the list of grounds for refusal cannot be completed at will without verifying whether the Convention applies does not remove this burden. The cost of verification is an inconvenience, but completing the list without verification results in rushing to judgment without even specifying the standard of examination.
Returning to this scene, it is not settled on the record whether the foreign court document A has brought is a foreign arbitral award subject to the Convention or not. The condition that, if the foreign judgment changes into an arbitral award, the route and basis of the execution judgment and the execution decision are to be chosen anew shows only that the branching of routes is substantive; it does not determine which award in fact existed in this scene. Matters that cannot be determined for want of materials must remain undetermined, and a lack of materials does not immediately mean an inability to recognize or an inability to obtain relief.
Accordingly, the conclusion permitted is confined to the narrow judgment that matters for which the materials have not been confirmed are left undetermined, as distinct from impossibility. What this judgment does not permit is arbitrarily filling in the list of grounds for refusal without verifying whether the Convention applies, and such completion is an interpretation that crosses this boundary. If whether the Convention applies is confirmed, the basis of recognition and enforcement may then be chosen along the branched route.
6.4The Records Needed for Determination
To divide this question into steps for judgment, one must first fix what records are required. In this scene, unless it is confirmed together whether the document A produces is a foreign court document or a foreign arbitral award, one cannot even choose the route of recognition that is to unfold thereafter. This question does not turn on a single phrase marking the nationality of the award; it passes through the branch of which system of recognition is to be attached to that award.
Article 39 of the Arbitration Act provides separately for two cases. Article 39 (1) provides that the recognition or enforcement of a foreign arbitral award to which the Convention on the Recognition and Enforcement of Foreign Arbitral Awards applies shall be in accordance with that Convention. Paragraph (2) provides that, as regards the recognition or enforcement of a foreign arbitral award to which that Convention does not apply, Article 217 of the Civil Procedure Act, Article 26 (1) and Article 27 of the Civil Execution Act shall apply mutatis mutandis. The subjects indicated by this text are the party seeking the recognition or enforcement of a foreign arbitral award, the act is the domestic recognition and enforcement of that award, and the condition is whether the Convention applies.
The reason the two paragraphs of this provision must be read as distinct is that the branch of Convention application is the criterion dividing the system of recognition to be applied to a foreign arbitral award. Even for the same foreign arbitral award, the basis for recognition and enforcement differs according to whether the Convention applies. Accordingly, the question of recognition is determined solely on the materials recorded in the certified copy of the judgment or award, finality, service and appearance, applicable convention, grounds for recognition, execution judgment or decision. The determination at each step is made only on the established records. Missing records are not filled in by surmise. If whether the Convention applies is undetermined, the system of grounds for refusal to be used cannot be fixed either.
The counterargument that verification of the applicable treaty and reservations raises costs aims, from the standpoint of domestic parties who frequently participate in international transactions, at the fact that the labor of freshly verifying the scope of application and reservations of the Convention each time is far from trivial. Further, the concern that respecting foreign adjudication may leave the right of defense of domestic parties and public policy insufficiently protected also operates alongside it. That verification is costly does not mean that, by omitting verification, an undecided list may be filled in.
Where the document A presents is a foreign arbitral award and whether the Convention applies has not been confirmed on the record, it is difficult to judge by any particular list of grounds for refusal. This case corresponds to a state in which the materials necessary for the applicable convention and reservations or for the requirements for recognition have not been confirmed, and therefore remains undetermined. If, however, the foreign judgment changes into an arbitral award, the route and basis of the execution judgment and the execution decision are to be chosen anew. This comparative sentence adds no actual fact; it examines only the point that the route must be re-fixed when the type of award changes. Accordingly, what can be determined in this scene is only the branching of routes and the kinds of records required.
The conclusion permitted by this section is that, to fix the recognition rule for a foreign arbitral award, whether the Convention applies must first be drawn, and that, according to the result, one must then determine whether the path prescribed by the Convention or the path prescribed by the provisions applied mutatis mutandis is to be taken. What cannot be determined is the presence or absence of Convention application and the consequent concrete list of grounds for refusal, and a judgment that fills these in by guesswork is not permitted.
6.5Circumstances That Change the Decision
From the preceding stage, only the premise is carried over: that effects between the parties, the action for revocation, and the recognition and execution decision are separated from one another, and that the conditions for refusing recognition of a domestic award are preserved. Even under that premise, if the document produced by A is an arbitral award, the recognition rules to be applied must be settled anew. This problem is not resolved by the mere fact that it was drawn up abroad, because the question of which recognition system to apply comes first. Here the questions are which recognition rules to apply to a foreign arbitral award, and what change overturns the determination made at the existing stage.
Its paragraph (1) provides: "The recognition or enforcement of a foreign arbitral award to which the Convention on the Recognition and Enforcement of Foreign Arbitral Awards applies shall be governed by the same Convention" (Arbitration Act, Article 39). In this wording, the object of recognition and enforcement is the foreign arbitral award, the act is recognition or enforcement in the Republic of Korea, and the condition that determines the applicable system is whether the Convention applies. Paragraph (2) makes clear that, for a foreign arbitral award to which the Convention does not apply, Article 217 of the Civil Procedure Act, Article 26 (1) of the Civil Execution Act, and Article 27 shall apply mutatis mutandis (Arbitration Act, Article 39). The provision establishes only these two branches, and the detailed grounds of refusal under the Convention are not enumerated in this section.
The distinction between these two paragraphs connects directly to the conclusion of this section. Why this branch must be divided is shown by the foregoing grounds. Awards to which the Convention applies and awards to which it does not apply rest on different bases for recognition and enforcement; accordingly, the system of grounds for refusal to be applied also diverges. A single list cannot be overlaid upon awards whose bases diverge. This determination leads to the conclusion that, where a foreign judgment is changed into an arbitral award, the route and the basis as between the execution judgment and the execution decision must be chosen anew.
The strongest counterargument points to the loss that this verification procedure targets. If external judgments are respected, the right of defense and public policy of domestic parties may not be sufficiently protected, and verification of the applicable treaty and of reservations raises the cost at an even earlier stage. Confirming one by one the nature of the document produced by A, the applicable Convention, and the matters reserved requires time and materials on B's part. This disadvantage must not be erased. Whether the channel for safeguarding the right of defense and public policy is the grounds for refusing recognition under the Convention or the requirements under the provision applied mutatis mutandis, if which channel to use is not settled first, that protection loses its target. The cost of the verification procedure remains, but the attempt to fix the grounds for refusal first is not accepted.
The fact confirmed in the synthetic scene is only the point that A, producing a foreign judicial document, seeks execution against B's property in the Republic of Korea. Whether this document is in fact a foreign arbitral award, whether that award is subject to the Convention, what the reservations are, and whether the materials needed for the requirements of recognition are prepared were not settled in this scene. The authentic copy, finalization, and service of the judicial decision or award, together with appearance, the applicable Convention, grounds for recognition, and the execution judgment or decision required by the records, are matters of kind only, and do not assert actual collection. The state in which the applicable Convention and the reservations, or the materials needed for the requirements of recognition, remain unverified stays undetermined. If the designated change from a foreign judgment to an arbitral award is confirmed, the route and the basis are chosen anew, but on this scene alone even whether that change is confirmed cannot be specified.
The conclusion this section permits is narrow. It is that the recognition and enforcement of a foreign arbitral award diverge, according to whether the Convention applies, between the Convention and the provision applied mutatis mutandis; that while matters remain undetermined the list of grounds for refusal cannot be filled in; and that if the designated change is confirmed, the existing determinations of blocking and of effectiveness are discarded and the matter is adjudicated anew from the stage. This section has not fixed the details of the scope of application, the reservations, or the grounds for refusal of the Convention. Unverified materials remain undetermined, and that does not itself mean that relief is impossible.
6.6The Strongest Counterargument and the Answer
Yet the route that opens diverges according to whether that document is a judgment of a foreign court or an arbitral award rendered abroad. If it is an arbitral award, what recognition rules bring that award into the domestic sphere? What must be settled first in this question is not the laying out of grounds for refusal, but under which system of rules that list is to be read. The mere foreignness apparent from the wording does not settle this branch.
Article 39 of the Arbitration Act divides this branch into two paragraphs (Arbitration Act, Article 39). Paragraph (1) provides that the recognition or enforcement of a foreign arbitral award to which the Convention on the Recognition and Enforcement of Foreign Arbitral Awards applies shall be governed by the same Convention (Arbitration Act, Article 39). Here the subject is the court that deals with the recognition and enforcement of a foreign arbitral award, and the act is the choosing of the system of rules to apply to that award. The condition is whether that award is subject to the application of the Convention. Once this condition is met, the rules to apply are determined on the side of the Convention.
Paragraph (2) stands on the opposite side. It provides that, for the recognition or enforcement of a foreign arbitral award to which the Convention does not apply, Article 217 of the Civil Procedure Act, Article 26 (1) of the Civil Execution Act, and Article 27 shall apply mutatis mutandis (Arbitration Act, Article 39). Following this contrast, the conclusion of this section stands. A foreign arbitral award to which the Convention applies and an award to which it does not apply rest on different bases for recognition and enforcement. Here the 'branch of Convention application' means the criterion that divides the recognition system to be applied to a foreign arbitral award. If the list of grounds for refusal is filled in without first passing this criterion, that list becomes a list whose grounds cannot be attributed to any system. The separation earlier drawn between effects between the parties, the action for revocation, and the recognition and execution decision also presupposes the same order. Only after the route is first chosen do the requirements placed along that route become visible.
The strongest counterargument comes in the language of cost: the cost of verifying the applicable treaty and the reservations is high. The loss faced is real. Time is delayed by verification, the labor of gathering materials is incurred, and creditor A bears the inconvenience of payment being deferred while verification remains unfinished. Going further, this counterargument targets one further value. It is the concern that, if external judgments are respected, the right of defense and public policy of domestic parties may not be sufficiently protected. It means that if verification is rushed and the route settled, the room for contesting in the Republic of Korea is reduced. Even leaving this disadvantageous aspect unerased, the answer remains where it is fixed. The circumstance that costs are high cannot change the order of verification.
Returning to this scene, whether the foreign judicial document brought by creditor A is truly a foreign arbitral award, and whether that award is subject to the Convention, are not settled. What is designated for the records of verification is the authentic copy, finalization, and service of the judicial decision or award, together with appearance, the applicable Convention, grounds for recognition, and the execution judgment or decision. Among these, the item 'applicable Convention' bears directly on this question. Only, this record fixes the kinds; it does not mean that they have actually been gathered. This merely shows the order that, if the character of the award changes, the route is fixed first. If the character of the award changes, the route is newly chosen first, and the basis follows afterward. If the materials needed for the applicable Convention and the reservations have not yet been verified, the circumstances remain undetermined.
The conclusion this section permits is narrow and clear. Without first confirming the branch of whether the Convention applies, it cannot be determined which system of grounds for refusal is to be used. Accordingly, the list of grounds for refusal cannot be regarded as complete at that point. By contrast, this section does not permit filling in the list arbitrarily on the sole ground that the cost of verification is high. Yet the mere circumstance that verification is incomplete does not itself mean that relief is impossible. What is undetermined remains undetermined. The counterargument voicing concern for the right of defense and public policy of domestic parties is not to be taken as a request to omit verification; rather, it confirms the need for verification.
6.7The Link to the Application and the Dispositive Part
If the document produced by A in this scene is a foreign arbitral award, a single rule permitting its recognition and enforcement in the Republic of Korea must be chosen. Yet the mere fact that the arbitral award was rendered abroad does not determine that rule. Herein lies the reason why the criterion that divides the recognition system to be applied to a foreign arbitral award — namely, the branch of Convention application — must first be confirmed.
Article 39 of the Arbitration Act divides the branch of Convention application in its wording. Paragraph (1) provides: "The recognition or enforcement of a foreign arbitral award to which the Convention on the Recognition and Enforcement of Foreign Arbitral Awards applies shall be governed by the same Convention" (Arbitration Act, Article 39). This wording entrusts the subject, namely a foreign arbitral award to which the Convention applies, and the act, namely recognition or enforcement, to regulation under the Convention. Paragraph (2) provides: "For the recognition or enforcement of a foreign arbitral award to which the Convention on the Recognition and Enforcement of Foreign Arbitral Awards does not apply, Article 217 of the Civil Procedure Act, Article 26 (1) of the Civil Execution Act, and Article 27 shall apply mutatis mutandis" (Arbitration Act, Article 39). For awards to which the Convention does not apply, it separately designates the domestic provisions to be applied mutatis mutandis.
Since these two paragraphs separate the bases of recognition and enforcement, whether the Convention applies is a stage of determination to be settled first for each award. For an award to which the Convention applies, the regulation of the Convention comes into play; for an award to which it does not apply, the system of domestic provisions applied mutatis mutandis takes its place. Because the two branches draw on different sources of norms, while it is undetermined which branch is at issue, the requirements or the grounds for refusal of one side cannot be borrowed. Even if, in the procedure by which A seeks execution against B's property, the court seeks to complete in advance the list of grounds for refusal it will apply, before the branch is established the source of that list cannot be chosen.
This distinction raises a question of cost in practice. To verify the scope of the applicable treaty and whether the State is one that entered a reservation, additional investigation of materials and judgment are required. When one bears that cost and delay out of respect in the Republic of Korea for external judgments, the concern also arises that the right of defense or the public policy of B, a domestic party, may not be sufficiently protected. Even so, the list of grounds for refusal cannot be completed arbitrarily without confirming whether the Convention applies. The convenience of reducing costs cannot serve as grounds for arbitrarily selecting the source of the recognition system. The inconvenience attending verification remains, but that inconvenience does not justify omitting the branch.
Returning to the synthetic scene, whether the foreign judicial document produced by A is an arbitral award, and whether the Convention applies to that arbitral award, are not fixed by this scene alone. What the scene fixes is only the facts: creditor A, debtor B, A's foreign judicial document, and B's property in the Republic of Korea. So long as the applicable Convention and the reservations, and the materials needed for the requirements of recognition, remain unverified, no determinate judgment that crosses the branch is reached in this section. This case is undetermined for want of verified materials, and it does not mean that recognition or enforcement is immediately impossible. Only, at the present point, the determination of which system of grounds for refusal to use must be reserved.
Accordingly, when speaking of the recognition rules for a foreign arbitral award, the rule must not be pronounced definitive on the single fact that it was rendered abroad. If whether the Convention applies is confirmed, the basis under the Convention follows; if it is not confirmed, the branch is not closed. What is settled within this boundary is the distinction that the bases diverge, and the conclusion that the system of grounds for refusal cannot be completed before the branch. The details of other requirements for recognition, or the specific content of reservations, are not dealt with in this section.
6.8The Scope This Section Undertakes
Whether that document is a judgment of a foreign court or an arbitral award by which an arbitrator resolved a dispute between the parties does not yet appear from this scene alone. Even if it is an arbitral award, as to what its recognition system is, the distinction earlier drawn between effects between the parties, the action for revocation, and the recognition and execution decision, together with the conditions for refusing recognition of a domestic award, cannot simply be carried over. The question to be put here is: what recognition rules are to be applied to a foreign arbitral award?
On this question the Arbitration Act first divides its subject matter. The recognition or enforcement of a foreign arbitral award to which the Convention on the Recognition and Enforcement of Foreign Arbitral Awards applies shall be governed by the same Convention (Arbitration Act, Article 39). The second paragraph of the same Article provides that, for the recognition or enforcement of a foreign arbitral award to which the Convention does not apply, Article 217 of the Civil Procedure Act, Article 26 (1) of the Civil Execution Act, and Article 27 shall apply mutatis mutandis (Arbitration Act, Article 39). This wording proceeds on the premise that the recognition system is not fixed to a single one merely by the fact of where the award was rendered. The material that divides the systems is not the foreignness of the award but whether the Convention applies. The list of grounds for refusal, too, can be obtained only after it is first determined to which system it belongs.
The reason the distinction of this branch must be maintained is that the two paragraphs point to different bases. For an award to which the Convention applies, the same Convention serves as the standard for recognition and enforcement, whereas for an award to which it does not apply, the provision of domestic law applied mutatis mutandis fills that place (Arbitration Act, Article 39). To which list the grounds on which recognition may be refused belong also differs according to which side of this crossroads one stands on. The branch of Convention application is the criterion that divides the recognition system to be applied to a foreign arbitral award, and this criterion is not an auxiliary reference for filling in the list of grounds for refusal but the condition that fixes the source of the list itself. Therefore, deciding which side's grounds for refusal to use while whether the Convention applies remains undetermined amounts to reversing the order fixed by the wording.
The counterargument that collides most forcefully is the problem of verification costs. The procedure of examining one by one the applicable treaty and whether reservations were made, and choosing the system accordingly, places a considerable burden of time and effort on creditor A. For B that delay would lead to an opportunity to mount a defense, but on the side that must await recognition, the expectation of swift domestic enforcement is frustrated. Moreover, the concern that respecting external judgments as they stand may leave the right of defense and public policy of domestic parties insufficiently protected is also attached to one end of this counterargument. Yet the list of grounds for refusal cannot be completed arbitrarily without confirming whether the Convention applies. The wish to reduce verification costs cannot serve as a means of filling in the list without deciding which system's grounds for refusal to use. That costs are incurred remains a burden of the verification procedure, and that burden cannot do away with the branch of the route itself.
What is fixed in the synthetic scene is only the fact that A, holding a foreign judicial document, seeks execution against B's property in the Republic of Korea. Whether that document is a foreign arbitral award to which the above Convention applies is not something the scene has determined. Furthermore, the scope of reservations or the content of the treaty actually applied remains a part for which verified materials must be added. If the document in question is verified not to be a foreign judgment but an arbitral award, the distinction that the route and the basis to apply must be chosen anew as between the execution judgment and the execution decision has meaning only within the same range. Accordingly, what can be determined now from this scene is the narrow conclusion that the crossroads of the recognition system turns on whether the Convention applies, while which grounds for refusal are actually allowed remains undetermined. The absence of materials means only the task of securing materials, and is not to be read as meaning that relief is impossible.
The conclusion this section permits is that, in fixing the recognition rules for a foreign arbitral award, the system of grounds for refusal cannot be determined without first confirming whether the Convention applies. Here the Arbitration Act neither newly creates the content of any particular ground for refusal nor arbitrarily fills in undetermined reservation matters. What is not permitted by contrast is the handling of simply completing the list of grounds for refusal while skipping the crossroads of the applicable system.
6.9Application of the Text of the Provisions and the Holdings of Precedents
On this premise, if the document brought by A is a foreign arbitral award, what rules apply to its recognition and enforcement in Korea? Unless this branch is settled, the system of refusal grounds to be applied is not determined either.
The source provision in question, Article 39 of the Arbitration Act, is divided into two paragraphs. The subject and object addressed by the two paragraphs of the same Article are each foreign arbitral awards, and what distinguishes them is whether the Convention applies (Arbitration Act, Article 39).
Under this wording, whether the Convention applies functions not merely as a preliminary procedural question but as a condition for choosing the basis of the decision. A foreign arbitral award to which the Convention applies and an award to which it does not have different bases for recognition and enforcement, so if whether the Convention applies remains undetermined, the system of refusal grounds to be used cannot be determined either. That is, the division between paragraph (1) and paragraph (2) is not two formulations reaching the same result but a branch designating different paths. Only the wording of the source provision in question is used as the basis for decisions on domestic recognition and enforcement of external determinations, only the wording within the scope of that source provision is applied, and it is not extended to the reasons for judgment or to paragraphs beyond the scope of the source provision.
The strongest counterargument targets the point that confirming the applicable treaty and reservations raises costs. To confirm first whether the Convention applies, the domestic party B must gather relevant materials, and at the same time there operates the concern that, if external determinations are respected, the right of defense and public policy in Korea may not be sufficiently protected. The mere fact that inconvenience attending the confirmation remains does not permit inserting grounds of a Convention that does not apply into the paragraph (1) path, nor the converse.
The facts confirmed in this scene are only that A seeks enforcement against B's domestic property on the basis of a foreign adjudicatory document. Whether this document is a foreign arbitral award subject to the Convention, and what the scope of application and reservations of the Convention and the source provision on refusal grounds provide, have not been confirmed and therefore remain undetermined. Accordingly, on this scene alone one cannot determine which path among paragraph (1) and paragraph (2) is followed. The contrasting sentence that, when the change is made from a foreign judgment to an arbitral award, the path and basis between an execution judgment and an execution decision are chosen anew serves only to confirm that re-choosing the path is at the same time re-choosing the wording of the basis.
The conclusion this section permits is first to distinguish whether the Convention applies and then to take the corresponding paragraph of the source provision in question as the basis of the decision; what it does not permit is arbitrarily filling in refusal grounds without confirmation or broadening the judgment to the reasons for judgment or to paragraphs beyond the scope of the source provision. A state of insufficient materials is undetermined and does not immediately mean that no relief is available.
6.10Fine Distinctions Within the Stage
The preceding section confirmed that if whether the Convention applies remains undetermined, the system of refusal grounds to be used cannot be determined either. It must now be made clear exactly what the branch of Convention application denotes in this determination. In this situation, the direction of the defense varies depending on whether the document rendered abroad is an arbitral award and whether that award is subject to the Convention. Unless this criterion is fixed, one cannot first determine in which list to find the grounds for refusal.
Article 39 of the Arbitration Act sets out this branch in two paragraphs. Paragraph (1) provides that "the recognition or enforcement of a foreign arbitral award to which the "Convention on the Recognition and Enforcement of Foreign Arbitral Awards" applies shall be governed by the same Convention." Here the subject is the domestic court determining the recognition or enforcement of a foreign arbitral award, the act is the determination of the permissibility of recognition and enforcement, and the condition is that the award is subject to the Convention. Paragraph (2) of the same Article provides that, with respect to a foreign arbitral award not subject to the Convention, Article 217 of the Civil Procedure Act, Article 26(1) and Article 27 of the Civil Execution Act shall apply mutatis mutandis. On this wording alone, the scope of application of the Convention, the content of the reservations, and the lists of refusal grounds of each system cannot be determined.
What the wording of the preceding paragraph shows is the fact that the basis for recognition and enforcement changes according to whether the Convention applies. The case of paragraph (1) and the case of paragraph (2) each apply different norms to the same foreign arbitral award, so the list of refusal grounds cannot be determined without first dividing the recognition system to be applied. The reason this distinction is not a mere procedural convenience is that the recognition system immediately determines the system of refusal grounds. If the award is one to which the Convention applies, the grounds for refusal under the same Convention are followed; if it is an award to which it does not apply, one looks for the conditions for refusing recognition under the domestic provisions applied mutatis mutandis. Thus the branch of Convention application is the criterion that divides the recognition system applicable to a foreign arbitral award, and if the list of refusal grounds is composed while this criterion remains undetermined, that list does not stand on a determined basis.
The counterargument targets the cost of the confirmation work. To confirm the scope of application of the Convention and the reservations, materials must be gathered and legal principles examined, and for Debtor B, a domestic party, the concern remains that the right of defense and public policy may not be sufficiently protected. Such inconvenience and concern do not disappear. Nor does the need for the domestic court to examine the content of a foreign award carefully diminish. But even so, the list of refusal grounds cannot be arbitrarily completed without confirming whether the Convention applies. If, merely on the ground that the confirmation requires effort, the grounds of two systems with different bases are mixed into a single list, it becomes impossible to explain which system's conditions have been satisfied. The point as to cost raised by the counterargument is acknowledged, but the conclusion is maintained in the direction that completing a list without confirmation is not permitted.
Returning to the synthetic scene, the nature of the document brought by Creditor A, and whether that foreign arbitral award is subject to the Convention, have not been confirmed; accordingly, on the records of this section, which system of refusal grounds is to be applied cannot be determined. Although the record items were set in advance as the authenticated copy of the judgment or award, finality, service and appearance; the applicable Convention; grounds for recognition; and the type of execution judgment or decision, in the intervals where materials on the applicable Convention and its reservations have not been confirmed, the recognition system to be applied remains undetermined. Undetermined does not immediately mean that Creditor A's enforcement is refused, nor does it mean that Debtor B has already completed his defense. Only this much is determined: that on the present records one cannot decide from which system's list the grounds for recognition must be drawn.
What this section can say is that dividing the recognition system applicable to a foreign arbitral award is the branch of Convention application, and that the system of refusal grounds is determined only after that branch is settled. What this section cannot say is the determination of the scope of application of the Convention, the content of the reservations, and the specific refusal grounds belonging to each system. Beyond this determination, whether recognition actually leads on to enforcement, or what blocks it midway, cannot be asserted here. How are the operation, the blockage, and the undetermined of domestic recognition and enforcement of external determinations distinguished?
6.11Synthesis of Effectiveness, Blockage, and Undetermination
In this scene, the question of which recognition rules apply to a foreign arbitral award first opens up. The premise adopted at the preceding stage — separating the effects between the parties, actions for revocation, and recognition and enforcement decisions, and preserving the conditions for refusing recognition of domestic awards — is carried forward, but that argument is not unfolded again. The question of this section is limited to whether the recognition rules attached to a foreign arbitral award can be fixed as one. At the center of this question lies the reason why refusal grounds cannot be discussed while the rule to be applied remains undetermined. Accordingly, the path of the preceding section is accepted, and upon it the fact is confirmed that whether the Convention applies becomes the branch point of the decision system.
The source provision for answering this question is Article 39 of the Arbitration Act. In this sentence the subject is the foreign arbitral award, the act is recognition or enforcement, and the condition is the case in which the same Convention applies. Accordingly, for awards subject to the Convention, the Convention itself becomes the standard of regulation. Here only the contrast between these two paragraphs is addressed, and no other requirements newly demanded by the provisions are sought. Ultimately, depending on which side the object of application falls on, the source provisions constituting the basis for recognition and enforcement diverge.
Contrasting the above two paragraphs reveals why the criterion of the branch of Convention application must first be determined. Under this distinction, the condition that opens is where the applicable system, the recognition conditions, and domestic enforcement permission for a foreign judgment or an arbitral award are in place; the condition that blocks is where the essential requirements for recognition of a foreign judgment are absent, or where the statutory refusal grounds for the arbitral award in question are recognized and domestic enforcement permission cannot be obtained. The undetermined remains where the applicable Convention and reservations, or the materials necessary for the recognition requirements, have not been confirmed. These three correspond to different stages of determination and cannot be lumped into one.
The counterargument that confirming the applicable treaty and reservations raises costs targets the point that the procedure of confirming, in each case, whether the Convention applies and the reservations delays and increases the burden of protecting the domestic party's right of defense and public policy. This criticism is not merely a matter of time; it also contains the concern that, in the process of respecting external determinations, the right of defense and public policy of domestic parties may not be sufficiently protected. If the list of refusal grounds is filled in without confirming whether the Convention applies, one is manipulating the basis of the list in a state where the system to be applied has not been determined. Through this answer the author does not deny the burden of the confirmation procedure, but maintains the conclusion that, notwithstanding that burden, the branch of the system to be applied must first be determined.
In the synthetic scene, A seeks enforcement based on a foreign adjudicatory document, that is, a foreign arbitral award, and B's domestic property is designated as the object of enforcement. The decision records of this scene were set only in the categories of the transcript or authentic copy of the trial or award, finality, service and appearance; the applicable Convention; grounds for recognition; and the type of execution judgment or decision, and are not records actually collected. On these records only the branch is determined that, if whether the Convention applies is confirmed, the relevant Convention is used, and otherwise the provisions applied mutatis mutandis are used. If the document in question is confirmed to be not a foreign judgment but an arbitral award, the path and basis to be applied must again be chosen between an execution judgment and an execution decision, and this is merely a change of conditions, not an additional fact of the case. Since no further materials on the content of the reservations or necessary for the recognition requirements have been confirmed, those items remain undetermined in this scene. This undetermined does not immediately mean that no relief is available.
The conclusion this section permits is that, in fixing the recognition system for a foreign arbitral award, the branch of whether the Convention applies is first determined, and accordingly the basis for recognition and enforcement is divided. By contrast, this section does not permit a conclusion that fills in the list of refusal grounds without confirming whether the Convention applies, nor a conclusion that asserts the possibility of recognition on the basis of unverified materials alone. The intervals in which the branch of Convention application is not determined are not asserted to be effectiveness or blockage but are left undetermined.
6.12이 권의 결론과 남는 물음
What the foregoing analysis left behind is the separation of effect between the parties, the action for revocation, and recognition and execution decision, together with the preservation of the conditions for refusing recognition of domestic awards. Creditor A seeks to execute, against the domestic property of debtor B, a foreign judgment document, and this attempt to use B's domestic property as leverage must pass through permission for domestic execution. Yet the mere fact that the document produced by A was rendered abroad does not determine which recognition system shall be applied domestically. Not every foreign award enters by one and the same path simply because it is a foreign award. The question raised here is: what recognition rules apply to foreign arbitral awards? Only by answering this question can the present separation of procedures extend to foreign awards.
Article 39 of the Arbitration Act provides two branches of basis for the recognition and enforcement of foreign arbitral awards. Here the subject is the court in charge of the recognition and enforcement of foreign arbitral awards, and the act is the determination permitting recognition or enforcement. The condition is whether the award in question is a foreign arbitral award to which the Convention applies. If the condition is met, the norm to apply is the Convention, and the list of grounds for refusal serving as the standard must also be sought within the scope set by the Convention. Article 39 (2) of the same Act provides that, as regards foreign arbitral awards to which the Convention does not apply, Article 217 of the Civil Procedure Act, Article 26 (1) and Article 27 of the Civil Execution Act shall apply mutatis mutandis, thereby designating a different basis (Arbitration Act, Article 39). Because the provision is divided into two paragraphs in this way, the court must first determine on which side the award falls.
The fact that these two paragraphs are divided means that the criterion dividing the recognition system applicable to foreign arbitral awards—that is, the branch point of Convention applicability—plays a substantive role. Whether the Convention applies is not merely a matter of choosing a citation form; it is the first step in determining the entire body of norms that serves as the basis for recognition and enforcement. Depending on whether one enters the path of paragraph (1) or the mutatis mutandis system of paragraph (2), the requirements to be verified and the list of grounds for refusal to be applied differ. Accordingly, one cannot cross this branch first and determine the grounds for refusal afterward. Combined with the separation of effect between the parties, the action for revocation, and recognition and execution decision, and the preservation of the conditions for refusing recognition of domestic awards, which the preceding section maintained, this branch becomes the starting point for the recognition rules applicable to foreign awards.
Putting this branch first exacts a price, because confirming the applicable treaty and the reservations raises costs. For the court to determine whether the Convention applies, it must review the materials reaching to the scope of application of the Convention surrounding the award in question and the confirmation of reservations, and creditor A must bear the time and expense incurred in that confirmation process. From B's standpoint, there is also a serious concern that, if external determinations are respected, the right of defense of domestic parties and public policy may not be sufficiently protected. At its foundation lies the worry that it is wrong to open the door to enforcement merely because an award was rendered abroad, when the opportunity to contest it domestically was not sufficiently obtained or the award is contrary to domestic public policy. If one arbitrarily fills in the list of grounds for refusal without first passing through the branch of Convention applicability, judgment is rendered without even determining to which system that list belongs. The magnitude of the costs and concerns cannot serve as grounds for omitting the confirmation of the branch.
Returning to the synthetic scene, creditor A seeks to execute, against the domestic property of debtor B, a foreign judgment document. In this scene, whether the document produced by A is a foreign arbitral award, and whether that award is subject to the Convention, are not established. Nor is the state of the records concerning the authenticated copy of the award and its finality and service, the records concerning appearance in the proceedings, the records concerning the applicable Convention and the grounds for recognition, and the records concerning the execution judgment or decision fixed in the synthetic scene. Accordingly, this scene alone does not determine whether Article 39 (1) of the Arbitration Act applies to the recognition and enforcement of the foreign arbitral award, or whether the matter enters the mutatis mutandis system of paragraph (2). If the document in question is confirmed to be an arbitral award rather than a foreign judgment, the applicable path and basis must be chosen anew between the execution judgment and the execution decision, and this shows only the direction to be confirmed and does not newly determine the actual facts of this scene. Unless the materials necessary for the applicable Convention and the reservations or the requirements for recognition are confirmed, which system of grounds for refusal is to be used also remains undetermined.
What this section permits is to clarify what the criterion is for dividing the recognition system applicable to foreign arbitral awards. What has been confirmed here is limited to the point that whether the Convention applies must be determined first, and that if this branch remains undetermined, the system of grounds for refusal cannot be determined either. What this section does not permit is to determine the specific content of the scope of application, reservations, and grounds for refusal of the Convention. Since nothing has been confirmed as to extending that list of grounds in this section, the matter is left aside. The question that the next section takes up beyond this boundary is: is it always more effective relief the more performance the court grants?
Statutes referred to
Questions left open
- How should domestic standards of protection and respect for international judgments be reconciled?
- What effect do the costs of translation and service have on small-value international relief?
- Can relief and the protection of public policy both be achieved through partial recognition?