In Search of How to Improve Consumer Arbitration in South Korea

The Korean Arbitration Act lacks the provision(s) for consumer protection, while Article 3 of the Addenda of the Japanese Arbitration Act prescribes the provision on exception relating to arbitration agreements concluded between a consumer and a business. In light of the discrepancy of bargaining power between a consumer and a business, the Japanese Arbitration Act states that a consumer may revoke a consumer arbitration agreement unless the consumer is a claimant in arbitral proceedings based on that agreement. Also, in the event that the party who is a consumer fails to appear on the date of the oral hearing, the said party shall be deemed to have cancelled the consumer arbitration. In Korea, the Korea Consumer Agency plays a major role in engaging in consumer mediation. Some of them are concerned with undertaking contracts or construction contracts, even though there is some doubt as to whether contractors of those contracts can be classified as consumers. At the outset, the Article explains the definition of a consumer in this regard. Afterwards, it deals with the current development in consumer arbitration before the Korean Commercial Arbitration Board (hereinafter referred to as “KCAB”), including arbitrations under undertaking contracts and construction contracts. In this context, it discusses the absence of arbitration before the Korea Consumer Agency. Based on the recent developments in consumer arbitration, it makes the following concluding remarks by proposing some reforms on consumer arbitration in Korea. In this context, KCAB needs to allow mediation followed, in the absence of a settlement, by [expedited] arbitration under KCAB domestic and international arbitration rules. Also, KCAB needs to add a category entitled “consumer-related cases” as a specific field of arbitration cases.