Case of the Day: KT Corp. v. ABS Holdings
Posted on April 13, 2018
The case of the day is KT Corp. v. ABS Holdings, Ltd. (S.D.N.Y. 2018). KT was a Korean firm that managed Korea’s fleet of communications satellites. ABS was a Bermuda corporation doing business in Hong Kong. In 2010, KT and ABS made a contract for the purchase and sale of the KOREASAT-3 satellite. Title would pass only once “any necessary approvals and licenses, including the U.S. State Department approval and the approvals and consents required for and during the Orbital Slot Use Period, have been received.” The State Department gave its approval, the money ($500,000) changed hands, and KT gave ABS a bill of sale. But two years later, the Korean Ministry of Science declared that the contract was invalid because it violated the Korean Foreign Trade Act. The parties engaged in an arbitration about the title to the satellite in New York. The tribunal, with one arbitrator dissenting, determined that title had passed to ABS.
KT moved to vacate the award, and ABS moved to confirm. Most of the decision is as you would expect—KT failed to show manifest disregard of the law, the tribunal did not exceed its authority, etc. There was one interesting point, though: KT argued that public policy required the US court to recognize the Korean government’s assertion that the contract was invalid. The US judge noted, first, that the Korean decision was administrative rather than judicial and thus entitled to less deference. Moreover, the decision was issued without prior notice to ABS. The judge doesn’t spell out the implications, but in general, you don’t accord a former decision preclusive effect unless it was actually litigated. KT’s assertion that it would face incompatible obligations if the award was confirmed, was unpersuasive in light of ABS’s lack of an opportunity to litigate the validity issue before the Korean Ministry gave its decision.