A number of laws of Korea including the Financial Investment Services and Capital Market Act (the “Capital Market Act”) have provisions on financial ADR. Experts point out, however, that the current Capital Market Act has shown limitations in that decisions made by arbitration institutions authorized by the Capital Market Act have had no binding power over respondents. Such limitations stem from the right to file suits granted by Article 27 of the Constitution of Korea therefore, in order for financial ADR to be adopted effectively and have some degree of binding power over respondents, it should be made clear that there is no violation of Article 27 of the Constitution, which acknowledges that all Korean citizens have the right to file suits.
In the case of Japan the Financial Instruments and Exchange Law, which is similar to Korea"s Capital Market Act, is currently effective, but the decision to introduce financial ADR into its financial system could not be made until 2009 because of Article 37 of its Constitution, which is similar to Article 27 of Korea"s Constitution, even though there had been many years of debate.(1) With a revision of the Financial Instruments and Exchange Law that ended any issue over its constitutionality, financial ADR was able to be introduced formally as part of the country"s financial system in the 171th Diet session of 2009.
This paper looks at the right to file suit as acknowledged by Korea"s Constitution and the key elements and limitations on the binding power of financial ADR as referred to by Korea"s Capital Market Act, and finally it explores schemes to both allow nonreciprocal binding power for ADR and resolve the constitutionality issue of ADR. To find solutions it also examines Japan"s Financial Products Trade Law and Britain"s Financial Services and Markets Act of 2000. Part II of the essay focuses on the right to file suit under the Constitution, which includes the meaning and legal nature of the right to file criminal suits, the right of financial investors to file suits, and utilization of the appeal system in civil cases, overriding any “agree-not-tofile- suit-in-any-cases” agreements. Part III overviews the elements of dispute resolution under the Capital Market Act and explores the issue on whether to acknowledge its possession of nonreciprocal binding power by looking at cases of dispute resolution involving the Korea Exchange and the Korea Financial Investment Association and their legal effects. Part IV discusses legislative tactics to grant nonreciprocal binding power for ADR as employed by Japan"s Financial Instruments and Exchange Law and Britain"s Financial Services and Markets Act. Part V lists legislative schemes. The author makes suggestions and concludes that further study needs to be made in order to establish fairer principles and to find better solutions.