How Do You Choose Between Litigation and Arbitration in Cross-Border Disputes Involving Korea?

Short Answer

There is no universal answer.

In cross-border disputes involving Korea, the better choice between litigation and arbitration depends mainly on where enforcement will be needed, where the counterparty’s assets are located, whether urgent provisional measures are required, and whether finality or appellate review is more important.

In many cases, the key question is not simply “Which forum is better?” but “Which forum will lead to an enforceable and practical result?”

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Why Enforcement Strategy Comes First

The starting point should often be enforcement.

If the counterparty’s assets are mainly located in Korea, Korean court litigation may provide a more direct enforcement path after judgment.

By contrast, if assets are located in several countries, arbitration may be more attractive because foreign arbitral awards are often enforced under the New York Convention, subject to limited refusal grounds.

For foreign companies, forum choice should be evaluated together with the likely enforcement country or countries.

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When Korean Court Litigation May Be Better

Korean court litigation may be preferable where the dispute is closely connected to Korea.

For example, litigation may be more practical where:

• The counterparty’s assets are mainly located in Korea
• The dispute is governed by Korean law
• The key witnesses and documents are located in Korea
• Korean court authority is needed for procedural or enforcement reasons
• The party wants access to an appellate process

If enforcement will occur only in Korea, obtaining a Korean judgment may sometimes be more straightforward than obtaining a foreign judgment and later seeking enforcement in Korea.

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When Arbitration May Be Better

Arbitration may be preferable where the dispute has a stronger international character.

For example, arbitration may be more practical where:

• The parties are located in different countries
• Neutrality is important
• Confidentiality is important
• Enforcement may be needed in multiple jurisdictions
• The dispute involves complex commercial or technical issues
• The parties want a final and internationally enforceable decision

Arbitration is commonly used in international contracts involving Korean companies through institutions such as:

• International Chamber of Commerce (ICC)
• Singapore International Arbitration Centre (SIAC)
• Hong Kong International Arbitration Centre (HKIAC)
• London Court of International Arbitration (LCIA)

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What If Assets Are Located in Korea?

If assets are located in Korea, the strategy should account for Korean enforcement from the beginning.

Relevant assets may include:

• Bank accounts
• Receivables
• Real estate
• Shares
• Lease deposits
• Other attachable rights or property

If a foreign judgment is obtained, the creditor generally needs a Korean enforcement judgment (exequatur) before compulsory enforcement can begin.

If a foreign arbitral award is obtained, the creditor generally needs a Korean court enforcement procedure, often under the New York Convention and the Korean Arbitration Act.

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Can Korean Assets Be Preserved During Arbitration?

Yes, in many cases.

Even if the main dispute is subject to arbitration, a party may still seek provisional measures from a Korean court to preserve assets or rights located in Korea.

For example, a party may consider Korean court relief where:

• The dispute is subject to foreign arbitration
• The Korean counterparty has assets in Korea
• There is a risk of asset dissipation
• Urgent relief is needed before the final arbitral award

This means arbitration and Korean court provisional measures can sometimes be used together as part of the same strategy.

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When Does the Appeal Process Matter?

Litigation and arbitration differ significantly in finality.

Korean court litigation generally allows appeals, which may be useful if a party wants multiple levels of judicial review.

Arbitration, by contrast, is usually more final. An arbitral award is not normally reviewed through a full appeal on the merits. Challenges at the setting-aside or enforcement stage are generally limited to specific grounds such as procedural defects, jurisdictional issues, due process concerns, or public policy.

For parties that value finality, arbitration may be attractive. For parties that want appellate review, litigation may be more appropriate.

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What Role Does the Contract Play?

The contract may already determine the available forum.

Before choosing a strategy, foreign companies should review:

• The dispute resolution clause
• The arbitration clause
• The court jurisdiction clause
• The governing law clause
• The language provision
• Any clause addressing interim or provisional relief

In some cases, the contract may require arbitration. In other cases, the contract may allow court litigation or create ambiguity that must be addressed before filing.

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Practical Considerations for Foreign Companies

Before deciding between litigation and arbitration, foreign companies should ask:

• Where are the counterparty’s assets?
• Will enforcement be needed in Korea or multiple countries?
• Is urgent asset preservation needed?
• Does the contract require arbitration or court litigation?
• Is confidentiality important?
• Is appellate review important?
• Where are the key documents and witnesses?
• What is the expected cost and timeline?

The best forum is usually the one that supports the overall recovery strategy, not merely the one that appears favorable at the start.

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Conclusion

Choosing between litigation and arbitration in cross-border disputes involving Korea requires more than a general comparison of court proceedings and arbitration.

The decision should be based on asset location, enforcement strategy, provisional measures, confidentiality, finality, cost, and the contract terms.

In practice, the most effective strategy is to choose the forum that not only allows the party to win, but also allows the party to obtain a result that can actually be enforced.

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