Kap-You (Kevin) Kim is a founding partner at Peter & Kim in Seoul. He was previously a senior partner at Bae, Kim & Lee LLC, where he headed the international arbitration practice for three decades. Kevin served as secretary general of the ICCA for four years, member of the LCIA Court for five years, vice chair of the IBA Arbitration Committee for three years, and as vice president of the ICC Court for ten years. Kevin has acted as counsel, presiding arbitrator, co-arbitrator or sole arbitrator in more than 300 international arbitration cases under various arbitration rules. Kevin now sits as the Chairman of the Korean Commercial Arbitration Board’s International Arbitration Committee.

Name one of your most memorable cases.

While I have been involved in many cases, two cases immediately come to mind. The first is the ICSID case brought by Lone Star Funds against the Republic of Korea which was the first ever investment arbitration case brought against Korea. The aggregate amount in dispute is estimated to be around US$ 5 billion, and we successfully reduced it to less than 5% of what was claimed in the decade-long case.

The second case is the Hyundai Oil Bank case, with an amount in dispute of approximately US$ 4 billion. The tribunal ordered the sale of 70 percent of the opposing party’s shares in an oil refining company jointly owned with our client, thereby transferring control of the company. We were awarded GAR’s “Win of the Year” in 2011 for this achievement.

What makes Peter & Kim stand out from its competitors in the market?

I believe that Peter & Kim stands out for its unique fusion and synergy of its lawyers. We established Peter & Kim to offer a truly international disputes practice with a team culturally rooted in Asia-Pacific and western Europe. The firm has continued to thrive as a result of identifying this gap in the market, and work to meet this demand from its offices in Bern, Geneva, Seoul, Singapore and Sydney. Keeping a tight-knit team of lawyers with deep expertise in serving European and Asian clients has given us more opportunities to represent clients in a diverse range of disputes. Our continuing successes in securing favourable outcomes for our clients are a testament to the viability of this integration.

While our size enables us to generally remain clear of conflicts, it has also allowed us to create a team of closely connected lawyers who can be trusted to work dynamically and synergistically. A diverse range of expertise and past experiences are organically shared between lawyers across all our offices, which in turn diversifies the capabilities and knowhow of our lawyers. In addition, with the number of lawyers in our firm acting as arbitrators, this allows us to give valuable insight to our clients when strategizing on their disputes.

How do your former vice-chairmanships and memberships at arbitration councils and committees enhance your practice?

I believe these roles have complemented my practice both as a counsel and as an arbitrator. For instance, my roles as vice-president of the ICC International Court of Arbitration, Advisory Board Member of the International Council for Commercial Arbitration, and Chair of the ICC Court Alumni Group have allowed me to gain intimate knowledge of the working procedures of various arbitral institutions and the considerations that underlie the management of cases by such institutions. This has helped me to better understand the application of the arbitration rules of various arbitral institutions, and to be at the forefront of developments and innovations in international arbitration practice.

I have also been able to take advantage of these opportunities to advocate for greater efficiency in the conduct of proceedings, which I consider desirable both as an arbitrator and as counsel. My formulation of the Gangnam Principles for international arbitration is in no small part due to the experience and insight I gained in being a part these arbitration councils and committees. While these have been beneficial to my practice as counsel and arbitrator, I believe that it is the clients and users of international arbitration who are ultimately the true beneficiaries of these experiences.

How has the coronavirus pandemic impacted third-party funding in arbitration, if at all?

Three years on, we have not seen the pandemic having any negative impact on third-party funding. Indeed, third-party funding was already on the rise even prior to the pandemic as evidenced for example by Hong Kong permitting third-party funding in 2019. There have also been significant positive developments in third-party funding in China as well as India recently.

Interest in third-party funding has been noticeably amplified by the coronavirus pandemic as it not only initiated new claims but also impacted companies faced with reduced cash flows. The overall lack of cashflow in some sectors was naturally conducive to more claims requiring third-party funding. However, this increase in demand is not without impact. While the competition for obtaining funding was already steep prior to the pandemic, the increased number of disputes requiring third-party funding means that successfully securing funding has become even more challenging. This trend is unlikely to change in the short term.

Some practitioners have told us of greater international harmonisation between arbitration codes of conduct, particularly for investor-state arbitration. Is this something you see, and how could it change arbitration?

One of the main efforts in harmonisation in this space is currently spearheaded by the ICSID Secretariat and UNCITRAL, who are collaborating on a draft Code of Conduct for Adjudicators in International Investment Disputes. The code seeks to harmonise the various sets of ethical standards applicable to decision-makers in investor-state disputes.

I welcome initiatives like this. It brings some level of normative certainty, and avoids contentious disagreements and controversies over differing ethical standards for arbitrators. Initiatives like this are both natural and necessary as arbitrations continue to become increasingly transnational and global.

I also see this as being particularly important for the proper scrutiny and enforcement of awards. Harmonised codes of conduct may be a solution to the increased scrutiny of arbitrator conduct that comes with investor-state arbitration. Whether this should be the final word on such issues, however, is a matter of debate. Whilst it is a welcome effort, I think that harmonized standards should continue to be cautiously applied. Harmonisation should not be achieved at the expense of fairness and balance, especially if codes of conduct are primarily geared towards, or give primacy to, one jurisdictional practice at the expense of others.

How is increased scrutiny towards social and environmental welfare affecting investment-treaty arbitrations?

Environmental, social and governance (ESG) issues are now under increased focus in the international arbitration space. Notably, a few high-stakes claims have brought much publicity to the matter. We have for instance seen that the renewable energy sector has been particularly affected by such claims. Spain and the aftermath of the modification of the incentive regime for renewable energy is a prime example of this as I have seen as the president of an ICSID ad hoc committee for such a case.

ESG has made its way to the top of the agenda for many States and corporations as a result of increased civil society advocacy, and modern investor-state dispute settlement mechanisms are now expected to ensure that both States and investors are accountable and transparent on such issues. This is reflected in model agreements and investment treaties which have incorporated provisions relating to sustainability and transparency.

Likewise, just as how the US re-entered the Paris Agreement, some states may try to join in on achieving greater sustainability goals. I believe that this may result in a potential increase in investor-state claims, particularly considering the breadth of causes of actions that can be brought under the scope of ESG. Indeed, States have also asserted increased scrutiny over other States and large corporations to ensure compliance with relevant ESG standards. There are now in place various mechanisms such as the UN Guiding Principles on Business and Human Rights and The Hague Rules on Business and Human Rights Arbitration, which provides for both the substance and procedure for access to scrutiny over a State or investor’s compliance with their ESG commitments.

To what extent does the shift towards virtual arbitration influence counsel when it comes to selecting the geography of their arbitrator’s seat?

Speaking from my experience, I believe that while virtual hearings for arbitration have brought increased flexibility to the arbitration practice, its impact has not been so substantial as to influence the parties’ considerations when selecting the geography of their arbitrator’s seat.

While parties now tend to resort to virtual hearings for minor or procedural disputes, I find that most parties, especially governments, continue to prefer traditional in-person hearings. Where costs is an overwhelming consideration, some commercial parties may be more inclined to accept virtual hearings, but the key considerations when selecting an arbitrator continue to be availability, relevant experience, knowledge of the applicable law and industry, as well as whether the arbitrator has the requisite civil or common law experience needed for the dispute.

In my experience, as certain types of hearings are better held in person, geography may not be a leading factor for selection. For example, I once participated in a second case management conference (CMC) in Tokyo as the president of a tribunal in an arbitration which was being conducted in accordance with the Gangnam Principles. Because the CMC would be conducted over a full day, during which the parties would be asked to make submissions on their respective positions and the tribunal would put questions to the parties, it was decided that an in-person format was desirable. This also allowed the tribunal to meet and discuss in person prior to the CMC. While all members of the tribunal were technically domiciled in different parts of Asia, another tribunal member and I had to travel to Tokyo from Europe and the US for the proceedings. The reality is that arbitrators and counsel are now starting to travel again, and the fact that they are resident in their home jurisdiction does not mean that they would be there prior to or during a hearing. Therefore, with a return to in-person hearings, and continued availability of virtual hearings as well, I do not see an arbitrator’s geography as having any influence over a party's choice when selecting arbitrators.

What steps can be made to increase diversity in the arbitration field?

There are many facets to diversity and inclusion (including race, ethnicity, cultural, gender, generational, nationality, disabilities, etc.). Meaningful progress in increasing diversity and inclusivity in international arbitration can only be made if arbitrators, external counsel, arbitral institutions and in-house counsel play their respective parts. While the arbitration community has made good progress in improving diversity and inclusivity over the past few years alone, there is always more that can be done. I am confident that the diversity pledges (such as the Equal Representation in Arbitration pledge) and taskforces will continue to make significant inroads to improving diversity and inclusivity.

To improve diversity in arbitrator appointments, I believe that lawyers and co-arbitrators (and even in-house counsel) can effect change by choosing to nominate minority candidates (of all facets) as well as younger practitioners as chairperson or president. For younger practitioners specifically, they are less likely to receive a nomination as co-arbitrator, perhaps due to a perception of lack of experience. But, if younger practitioners are nominated as a chairperson or president, they would then be able to lead the proceedings while being assisted by co-arbitrators who would be able to provide guidance and assistance. This would help minorities and younger practitioners gain more experience and visibility, leading to repeat appointments by parties and/or arbitral institutions. Institutions such as the ICC have taken steps to introduce standard language in its model letters to parties and co-arbitrators on diversity and inclusion in selecting arbitrators, amongst other measures. In-house counsel are also well placed to effect change, from reassessing their vetting processes to incorporating diversity and inclusivity parameters when reviewing or assessing potential arbitrators for their disputes.

Arbitrators should also be advocates for diversity and inclusivity, by endeavouring to remain cognisant at all times of the impact that cultural differences may have on the proceedings. Arbitrators should be mindful of subjective notions of common or business sense as applied in their home jurisdictions, and prevent this from restricting their understanding of cases involving parties from different cultural backgrounds. International arbitration’s roots lie in being an alternative to a system of adjudication governed by one single notion of laws catered for users hailing from a single jurisdiction, and diversity is the key to ensuring the continued relevance and growth of international arbitration.