Up 337.1% year-on-year
Interior and other sectors also on the rise
The number of construction and real estate arbitration cases filed with the Korean Commercial Arbitration Board (KCAB) last year edged up slightly from the previous year, but with many large-scale cases involving substantial amounts in dispute, the total amount claimed surged to roughly 4.4 times the prior year's level.
The Korean Commercial Arbitration Board released its "2023 Construction and Real Estate Arbitration Statistics," reporting that a total of 128 construction and real estate arbitration cases were filed last year, with claims totaling 1.4286 trillion won.
This represents a 4.9% increase in the number of cases and a 337.1% increase in the amount claimed compared with the previous year (122 cases, 326.8 billion won). Out of all cases (368 cases, 1.5715 trillion won), these accounted for 34.8% of the case count and 90.9% of the total amount claimed, respectively.
The sharp rise in the amount claimed in construction and real estate arbitration cases stemmed from the filing of numerous large-scale cases involving greater amounts in dispute than in the previous year.
By public and private sector, public cases declined slightly in number from 48 cases (142.4 billion won) to 39 cases (934.7 billion won), yet the amount surged more than sixfold. This is attributed to an increase in filings of large construction cases related to power plants, as well as to disputes over large-scale new-town development profits.
Private-sector cases likewise saw a marked increase in amount, rising from 74 cases (204.3 billion won) to 86 cases (530.2 billion won). While public-sector cases had traditionally dominated large construction disputes, high-value cases have recently been increasing in the private sector as well, including a 320-billion-won additional construction-cost claim arising from the introduction of the 52-hour workweek.
By amount claimed, small and mid-sized cases of 1 billion won or less accounted for 70.3% of the total, which is interpreted as reflecting a steady increase in the use of arbitration for small-value construction cases such as interior work. Recognition of arbitration as a useful means of dispute resolution is spreading further throughout the interior industry, with arbitration agreements now being included in the construction contract terms of well-known interior brands.
Kim Tae-hoon, head of the KCAB's Arbitration Business Division, said, "The upward trend in the amount claimed in construction arbitration is encouraging," adding, "Following the revision and implementation at the end of August last year of the Ministry of Land, Infrastructure and Transport's notified 'Standard Contract for Private Construction Works,' which requires that either mediation or arbitration be designated as the dispute resolution method at the time of contract signing—before any dispute arises—we expect growing demand to resolve disputes such as those related to soaring price fluctuations smoothly and swiftly through arbitration."
Meanwhile, the Korean Commercial Arbitration Board, established in 1966, is the nation's only permanent statutory arbitration institution, carrying out dispute resolution work such as conducting arbitration proceedings for domestic and international civil and commercial disputes. Arbitration is a leading alternative dispute resolution system characterized by a single-instance process, closed hearings, decisions rendered by private-sector experts, and the domestic and international enforceability of awards under the Arbitration Act and UN conventions. In addition to handling arbitration cases, the KCAB provides dispute resolution services through mediation, conciliation, and consultation, and also carries out various government-commissioned projects such as ISD and NCP.