This case involves a globally renowned marine transportation company (“Client”). Its exclusive agency in Greece, which continued performing tasks such as making payments to third parties on behalf of the Client after the Client’s rehabilitation procedures began, claimed that these payments and the associated commission claims should be considered “priority claims” under the Debtor Rehabilitation and Bankruptcy Act. The agency applied for international arbitration to seek repayment of the priority claim of approximately KRW 2.9 billion. 

Representing the Client, DR & AJU meticulously refuted the agency’s claims, asserting that: (i) the claim does not constitute “priority claims” under the Debtor Rehabilitation and Bankruptcy Act, (ii) there is insufficient evidence and credibility regarding the agency’s alleged payments to third parties, and (iii) the agency’s failure to return part of the money collected on behalf of the Client, in violation of the contract, constitutes a breach of the agency contract. Moreover, we persuaded the arbitrator, who was not an expert in Korean law, that the Civil Act of Korea, which governs the agency contract in this case, requires a “high likelihood”, which is a higher burden of proof than common law, to recognize the claim of an applicant. Furthermore, we argued that as the agency continued to delay the proceedings and submitted evidence indiscriminately, we were forced to conduct additional reviews, incurring additional legal expenses. We contended that these costs should be borne by the agency due to its undue procedural delays.

After a thorough review of the evidential documents in this case, the arbitral tribunal dismissed all of the agency’s claims, determining that: (i) the agency had no right to the commission since it failed to transfer the money collected during the agency contract period to the Client, and (ii) there was insufficient or no evidence to support the agency’s claim that it had paid money to third parties. Moreover, the tribunal recognized the additional legal fees inevitably incurred during DR & AJU representing the Client and ordered the agency to bear these costs.

The major issue in this case was the interpretation of the agency contract and the meaning and scope of a priority claim under the Debtor Rehabilitation and Bankruptcy Act. DR & AJU achieved significant and rare success by not only securing the dismissal of all claims from the opposing party but also recovering the Client’s legal expenses. This outcome was achieved through a precise understanding of the relevant laws, a meticulous review of the extensive documents submitted by the opposing party, and well-crafted arguments regarding the burden of proof required by Korean law.