[Contribution] Implications of multinational construction territory expansion and global legal services

The domestic construction industry's overseas expansion is dire. In the past, the main focus was plants in the Middle East, infrastructure in Asia, and urban development in Africa, but in the 2020s, the landscape is changing, with orders reaching $3 billion (approximately KRW 4.4 trillion) per year by entering Western markets such as North America and Europe.

To secure competitiveness in the borderless legal service market, we must not limit ourselves to the narrow fence of the existing Overseas Construction Promotion Act and the overseas EPC (engineering, procurement, and construction) level. It is time to change the frame of providing global legal services from a macro perspective that encompasses the entire project, such as investment development and urban development.

Legal review from the overseas expansion/negotiation stage: Examples of binding force of applicable law
In overseas construction practice, governing laws, dispute resolution methods, and contract conditions are complexly intertwined. In particular, as international standard contracts, including FIDIC (Federation Internationale Des Ingenieurs-Conseils) contract terms, are widely used, legal review from the overseas expansion and negotiation stage has become the starting point for multinational legal services.

The Supreme Court's position on the application of governing laws to overseas engineering contracts (2016Da222712) also clearly demonstrates the importance of drafting contracts for design, construction, and operation. In that decision, the Supreme Court ruled that if there is a clear agreement between the parties on the choice of governing law, it must be followed. This reaffirms that even if the issue is closely related to domestic law, such as trade secrets, the governing law clause in the contract has a strong binding force that changes the standard of trial itself.

Between domestic law and international arbitration: Arbitration awards in construction disputes
Disputes in the overseas construction field are commonly resolved through international arbitration institutions such as the ICC (International Arbitration Court) and SIAC (Singapore International Arbitration Center). In particular, such arbitral awards have the same effect as domestic final judgments in accordance with the New York Convention (Convention on Recognition and Enforcement of Foreign Arbitral Awards). However, the New York Convention stipulates that 'execution may be refused if it is contrary to public order in the country where the execution is carried out.'

In addition, the court recently ruled that "'violation of public order' under the New York Convention should be interpreted very exceptionally and restrictively" (Seoul Central District Court 2021 Kagi 2778), showing a position that places importance on the stability and predictability of international arbitral awards. This ultimately gives an important implication that the role of lawyers should be expanded into convergence experts who deeply understand and respond to construction technology and international contract practices.

Expanding overseas expansion and challenges of global legal services
In the midst of the opening of the legal market, legal services are now positioned as a key strategic asset that determines the success or failure of a project beyond an after-the-fact means. In particular, providing multinational legal services in a timely manner and designing advantageously from the initial contract terms in areas where our company has strengths, such as plants, shipbuilding, and marine structures, have value beyond the ability to win orders.

To this end, we must actively consider providing legal consulting services from domestic law firms as a package when receiving overseas orders, or providing legal consulting support to developing countries in connection with international development cooperation (ODA) projects. At the same time, active support should be provided to strengthen multinational capabilities by closely cooperating with global law firms in the Americas and Europe so that our legal services can stand shoulder to shoulder with the global market.

Small Business Team

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