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    A. Korean Technologies Co. Ltd. Vs Lerma, 542 SCRA 1

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    Valora France Miral Aranas
    This case involves a dispute between Korean Technologies Co. Ltd. (KOGIES) and Pacific General Steel Manufacturing Corporation (PGSMC) over a contract for KOGIES to set up an LPG cylinder manufacturing plant in the Philippines. When financial difficulties arose and PGSMC rescinded the contract, KOGIES initiated arbitration proceedings in Korea per the contract's arbitration clause. Both the trial court and appellate court found the arbitration clause invalid as contrary to public policy. However, the Supreme Court ultimately ruled that the arbitration clause stipulating arbitration in Korea was not against public policy. The Court ordered the parties to submit to arbitration in Korea as agreed in the contract.

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    A. Korean Technologies Co. Ltd. Vs Lerma, 542 SCRA 1

    Uploaded by

    Valora France Miral Aranas
    122 views2 pages
    This case involves a dispute between Korean Technologies Co. Ltd. (KOGIES) and Pacific General Steel Manufacturing Corporation (PGSMC) over a contract for KOGIES to set up an LPG cylinder manufacturing plant in the Philippines. When financial difficulties arose and PGSMC rescinded the contract, KOGIES initiated arbitration proceedings in Korea per the contract's arbitration clause. Both the trial court and appellate court found the arbitration clause invalid as contrary to public policy. However, the Supreme Court ultimately ruled that the arbitration clause stipulating arbitration in Korea was not against public policy. The Court ordered the parties to submit to arbitration in Korea as agreed in the contract.

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    A. Korean Technologies Co. Ltd. vs Lerma, 542 SCRA 1

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    This case involves a dispute between Korean Technologies Co. Ltd. (KOGIES) and Pacific General Steel Manufacturing Corporation (PGSMC) over a contract for KOGIES to set up an LPG cylinder manufacturing plant in the Philippines. When financial difficulties arose and PGSMC rescinded the contract, KOGIES initiated arbitration proceedings in Korea per the contract's arbitration clause. Both the trial court and appellate court found the arbitration clause invalid as contrary to public policy. However, the Supreme Court ultimately ruled that the arbitration clause stipulating arbitration in Korea was not against public policy. The Court ordered the parties to submit to arbitration in Korea as agreed in the contract.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    122 views2 pages

    A. Korean Technologies Co. Ltd. Vs Lerma, 542 SCRA 1

    Uploaded by

    Valora France Miral Aranas
    This case involves a dispute between Korean Technologies Co. Ltd. (KOGIES) and Pacific General Steel Manufacturing Corporation (PGSMC) over a contract for KOGIES to set up an LPG cylinder manufacturing plant in the Philippines. When financial difficulties arose and PGSMC rescinded the contract, KOGIES initiated arbitration proceedings in Korea per the contract's arbitration clause. Both the trial court and appellate court found the arbitration clause invalid as contrary to public policy. However, the Supreme Court ultimately ruled that the arbitration clause stipulating arbitration in Korea was not against public policy. The Court ordered the parties to submit to arbitration in Korea as agreed in the contract.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Korean Technologies Co. Ltd.

    (KOGIES) vs Judge Lerma and PACIFIC GENERAL STEEL


    MANUFACTURING CORPORATION(PGSMC), 542 SCRA 1
    G.R. No. 143581 January 7, 2008
    a. Facts
    KOGIES) is a Korean corporation which is engaged in the supply and installation of Liquefied
    Petroleum Gas (LPG) Cylinder manufacturing plants, while private respondent Pacific General
    Steel Manufacturing Corp. (PGSMC) is a domestic corporation.
    PGSMC and KOGIES executed a Contract in the Philippines whereby KOGIES would set up an
    LPG Cylinder Manufacturing Plant in Carmona, Cavite.
    PGSMC encountered financial difficulties affecting the supply of materials, thus forcing the
    parties to agree that KOGIES would be deemed to have completely complied with the contract
    when the latter delivered the machinery and facilities. However, the check sent by PGSMC was
    stopped because of “value was not received” due to the low quality of the machineries and
    equipment it delivered. PGSMC wrote a letter to rescind the contract.
    KOGIES averred that PGSMC violated Art. 15 of their Contract by unilaterally rescinding the
    contract without resorting to arbitration. KOGIES instituted an Application for Arbitration before
    the Korean Commercial Arbitration Board (KCAB) in Seoul, Korea pursuant to Art. 15 of the
    Contract as amended.
    Kogies filed a Complaint for Specific Performance and TRO
    PGSMC argues that the arbitration clause, was null and void for being against public policy as it
    ousts the local courts of jurisdiction over the instant controversy.
    b. Issue/s
    WON the arbitration clause in a contract mutually agreed upon by the parties stipulating that
    they would submit themselves to arbitration in a foreign country is contrary to public policy.
    c. Ruling of the RTC,
    RTC held that Art. 15 of the Contract as amended was invalid as it tended to oust the trial court
    or any other court jurisdiction over any dispute that may arise between the parties.
    d. Ruling of the CA,
    The Court of Appeals affirmed the trial court and declared that the arbitration clause which
    provided for a final determination of the legal rights of the parties to the contract by arbitration
    was against public policy.
    e. Final Ruling of the SC
    The arbitration clause which stipulates that the arbitration must be done in Seoul, Korea in
    accordance with the Commercial Arbitration Rules of the KCAB, and that the arbitral award is
    final and binding, is not contrary to public policy.
    In case a foreign arbitral body is chosen by the parties, the arbitration rules of our domestic
    arbitration bodies would not be applied.
    As an incorporation of the Arbitration Rules of the UNCITRAL Model Law , Sec. 24 of RA
    9285 states that the RTC does not have jurisdiction over disputes that are properly the subject of
    arbitration pursuant to an arbitration clause.
    foreign arbitral awards when confirmed by the RTC are deemed not as a judgment of a foreign
    court but as a foreign arbitral award, and when confirmed, are enforced as final and executory
    decisions of our courts of law.
    The parties are hereby ORDERED to submit themselves to the arbitration of their dispute and
    differences arising from the subject Contract before the KCAB

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