The respected Comrade
"A favourable climate and good conditions for investment should be created in our economic development zones in order to revitalize their operation, and wide-scale tourism should be encouraged."
The DPRK has designated various economic development zones in different parts of the country and provided them with favourable climate and good conditions for investment. In particular, the system of external economic arbitration has been further perfected as required by international law to protect the just legal interests of foreign enterprises and investors.
The recognition and enforcement of the foreign arbitral award is one of the most important legal issues in the practice of international arbitration. This is because, in the nature of international arbitration aimed at the settlement of international economic disputes between parties with different legal areas, there are many cases in which the arbitral awards should be executed in other countries. Therefore, the effectiveness of international arbitration cannot be guaranteed if there is no legal guarantee for it.
For this purpose, in 1958, under the auspices of the United Nations, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) was adopted and the system of recognition and enforcement of foreign arbitral award was established. The DPRK has not yet acceded to the above mentioned Convention but legal requirements for the refusal to enforce the foreign arbitral award are almost similar to the provisions of the Convention.
The law relating to the enforcement of the foreign arbitral award in the DPRK are the "Law of the Democratic People's Republic of Korea on External Economic Arbitration", which was adopted in July 1999 and amended and supplemented four times to date, and the "the Law of the Democratic People's Republic of Korea on Execution of Property", which was adopted in December 2021.
First of all, we should have a correct understanding of the legal requirements for the enforcement of foreign arbitral awards.
In DPRK, the general procedure for enforcement of the arbitral award is as follows.
First, if the responsible party fails to fulfill the obligations stated in the arbitral award in time or fails to fulfill them honestly, the other party may apply for the enforcement of the award to a court or an institution concerned.
The application for the enforcement of the arbitral awards should be accompanied with a copy of it.
In addition, the court or the institution concerned should examine the application within 30 days of receipt of the application for the execution of the award, and execute it by judgment and decision.
When a party refuses to perform the award, measures may be taken; freezing of its bank account, seizure or confiscation of its vehicles and floating assets, removal of real estate owned by the external economic unit (excluding of objects invested by state), fines, cessation of operations and discontinuation of entry and exit of goods.
Article 64 of the "Law of the Democratic People's Republic of Korea on External Economic Arbitration" stipulates that "an award rendered by the arbitral tribunal of a foreign country should be acknowledged and executed in accordance with the relevant law of the DPRK" and paragraph 2 of Article 6 of the "Law of the Democratic People's Republic of Korea on External Economic Arbitration" stipulates that "it applies to the execution of judgment, decision and arbitral award made by a foreign court or arbitration institution submitted to the court of the DPRK".
Therefore, the "Law of the Democratic People's Republic of Korea on External Economic Arbitration" should be applied to the enforcement of the foreign arbitral award in the DPRK.
In accordance with this law, a party who wishes to execute the arbitral award of a foreign country in the DPRK may submit an application for the execution of property including a copy of the arbitral award or certificates of credits granted to the competent authority, and apply for the execution of property. In this case, the applicant should specify the name of the rightful person, the reason for application, the name of the obligator and other matters in the application, and it should be signed and have a stamp on it.
Upon receipt of the application for the execution of property, the execution body should examine the matters specified in the law and issue the execution document within 10 days of approval of the execution of the property.
In addition, the law stipulates specific matters relating to the execution of property such as investigation on the property of the obligator, the time of the execution of the property, the presence of the execution, the maintenance of the order of execution, the mandatory enforcement, the sale of the enforced property, the execution of a particular property, the enforcement of intellectual property, the execution of the real estate, the management and transfer of the guaranteed realty, and so on.
Next, we must have a correct understanding of the legal requirements for the refusal to enforce the foreign arbitral award.
Article 65 of the "Law of the Democratic People's Republic of Korea on External Economic Arbitration" stipulates the refusal of the enforcement of the foreign arbitral award in seven terms.
First of all, there is the fact that a party concerned was incompetent under the governing law at the time of making an agreement for arbitration, or the arbitration agreement is invalid under the law designated by the parties concerned and in the absence of such law, under the law of the country where the arbitration examination was conducted;
It is also the case that a party concerned was unable to make a response because he was not properly informed of the appointment of an arbitrator or the arbitration procedures or for unavoidable reasons;
It is also the case that an award is rendered in respect of a dispute that is not the subject of arbitration agreement, or has gone beyond the limit of arbitration agreement;
It is also the case that the composition of the arbitral tribunal or the arbitration procedures are in violation of the agreement of the parties or in the absence of such agreement, violates the law of the country where the arbitration examination was conducted;
It is also the case that an award does not yet have an effect on the party concerned but was revoked or suspended by a court of the country where the award was rendered or by the law of such country;
It is also the case that a dispute in question cannot be settled by the arbitration procedure under the law of the country where an award was rendered; or
It is also the case that the execution of an award is prejudicial to the public order of the DPRK.
This rule is similar to the Article 5 of the New York Convention, which stipulates the rejection of foreign arbitral award, but it differs in three aspects.
One is that in the Article 5. 1. (a) of the New York Convention, "the said agreement is not valid … under the law of where the award was made", whereas in the "Law of the Democratic People's Republic of Korea on External Economic Arbitration", "arbitration agreement is invalid … under the law of the country where the arbitration examination was conducted."
On the other hand, the provision of the Article 5. 1 (c) of the New York Convention, which stipulates as follows; "if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced", is not included in the "Law of the Democratic People's Republic of Korea on External Economic Arbitration".
The other is that Article 5. 2 (a) of the New York Convention defines a case in which "the subject matter of the difference is not capable of settlement by arbitration under the law of that country", whereas the "Law of the Democratic People's Republic of Korea on External Economic Arbitration" defines it as "a dispute in question cannot be settled by the arbitration procedure under the law of the country where an award was rendered".
In this way, DPRK continues to perfect the system of external economic arbitration through the amendment and supplement of the laws and regulations related to external economic arbitration in conformity with the external economic relations and the practice of the international arbitration law.
