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Final Award

INTRODUCTION

1.
In this arbitration, Claimant Galaxia Electronics Co., Ltd. ("Galaxia") requests from Respondent RWS Management, Inc. ("RWS") payment of the amount of USD 8,857,949.00 allegedly outstanding under a debt assumption agreement entitled "Accounts Receivable Payment Agreement" dated 27 March 2015 between Galaxia and RWS ("ARPA"),1 as amended by a confirmation letter dated 31 August 2015 among Galaxia, Luxmax U.S.A. ("Luxma"x) and RWS ("Confirmation Letter").2 Under the ARPA as amended by the Confirmation Letter, RWS assumed joint and several liability for all debt obligations then owed by Luxmax to Galaxia.
2.
As RWS defaulted on its payment obligations under the ARPA as amended by the Confirmation Letter, Galaxia and RWS entered into two subsequent agreements entitled Acknowledgement and Agreement Concerning Repayment of Certain Past Due Debt Obligations, in which RWS agreed to pay Galaxia a portion of certain sums then owed to Galaxia by certain dates. The first agreement was executed on 11 December 2015 ("11 December 2015 Agreement"),3 and the second agreement was executed on 24 May 2016 ("24 May 2016 Agreement"),4 together with the 11 December 2015 Agreement, the "Acknowledgement Agreements".
3.
As RWS continued to disregard its payment obligations under the ARPA, Confirmation Letter and Acknowledgment Agreements, on 13 July 2016, Galaxia filed a lawsuit seeking damages against RWS, Luxmax. and their principals, Mr Scarnechia and Mr Murphy, with the United States District Court for the Central District of California, Western Division (the "U.S. Court").5
4.
In response, RWS and Luxmax filed a motion to compel arbitration with the U.S. Court, alleging that the dispute between Galaxia and RWS and Luxmax should be referred to arbitration in Korea.6 On 6 June 2018, the U.S. Court partially granted RWS's motion and ruled that the arbitration agreement in the ARPA applies only to such claims arising out of the debts under the ARPA (as amended by the Confirmation Letter) that are distinct from those described in the Acknowledgement Agreements.7
5.
In consideration of the U.S. Court ruling, Galaxia brought this arbitration to compel RWS to perform its payment obligations under the ARPA (as amended by the Confirmation Letter) that do not overlap with those set forth in the Acknowledgement Agreements. The acknowledged debt under the Confirmation Letter is USD 20,287,245.00 of which USD 12,458,529.00 is not covered in the Acknowledgement Agreements. Galaxia claims that RWS has failed to make full payment, and to date, the amount of USD 8,857,949.00 remains outstanding.
6.
The arbitration is based on an arbitration agreement contained in Clause 9 of the ARPA which reads as follows:

"Any disputes, controversies or differences which may arise between the parties, out of or in relation to or in connection with this Agreement shall be finally settled by arbitration in Korea in accordance with the rules and procedures of the Korean Commercial Arbitration Board. The arbitration shall be conducted in the English language. The award thereof shall be final and binding upon the parties."

I.THE PARTIES

Claimant Galaxia Electronics Co., Ltd. is a company established under the laws of the Republic of Korea, which is in the business of manufacturing and selling LED display products that are used for the purpose of large-scale outdoor and indoor video display. Galaxia's contact details are as follows:

Address: Galaxia Electronics Co., Ltd.
50. Omokcheonro 132 Beongil
Gwonseon-gu, Suwon-si
Gyeonggi-do 16642
Republic of Korea

Attention: Mr Junhak Shim

Telephone: +82-31-8060-8902

Facsimile: +82-31-8060-8999

E-mail: openmind@galaxia.co.kr

Lee & Ko represents Galaxia in this arbitration. Its contact details in this arbitration are as follows:

Address: Lee & Ko
Hanjin Main Building
63 Namdaemun-ro, Jung-gu
Seoul 04532
Republic of Korea

Attention: Mr Sean Sungwoo Lim
Mr David Kim
Ms Sunyoung Kim
Ms Han Ah Lee

Telephone: +82-2-2191-3008

Facsimile: +82-2-772-4001

E-mail: sean.lim@leeko.com
david.kim@leeko.com
sunyoung.kim@leeko.com
hanah.lee@leeko.com

Respondent RWS Management, Inc. is an Illinois corporation with its principal place of business in Nevada. RWS's contact details are as follows:

Address: RWS Management, Inc.
909 Armstrong Street
Algonquin
IL, 60102, United States of America

Attention: Mr Robert W. Scarnechia
9500 Church Road
Barrington Hills IL, 60010, United States of America

Telephone: +1-818-519-3162

Facsimile: +1-847-589-8415

E-mail: rwscamechia@yahoo.com

II. PROCEDURAL HISTORY

7.
On 16 July 2018, Claimant filed a Request for Arbitration accompanied by factual exhibits C-1 to C-12 and legal exhibits CL-1 and CL-2, and the KCAB registered the filing.
8.
On or around 24 July 2018, the KCAB Secretariat served the Request for Arbitration on Respondent together with the Commencement of Arbitration letter.
9.
Respondent did not file its Answer to the Request for Arbitration within the 30-day period pursuant to Article 9 of the KCAB International Arbitration Rules but requested a 60-day extension by letter of 26 July 2018, which was submitted on 22 August 2018.
10.
By e-mail of 22 August 2018 Respondent advised KCAB that it agreed that the arbitration be decided by a Sole Arbitrator.
11.
By e-mail of 28 August 2018 the KCAB Secretariat granted Respondent a 30-day extension of time for submitting its Answer and extended the due date to 21 September 2018. The KCAB reminded Respondent that by the Commencement of Arbitration letter the Parties had been requested to pay the advances to cover the costs of the arbitration no later than by 12 September 2018.
12.
By e-mail of 14 September 2018 to the KCAB Secretariat Respondent requested that the advance be waived or that it would be given more time for the payment.
13.
By letter of 27 September 2018 the KCAB Secretariat advised Respondent that it had not received Respondent's Answer by the extended due date of 21 September 2018 and again requested Respondent to file an Answer.
14.
By letter of 1 October 2018 the KCAB Secretariat advised Respondent that Claimant had paid Respondent's portion of the advance on costs.
15.
On 16 October 2018 the KCAB appointed Dr. Peter Heckel, attorney-at-law in Frankfurt am Main, Germany, as Sole Arbitrator in this arbitration and notified the Parties on this appointment by e-mail of 17 October 2018.
16.
By Procedural Order No. 1 of 31 October 2018 the Sole Arbitrator ordered that Respondent file an Answer to the Request for Arbitration no later than by 16 November 2018 and suggested to the Parties several dates for a preliminary procedural conference with the Parties to be held by telephone.
17.
By e-mail of 2 November 2018 Respondent submitted only a rudimentary Answer to the Request for Arbitration "deny[ing] most of the claims".
18.
In a telephone conference on 13 November 2018 the Sole Arbitrator discussed with the Parties the arbitration proceedings, in particular a provisional procedural timetable.
19.
By Procedural Order No. 2 of 14 November 2018 the Sole Arbitrator established a Provisional Procedural Timetable and issued Special Procedural Rules regarding Written Submissions dated 14 November 2018. Furthermore, Respondent was ordered to clarify the Answers submitted on 2 November 2018 no later than by 21 November 2018 by answering certain questions of the Sole Arbitrator as listed in Procedural Order No. 2.
20.
On 31 December 2018 Claimant submitted its Statement of Claim accompanied by factual exhibits C-13 to C-33 and by legal exhibits CL-3 and CL-4 as well as by a schedule describing the calculation of Claimant's claimed amount under this arbitration.
21.
By e-mail of 16 January 2019 Respondent asked the Sole Arbitrator whether "there [was] an update on the documents from Galaxia".
22.
By e-mail of 17 January 2019 the Sole Arbitrator advised Respondent that Claimant had submitted its Statement of Claim on 31 December 2018, which, according to the relevant e-mail-distribution list, Respondent should have received on the same date. The Sole Arbitrator attached the entire submission of Claimant again as a matter of courtesy.
23.
By e-mail of 19 January 2019 Respondent asked for a two-week extension for its response to the Statement of Claim.
24.
By Procedural Order No. 3 of 22 January 2019 the Sole Arbitrator extended the period for Respondent's submission of its response to the Statement of Claim by one week only and ordered Respondent to submit its response no later than by 17 February 2019.
25.
By the date of the issuance of this award Respondent has still not submitted a response to the Statement of Claim.
26.
By Procedural Order No. 4 of 8 March 2019 the Sole Arbitrator requested the Parties to advise him of their availability for a pre-hearing telephone conference and to submit a list of issues to be addressed in that conference.
27.
While Claimant complied with the Sole Arbitrator's requests by e-mail of 12 March 2019, Respondent did not react.
28.
By Procedural Order No. 5 of 18 March 2019 the Sole Arbitrator invited the Parties to a pre-hearing telephone conference to be held on 25 March 2019.
29.
On 25 March 2019 the pre-hearing telephone conference was held by the Sole Arbitrator in which Claimant was represented by legal counsel while Respondent did not participate.
30.
By notice of hearing of 22 May 2019 the KCAB Secretariat informed the Parties that the hearing in this arbitration case would be held on 26 June 2019 at the Seoul International Dispute Resolution Center.
31.
By Procedural Order No. 6 of 24 May 2019 the Sole Arbitrator requested the Parties to advise who is going to attend the hearing.
32.
On 26 June 2019, the Sole Arbitrator conducted an in-person hearing at the Seoul International Dispute Resolution Center. At this hearing Claimant was represented by Mr Heungkyu Yang of Hyosung TNC Corporation and Ms Sunyoung Kim and Ms Han Ah Lee, both of the law firm Lee & Ko. Respondent failed to appear.
33.
At the hearing the Sole Arbitrator covered the procedural history of this arbitration and emphasized that Respondent had been duly notified of every step of the arbitration, had had every opportunity to participate in the arbitration and to respond to the allegations and claims raised by Claimant, but failed to participate. Claimant held an opening statement of about 45 minutes and made some minor corrections regarding the English translation of the written witness statement of Mr Eun-Pyo Chang dated 31 December 2018 submitted along with the Statement of Claim of even date. Thereafter, the Sole Arbitrator called the witness Mr Eun-Pyo Chang and asked him whether he could confirm his witness statement. The witness stated that there was no need for any correction or amendment of the written witness statement. The Sole Arbitrator told the witness that he saw no need for any additional questions and asked Claimant's counsel whether she would see a necessity for direct examination. As Claimant's counsel confirmed she would see no such necessity, the Sole Arbitrator released the witness. Thereafter, the Sole Arbitrator ordered Claimant to submit its submission on costs by 26 July 2019 and closed the hearing.
34.
On 26 July 2019, Claimant submitted its submission on costs.
35.
By Procedural Order No. 7 of 26 July 2019 the Sole Arbitrator granted Respondent the opportunity to submit its comments on the submission on costs no later than by 9 August 2019.
36.
Upon Respondent's failure to submit any comments, by Procedural Order No. 8 of 15 August 2019 the Arbitral Tribunal declared the proceedings closed pursuant to Article 31 para. 1 of the KCAB International Arbitration Rules.

III. SUMMARY OF THE FACTS

37.
The following summary is a resume of the substantial factual allegations and legal arguments submitted by the Parties. The Sole Arbitrator has duly considered all written and oral statements of the Parties as well as the written witness statement dated 31 December 2018 and the oral testimony of Mr. Eun-Pyo Chang in the hearing of 26 June 2019. Any omission of a factual allegation or an argument of a Party in this summary must not lead to the conclusion that this allegation or argument has been disregarded by the Sole Arbitrator in his decision process.

A. CLAIMANT'S POSITION

38.
Beginning in 2008, Galaxia sold millions of US dollars' worth of light-emitting diode ("LED") products to Luxmax and its principals, Mr Daniel Murphy ("Mr Murphy") and Mr Robert William Scarnechia ("Mr Scarnechia"). While Galaxia fulfilled its contractual obligations toward Luxmax by delivering all ordered products, Luxmax failed to fully perform its payment obligations and the outstanding balances had increased to millions of US dollars. On 27 March 2015, Galaxia and RWS entered into the Accounts Receivable Payment Agreement ("ARPA")8 in which RWS agreed to assume as its own legal obligations the debt obligations then owed by Luxmax to Galaxia. Under the ARPA, RWS also promised to submit a new repayment plan by 10 April 2015, specifying, among others, the planned payment dates.
39.
In Clause 1 and Exhibit A of the ARPA, the parties acknowledged that the total amount of debts owed by Luxmax to Galaxia as of 27 March 2015 was USD 19,447,111. Of such amount, the accounts receivable that was overdue for at least 120 days from the shipment date of the goods ("Past Due Accounts Receivable") amounted to USD 13,182,903:

1. Amount of Outstanding Accounts Receivable

The parties hereby confirm, acknowledge and recognize that the accounts receivable amounts, including amounts not yet due as well as the amounts of the Past Due Accounts Receivable, are as follows (collectively, the "Assumed Obligations"):

[Account Receivable (A/R) List]

(Unit: thousand US$)

CustomerTotal A/RPast Due A/R
VER11,9186,825
RWS1,4281,428
KinoFlo3,0152,739
Disney1,700846
Standard Vision1,0881,088
ETC299258

Total 19,447 13,183
* Past Due A/R means A/R remaining unpaid for at least 120 days from the
shipment date of the Goods.
* A more detailed description of the Accounts Receivable is set forth in
Exhibit A.

40.
Clause 3(a) of the ARPA required RWS to submit a new repayment plan specifying, among others, the planned payment dates, installment amounts and sources of funds for repayment ("New Debtor Repayment Plan") by 10 April 2015. Also, RWS was required to set out in the New Debtor Repayment Plan a detailed payment schedule that would result in full payment of Past Due Accounts Receivable by no later than: (i) 30 April 2015 for Past Due Accounts Receivable with respect to VER and (ii) 31 July 2015 with respect to other customers. Payments for non-Past Due Accounts Receivable were to be made by the original payment due dates:

3. Payment Schedule

(a) The New Debtor shall prepare and deliver a written repayment schedule and plan (the "New Debtor Repayment Plan") to the Creditor within the 2-week period immediately following the date of this Agreement. The New Debtor Repayment Plan shall provide a reasonably detailed schedule of payments to be made by the New Debtor in such installments and amounts as will result in the payment in full of all Past Due Accounts Receivable no later than (i) April 30, 2015, in the case of the VER Past Due A/R amounts [...]; and (ii) July 31, 2015, in the case of all other Past Due A/R amounts [...] With regard to any accounts receivable that are not yet due as of the date of this Agreement, the New Debtor Repayment Plan shall provide for the prompt payment of each such amount when and as it falls due in accordance with the original terms and due dates thereof, unless otherwise agreed to by the Creditor [...].

41.
As set forth in Clause 5 of the ARPA, RWS pledged to bear joint and several liability to Galaxia for the payment of all of the debts owed by Luxmax to Galaxia as long as such amounts remain unpaid:

5. Joint-and-Several Liability

[...] Joint-and-several liability of the New Debtor and LUXMAX USA will continue to apply with regard to any and all amounts of the Assumed Obligations for so long as such amounts remain unpaid.

42.
In Clause 6 of the ARPA, RWS also agreed that it would bear all fees and out of pocket expenses (including the reasonable fees and expenses of Galaxia's counsel) in relation to the enforcement or protection of the rights of Galaxia under the ARPA:

6. Expenses

The New Debtor agrees to pay on demand all fees and out of pocket expenses (including the reasonable fees and expenses of Creditor's counsel) in any way relating to the enforcement or protection of the rights of the Creditor hereunder.

43.
In Clause 9 of the ARPA, the parties agreed to resolve all disputes arising out of the ARPA through arbitration in Korea in accordance with the rules of the Korean Commercial Arbitration Board:

9. Arbitration

All disputes, controversies or differences which may arise between the parties, out of or in relation to or in connection with this Agreement shall be finally settled by arbitration in Korea in accordance with the rules and procedures of the Korean Commercial Arbitration Board. The arbitration shall be conducted in the English language. The award thereof shall be final and binding upon the parties.

44.
However, RWS neither made payments nor submitted a new repayment plan in accordance with the ARPA. After negotiations with Mr Scarnechia, Galaxia entered into another agreement, the Confirmation Letter,9 with Luxmax and RWS. In the Confirmation Letter, the parties agreed to amend the debt amount under the ARPA and RWS confirmed its obligation to assume the debts owed by Luxmax to Galaxia on a joint and several basis.
45.
The aggregate amount of the acknowledged debt under the Confirmation Letter was USD 20,287,245 as of 31 August 2015. The revised amount under the Confirmation Letter reflects additional debts arising out of new orders, payments, and certain adjustments the parties made to the amounts and details of the debts since the execution of the ARPA.

Table 1: Debts Recognized in the ARPA and Confirmation Letter (Unit: US$)

ARPAConfirmation Letter
Customer Total Accounts Receivable Total Accounts Receivable
VER 11,917,742 6,794,376
RWS 1,427,444 6,390,208

KinoFlo 3,015,173 3,130,828
Disney 1,699,924 2,571,006
Standard Vision 1,088,205 1,090,708
ETC 298,624 310,119
Total19,447,11120,287,245

46.
The Confirmation Letter does not have an arbitration clause but contains the following permissive forum selection clause (emphasis added):

This Letter shall be governed by and construed in accordance with the laws of Korea. The parties agree to seek to resolve any disputes arising out of or concerning this Letter amicably and in good faith and agree that any disputes that are not so resolved by the parties in a timely manner may be submitted to the Seoul Central District Court for resolution by the court.

47.
Yet RWS continued to default on its payment obligations under the Confirmation Letter and disregarded its obligation to submit a new repayment plan under the ARPA. As RWS again promised Galaxia that it would pay the outstanding debts, on 11 December 2015 Galaxia once again entered into a debt acknowledgment agreement with RWS to facilitate its repayment of the existing debts ("11 December 2015 Agreement").10
48.
In the 11 December 2015 Agreement, RWS made specific acknowledgements of four categories of debt:
49.
First, RWS agreed to pay USD 2,881,384, in part on 18 December 2015 and in part on another mutually agreed upon date, for the balance owing for the 956 Units of Winvision 8MM HD Products11 (emphasis added):

11 December 2015 Agreement

(2) RWS acknowledges that the Debt is past due and owed by RWS to Galaxia, and RWS agrees to repay the Debt in accordance with the payment schedule stated below:

Payment Schedule :

(a) The amount of payments past due and owed for the 956 units of Winvision 8HD is USS 2,881,384.

Of this past due amount

- US$ 1,381,384 will be paid on December 18, 2015; and

- USS 1,500,000 will be paid on or before mutually agreed upon date by both parties, upon final determination of its accountability on or before December 15, 2015.

50.
The above amount was not included in the ARPA or the Confirmation Letter because Mr Scarnechia represented to Galaxia that Luxmax paid Galaxia this amount in full in January 2015. However, in an email dated 21 October 2015 sent by Mr Murphy to Mr Franky Oh of Galaxia,12 Mr Murphy indicated that the payment of USD 3,000,000 made on 27 January 2015 was for 750 units of Win Air 9mm products and their accessories sold to VER pursuant to Purchase Order No. 14070213, not the 956 Units of Winvision 8HD Products. Therefore, the parties revived the debt amount of USD 2,881,384 for the 956 Units of Winvision 8HD Products in the 11 December 2015 Agreement.
51.
Second, RWS agreed to pay USD 741,444 on or before 15 January 2016 for the balance owning on the 246 units of WinVision 8 HD products and their accessories ("246 Units of Winvision 8 HD Products") sold to RWS pursuant to Purchase Order No. 13030738 (emphasis added):

11 December 2015 Agreement

(2) RWS acknowledges that the Debt is past due and owed by RWS to Galaxia, and RWS agrees to repay the Debt in accordance with the payment schedule stated below:

Payment Schedule :

[...]

(b) The amount of payments past due and owed for the 246 units of Winvision 8HD is USS 741,444. This past due amount will be paid on or before January 15, 2016.

52.
Third, RWS agreed to pay Galaxia USD 936,054 on or before 15 January 2016 for the balance owing on D1 products and Win Air Fixed 6mm products that were sold to Disney pursuant to Purchase Order Nos. 073013, 082013, 08201414 and LRWS50001315 (emphasis added):

11 December 2015 Agreement

(2) RWS acknowledges that the Debt is past due and owed by RWS to Galaxia, and RWS agrees to repay the Debt in accordance with the payment schedule stated below:

Payment Schedule :

[...]

(c) The amount of payments past due and owed for Disney - D1 (sold in 2013 at a purchase price of US$ 378,041) and for the Win Air Fixed 6mm (sold in 2014 at a purchase price of US$ 558,013) is USS 936,054. This past due amount will be paid on or before January 15, 2016.

53.
Lastly, RWS agreed to pay USD 3,269,834 (= USD 995,106 + USD 2,274,728) on or before 22 January 2016 for the balance owing on a total of 874 units (= 266 units + 608 units) of Winvision Air 916 products and their accessories ("874 Units of Winvision Air 9 Products") sold to RWS pursuant to Purchase Order No. 11225517 (emphasis added):

11 December 2015 Agreement

(2) RWS acknowledges that the Debt is past due and owed by RWS to Galaxia, and RWS agrees to repay the Debt in accordance with the payment schedule stated below:

Payment Schedule :

[...]

(d) The amount of payments past due and owed for the 266 units of Winvision Air 9 is USS 995,106. This past due amount will be paid on or before January 22, 2016.

(e) The amount of payments past due and owed for the 608 units of Winvision Air 9 is USS 2,274,728. This past due amount will be paid on or before January 22, 2016.

54.
The 11 December 2015 Agreement contains the following mandatory forum selection clause, wherein the parties agreed to submit all disputes arising under or in connection with the agreement to the Seoul Central District Court (emphasis added):

Any disputes or issues arising under or in connection with this document and the contents thereof shall be subject to and construed in accordance with the laws of the Republic of Korea, and shall be subject to the exclusive jurisdiction of the Seoul Central District Court.

55.
As RWS again failed to fully honor its promises under the Confirmation Letter and the 11 December 2015 Agreement, RWS once again assured Galaxia that it would pay the outstanding debts. On 24 May 2016, Galaxia entered into another acknowledgement agreement with RWS ("24 May 2016 Agreement";18 together with the 11 December 2015 Agreement, "Acknowledgement Agreements"), in which RWS agreed to pay certain debts by certain specific dates.
56.
In the 24 May 2016 Agreement, RWS made specific acknowledgements of three categories of debt:
57.
First, RWS agreed to pay Galaxia USD 769,834 on or before 1 June 2016 for the balance owing on the 874 Units of Winvision Air 9 Products (emphasis added):

24 May 2016 Agreement

(2) RWS acknowledges that the Debt is past due and owed by RWS to Galaxia, and RWS agrees to repay the Debt in accordance with the payment schedule stated below:

Payment Schedule

(a) The amount of payments past due and owed for the 874 units of Winvision Air 9 is US$ 3,269,834.

[...]

USS 769,834 will be paid on or before [*], 2016

58.
After the execution of the 11 December 2015 Agreement, Luxmax paid Galaxia USD 1,300,000, USD 200,000 and USD 1,000,000 on 23 February, 5 April and 28 April 2016, respectively (emphasis added):

24 May 2016 Agreement

(2) RWS acknowledges that the Debt is past due and owed by RWS to Galaxia, and RWS agrees to repay the Debt in accordance with the payment schedule stated below:

Payment Schedule

(a) The amount of payments past due and owed for the 874 units of Winvision Air 9 is US$ 3,269,834.

Of this past due amount:

- USS 1,300,000 paid on February 23, 2016;

- USS 200,000 paid on April 5, 2016;

- USS 1,000,000 paid on April 28, 2016;

Hence, the above debt amount of USD 3,269,834 in the 11 December 2015 Agreement was further reduced to USD 769,834 (= USD 3,269,834 - USD 1,300,000 - USD 200,000 -USD 1,000,000) in the 24 May 2016 Agreement.

59.
Second, RWS agreed to pay Galaxia USD 1,363,014 on or before 9 June 2016 for the balance owing on 565 units of GL6 products sold to POW Production ("POW") pursuant to Purchase Order No. 15.10.0004.19 This balance was not recognized in the ARPA or the Confirmation Letter because the above purchase order was placed after the ARPA and the Confirmation Letter were signed.
60.
Lastly, RWS agreed to pay Galaxia USD 1,130,400 on or before 13 June 2016 for the balance owing on 314 units of GL9 products sold to POW pursuant to Purchase Order No. 3.20 This balance was not recognized in the ARPA or the Confirmation Letter as the above purchase order was placed after the ARPA and the Confirmation were signed.
61.
The 24 May 2016 Agreement does not provide for an arbitration agreement, but contains the following mandatory forum selection clause (emphasis added):

Any disputes or issues arising under or in connection with this document and the contents thereof shall be subject to and construed in accordance with the laws of the Republic of Korea, and shall be subject to the exclusive jurisdiction of the Seoul Central District Court.

62.
Yet once again RWS continued to default on its obligation to pay off the debts under the APRA, Confirmation Letter and Acknowledgement Agreements. Accordingly, on 13 July 2016, Galaxia filed a lawsuit seeking damages against RWS, Luxmax and their principals, Mr Scarnechia and Mr Daniel Murphy, with the United States District Court for the Central District of California.21 On 27 September 2017, RWS and Luxmax filed a motion to compel arbitration with the U.S. Court, requesting that the dispute between Galaxia and RWS and Luxmax be resolved through arbitration pursuant to the arbitration agreement contained in Clause 9 of the ARPA.22
63.
On 6 June 2018, the U.S. Court issued an order ("U.S. Court Order") granting, in part, and denying, in part, RWS's motion to compel arbitration. The U.S. Court ruled that the arbitration agreement in the ARPA was not superseded by the dispute resolution clause in Section 5 of the Confirmation Letter because such clause is permissive, not mandatory.23 On the other hand, the U.S. Court found that the arbitration agreement in the ARPA was superseded in part by the mandatory forum selection clauses in the Acknowledgement Agreements as to claims for debts stated in both the ARPA and the Acknowledgement Agreements.24 Therefore, the U.S. Court concluded that the arbitration agreement in the ARPA applies only to claims arising out of debts identified in the ARPA which was amended by the Confirmation Letter that are distinct from those described in the Acknowledgement Agreements.25
64.
The aggregate accounts receivable acknowledged in the ARPA as amended by the Confirmation Letter is USD 20,287,245. In order to calculate the amount of claims subject to this arbitral proceeding, the debts recognized in both the Confirmation Letter and the Acknowledgement Agreements must first be deducted from USD 20,287,245 pursuant to the U.S. Court Order. Then, the arbitrable base amount should be adjusted based on facts newly discovered following the execution of the Confirmation Letter. Lastly, the amount of debts paid off or discounted after the execution of the Confirmation Letter must be subtracted.

(1) The Debts Recognized in Both the Acknowledgement Agreements and the Confirmation Letter

65.
There are three categories of debts that are recognized in both the Confirmation Letter and the Acknowledgment Agreements.
66.
First, the Confirmation Letter and the 11 December 2015 Agreement both recognize the outstanding balance for the 246 Units of Winvision 8HD Products. The Confirmation Letter identified the debt amount of these products as USD 741,444.
67.
Second, the Confirmation Letter and the 11 December 2015 Agreement both recognize the outstanding balance for the D1 products and Win Air Fixed 6mm products sold to Disney pursuant to Purchase Order Nos. 073013, 082013 and 082014. The Confirmation Letter identified the debt amount for these products as USD 936,054.
68.
Third, the Confirmation Letter and the Acknowledgement Agreements all recognize the debt for the 874 Units of Winvision Air 9 Products. The Confirmation Letter identified the debt amount of these products as USD 3,666,380 (=USD 1,870,700 + USD 1,795,680):
69.
Therefore, the sum of accounts receivable acknowledged in the ARPA as amended by the Confirmation Letter that is distinct from those described in the Acknowledgement Agreements is USD 14,943,367 ("Base Arbitrable Amount"). This amount is derived as follows:

(i) The total amount of accounts receivable under the Confirmation Letter: USD 20,287,245

minus

(ii) The three items of outstanding balances under the Confirmation Letter that are also acknowledged under either or both of the Acknowledgement Agreements: USD 5,343,878 (= USD 741,444 + USD 936,054 + USD 3,666,380)

(2) Adjustments to the Base Arbitrable Amount Based on New Findings

70.
After the execution of the Confirmation Letter, Mr Scarnechia and/or Mr Murphy made new statements to Galaxia as to certain payments that had been made by Luxmax to Galaxia prior to the execution of the Confirmation Letter. The new statements contradicted Mr Scarnechia's previous statements as to the debt accounts under the Confirmation Letter. This resulted in errors in the amount of total debts (USD 20,287,245) stipulated under the Confirmation Letter. Accordingly, adjustments should be made to the Base Arbitrable Amount to accurately reflect the debts owed by Luxmas to Galaxia as of 31 August 2015 (the date of the Confirmation Letter).
71.
First, an additional balance of USD 1,500,000 for the 801 Units of Winvision 9375 Air Products should be added to the Base Arbitrable Amount.
72.
Second, the outstanding balance for the 1,200 Units of Win Air 9 Products was wrongfully calculated as USD 2,947,499 in the Confirmation Letter and should be revised to the correct amount of USD 66,115.
73.
In sum, the Base Arbitrable Amount has to be adjusted to USD 13,561,983 (= USD 14,943,367 (amount of debts distinct from the Acknowledgement Agreements) + USD 1,500,000 (the outstanding balance for the 801 Units of Winvision 9375 Air Products not reflected in the Confirmation Letter) - USD 2,881,384 (neglected payment for the 1,200 Units of Win Air 9 Products)).

(3) Further Payments and Discounts

74.
Following the execution of the Confirmation Letter, RWS or Luxmax has made partial payments to Galaxia over the course of the past few years, and Galaxia has agreed to reduce certain accounts receivable of the Base Arbitrable Amount. The total of amount of payments and discounts applicable to the Base Arbitrable Amount is USD 4,704,033:
Customer Date of Payment Paid Amount Date of Shipment P.O. No.
VER 2015-11-10 41,055 2014-10-31 PO140702
2015-11-10 758,945 2014-11-30 PO140702
RWS 2015-10-05 677,349 2015-06-28 PO15.04.0001
KinoFlo 2015-10-27 480,735 2013-11-25 LUSA11182013-0
2016-05-09 198,930
2015-12-16 243,000 2015-04-30 LUSA02252015-0
2015-10-27 213,500 2015-04-30 LUSA02252015-1
2015-10-27 2,375
2015-10-27 2,625
2015-09-15 106,200 2015-04-30 LUSA04162015-0
2015-09-15 81,750 2015-04-30 LUSA04072015-0
2015-09-15 4,750 2015-05-28 LUSA04082015-0
2015-12-28 245,625 2015-05-31 LUSA02252015-0 /LUSA02252015-1
2016-02-24 303,094
2016-05-09 156,248
2016-09-30 703
2015-10-19 243,000 2015-06-28 LUSA02252015-0 #LUSA02252015-1
2016-03-16 413,800
2016-05-09 150,752
2016-06-30 2,375
2016-09-30 1,197
2017-02-09 2,625
DisneyDiscount 124,750 2014-09-30 P0070407 PO060612
2016-01-22 109,470 2014-10-27 60607
Discount 20,000 2014-11-08 60607
2016-01-22 67,930
ETC (USHIO) 2015-12-03 50,950 2015-03-11 2015-03-31 LUSA12232014
2015-12-03 200 2015-04-28 LUSA12232014
2015-12-03 100 2015-05-07 LUSA05062015
Total4,704,033
75.
The above amount should be subtracted from the adjusted Base Arbitrable Amount. Therefore, Galaxia's claim amount arbitrable in this arbitration is USD 8,857,949 (= USD 13,561,983 -USD 4,704,033).26
76.
In addition to the request for payment of the above amount, Galaxia requests interest at the statutory rates applicable in Korea, which are currently six percent per annum under Article 54 of the Korean Commercial Code for the period from 1 September 2015 (which is one day after the date of execution of the Confirmation Letter)27, up to 24 July 2018 (the date when RWS received the Request for Arbitration), and interest at the special statutory rate of 15% per annum under Article 3(1) of the Korean Act on Special Cases Concerning Expedition of Legal Proceedings from 25 July 2018 to the date of full payment of all amounts due and payable to Galaxia.
77.
Furthermore, Galaxia alleges that RWS not only defaulted on its payment obligations under the ARPA, the Confirmation Letter and the Acknowledgement Agreements, but also repeatedly acted in bad faith, e.g. by employing delay tactics and by fraudulently misappropriating financial amounts received from Luxmax destined for payment to Galaxia.

B. RESPONDENT'S POSITION

78.
In its Answer dated 2 November 2018 Respondent raised the following defenses:

1. RWS is no longer in business and no longer operating.

2. RWS denies "most of the claims" save for USD 2.4 million for products supplied to POW and states that Galaxia is basing this arbitration on incorrect numbers as it neglected to mention payments received from other companies.

3. Galaxia's claim should be dismissed because Luxmax and VER filed for bankruptcy under Chapter 7 of Title 11 of the United States Bankruptcy Code.

4. Luxmax may have made direct payments to Galaxia for some portion of the outstanding debts after Galaxia commenced the U.S. litigation.

C. GALAXIA’S REBUTTAL TO RWS'S ANSWER

79.
In its Statement of Claim dated 31 December 2018 Claimant argued that Respondent's defenses stated in the Answer dated 2 November 2018 are totally without merits for the following reasons:

1. It cannot be true that RWS does not exist as a company any longer because RWS neither has paid its outstanding debts under the ARPA, the Confirmation Letter and the Acknowledgement Agreements nor has it distributed any proceeds from its alleged liquidation to Galaxia.

2. Payments received by Galaxia from other companies have either been deducted from the receivables Galaxia is claiming in this arbitration or were made for balances not identified as a debt under the ARPA or the Confirmation Letter.

3. The amount of USD 2.4 million which RWS suggests that it owes Galaxia for products supplied to POW does not fall within the scope of debts subject to this arbitration.

4. Whether Luxmax and VER filed for bankruptcy under Chapter 7 of Title 11 of the United States Bankruptcy Code does not affect Galaxia's claim against RWS.

D. RESPONDENT'S RESPONSE DATED 19 JANUARY 2019 TO GALAXIA'S STATEMENT OF CLAIM

80.
By e-mail of 19 January 2019 RWS announced that it would send a formal response and alleged that Galaxia has never provided pro-forma invoices for any of the amounts owed but only commercial invoices, some of which were submitted with false information on pricing for Galaxia to avoid fees in Korea. The formal response announced by Respondent was never submitted in the course of this arbitration.

IV. REQUESTED RELIEF

81.
Galaxia seeks a final and binding award:

(a) ordering RWS to pay USD 8,857,949 to Galaxia;

(b) ordering RWS to pay interest on USD 8,857,949 at the following Korean statutory rates:

(i) six percent per annum for the period from 1 September, 2015 until 24 July 2018; and

(ii) fifteen percent per annum for the period from 25 July 2018 until the date on which RWS pays Galaxia USD 8,857,949;

(c) ordering RWS to reimburse Galaxia for all fees and out of pocket expenses incurred in the connection with this arbitration, including the costs of the arbitration (as defined in Article 50 of the KCAB International Rules) and legal fees; and

(d) ordering such other relief as the Tribunal deems appropriate.

82.
RWS never submitted a motion for dismissal of Galaxia's requested relief in the course of the arbitration.

V. JURISDICTION

83.
The Sole Arbitrator is competent to hear and decide this arbitration case. Clause 9 of the ARPA constitutes a valid arbitration agreement. In light of the fact that at the time of entering into the ARPA RWS had its place of business in the United States of America, the reference to "the rules and procedures of the Korean Commercial Arbitration Board" in Sentence 1 of Clause 9 of the ARPA has to be interpreted to provide that the KCAB International Arbitration Rules shall apply. In accordance with the Parties' agreement that the arbitration be conducted in Korea and pursuant to Article 24 of the KCAB International Arbitration Rules the Sole Arbitrator determines that Seoul, the Republic of Korea, shall be the place of arbitration. In its order of 6 June 2018 the U.S. Court ruled that the arbitration agreement in Clause 9 of the ARPA was not superseded by the dispute resolution clause in Section 5 of the Confirmation Letter providing for the jurisdiction of the Seoul Central District Court, because such clause is not mandatory. The Sole Arbitrator considers this issue as res judicata and shares the legal position of the U.S. Court.
84.
The jurisdiction of the Sole Arbitrator for this arbitration is not contested between the Parties.

VI. APPLICABLE LAW

85.
According to Clause 8 of the ARPA and Section 5 of the Confirmation Letter the Parties have validly chosen the laws of Korea as governing law for these agreements.

VII. THE TRIBUNAL’S ANALYSIS AND DECISION ON THE MERITS

A. PAYMENT CLAIM

86.
Galaxia's claim against RWS for payment of USD 8,857,949 is justified on the basis of the Debt Assumption Agreement as stated in Clause 2 of the ARPA as amended by the Confirmation Letter.
87.
The facts presented by Galaxia as summarised above in Section III.A. of this award are either uncontested by RWS or have been proven to the satisfaction of the Sole Arbitrator by documentary evidence provided by Galaxia or by the written witness statement of Mr. Eun-Pyo Chang dated 31 December 2018 as modified and confirmed by his oral testimony at the hearing of 26 June 2019.
88.
In line with the order of the U.S. Court of 6 June 2018 ruling that the arbitration agreement in the ARPA applies only to those claims arising out of the debts under the ARPA as amended by the Confirmation Letter that are distinct from those described in the Acknowledgement Agreements, in this arbitration Galaxia requests only payment of those obligations under the ARPA as amended by the Confirmation Letter that do not overlap with those set forth in the Acknowledgement Agreements, i.e. USD 8,857,949.
89.
The defenses raised by RWS have no merits:
90.
RWS failed to prove that it does not exist as a company any longer and Galaxia has not received any proceeds from its alleged liquidation, if any.
91.
RWS’s allegation that Galaxia is basing its payment requests in this arbitration on incorrect numbers by neglecting to mention payments received from other companies has not been supported by any means of evidence.
92.
It is irrelevant to the outcome of this arbitration whether Luxmax and VER filed for bankruptcy, because their bankruptcy, if any, would not affect RWS's debt owed to Galaxia.

B. CLAIM OF INTEREST

93.
Galaxia's request for the payment of interest on the outstanding accounts receivable at the statutory rates applicable under Korean law is justified (i) pursuant to Article 54 of the Korean Commercial Code from the payment due dates under the ARPA as amended by the Confirmation Letter, i.e. 1 September 2015, to the date on which RWS received the Request for Arbitration, i.e. 24 July 2018, and (ii) pursuant to Article 3(1) of the Korean Act on Special Cases Concerning Expedition of Legal Proceedings from the day following RWS's receipt of the Request for Arbitration, i.e. 25 July 2018, to the date of full payment of the requested amount of USD 8,857,949 to Galaxia.

C. CLAIM FOR COSTS

94.
Galaxia's request for reimbursement by RWS of all fees and out of pocket expenses incurred in connection with this arbitration, including the costs of the arbitration (as defined in Article 50 of the KCAB International Arbitration Rules) and legal fees is justified.
95.
The fixed Arbitration Costs for this arbitration case are as follows:

1. Fees

(1) Filing Fee: KRW 1,000,000

(2) Administrative Fees: KRW 38,177,000

2. VAT: KRW 3,917,700

3. Expenses

(1) Arbitrator's Expenses: KRW 6,174,877

(2) Necessary Expenses: KRW 61,279

4. Arbitrator's Fees: KRW 49,690,000

5. Total: KRW 99,020,856 (including VAT)

The Claimant has paid all of the fixed Arbitration Costs.

In accordance with Article 52 of the KCAB International Arbitration Rules the fixed Arbitration Costs of KRW 99,020,856 shall be fully borne by RWS as the unsuccessful party.

96.
All costs other than the Arbitration Costs stated in Galaxia's cost submission of 26 July 2019 namely

(1) Legal fees of Lee & Ko: KRW 267,188,000

(2) Translation fees of Lee & Ko: KRW 1,640,000

(3) Disbursements of Lee & Ko: KRW 780,140

(4) Court reporter services: KRW 13,103,480

(5) Interpreter services: KRW 3,150,000

Total: KRW 285,861,620

shall also be borne by RWS under Clause 6 of the ARPA, in which RWS agreed to pay on demand all fees and out of pocket expenses (including reasonable fees and expenses of Galaxia's counsel) in any way relating to the enforcement or protection of Galaxia's rights under the ARPA, and in accordance with Article 53 of the KCAB International Arbitration Rules. In the Sole Arbitrator's view the costs submitted by Galaxia are reasonable under the circumstances given in this arbitration and have not been contested by RWS.

VIII. DISPOSITION OF THE CASE

97.
On the grounds stated above the Arbitral Tribunal rules as follows:

1. RWS shall pay to Galaxia USD 8,857,949.

2. RWS shall pay to Galaxia interest on USD 8,857,949 at the following Korean statutory rates:

(a) six per cent per annum for the period from 1 September 2015 to 24 July 2018; and

(b) fifteen per cent per annum for the period from 25 July 2018 until the date on which RWS pays Galaxia USD 8,857,949.

3. RWS shall reimburse Galaxia for the fixed Arbitration Costs in the amount of KRW 99,020,856 and for the legal costs and necessary expenses incurred by Galaxia in the amount of KRW 285,861,620.

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