'Winner of the Running Boom' Hoka Licensing Rights Dispute: Why Major Corporations Are Withdrawing from the Muddy Battle [Why&Next]

ICDR Emergency Order Maintains Status Quo

Main Ruling and Deckers' Next Move Are Key Variables

Big Corporations Back Away Due to Risks

Joyworks' Survival at Stake If Distribution Rights Are Lost

The dispute over the Korean licensing rights for Hoka—considered the biggest beneficiary of the domestic running boom—is showing signs of turning into a prolonged conflict. Recently, Joyworks, the brand’s local distributor, announced that it would retain its business rights based on an emergency order from the International Centre for Dispute Resolution (ICDR) in the United States, launching a campaign to sway public opinion. However, the fashion industry remains skeptical. Industry observers say that the recent decision is merely a provisional measure to maintain the status quo until a final ruling is made, and that no conclusive verdict has been reached yet.

Capture of Hoka Homepage

"Nothing Has Been Decided"... Limitations of the ICDR Emergency Order

According to industry sources on June 27, Joyworks recently received a second emergency order from the ICDR, a body under the American Arbitration Association (AAA), instructing it to maintain its business rights in Korea.

The dispute began earlier this year when Deckers Outdoor (hereafter, Deckers) notified Joyworks of the termination of their Korean distribution contract, citing an assault case involving Joyworks’ former CEO. Joyworks argued that the unilateral contract termination was unfair, as the facts surrounding the incident had not been sufficiently clarified, and filed for international arbitration with the ICDR. In April, Joyworks obtained the first emergency order from the ICDR, which barred Deckers from appointing a new distributor in Korea. Although Deckers contested this and requested a review, the same judgment was upheld in the second emergency order issued on June 24.

Joyworks is emphasizing that this gives it grounds to maintain its position as the official distributor in Korea. However, the fashion industry argues that interpreting this decision as a final victory is misguided.

An industry insider stated, "We have seen many foreign brand licensing disputes, but rarely has there been a case as messy and noisy as this Hoka situation. While Joyworks is highlighting only the favorable aspects, this emergency order is an interim measure to maintain the status quo until a final arbitration ruling, similar to a provisional injunction in Korea."

In reality, the emergency order does not make a final judgment on the legality of the contract termination or the continuation of the distribution contract. The main arbitration process is only just beginning, and since international arbitration typically takes several months to years, it is expected that a final decision will take considerable time. Industry sources point out that since Deckers remains intent on terminating the contract, it is difficult to predict the outcome at this stage.

Musinsa CI

Once Competed, but... "The Risks Are Greater"

Hoka is one of the fastest-growing brands in Korea, thanks to the expansion of the domestic running market. For this reason, major fashion companies such as Musinsa, Shinsegae International, E-Land World, and LF were once reportedly considering acquiring the licensing rights.

Musinsa, in particular, is said to have actively approached Deckers in an effort to secure a new high-growth brand, even submitting a letter of intent to become Hoka’s exclusive Korean distributor. Shinsegae International was considered a strong contender given its successful operation of Deckers’ mega-hit brand UGG, E-Land World has experience distributing New Balance, and LF has experience managing global sports brands.

However, after the assault case involving Joyworks’ former CEO became public and the legal dispute dragged on, the atmosphere changed. For large companies sensitive to ESG management and brand image, the risks related to the dispute and reputation were seen as outweighing the potential benefits of acquiring the distribution rights.

Another industry insider said, "Currently, no company is willing to take on the complexities of this dispute and actively pursue the licensing rights."

Room for Major Companies to Re-enter... Possibility of Direct Entry by Deckers

The industry believes that the relationship between Joyworks and Deckers has already deteriorated to the point where reconciliation is unlikely. In particular, if the main arbitration process drags on, the contract period may end before a final ruling is made. The exact expiration date of the contract between Joyworks and Deckers is confidential. However, according to industry sources, brand distribution contracts are usually renewed annually, and Deckers reportedly renewed the contract last summer.

If the existing contract expires before a final arbitration decision is reached, Deckers could legitimately terminate the contract by refusing renewal, rendering the ICDR’s emergency order effectively moot.

If the main arbitration process results in a breakup between the two parties, competition for the Korean licensing rights could heat up once again. However, for now, most companies reportedly prefer to wait until the dispute is resolved.

Some observers suggest that Deckers could also consider entering the Korean market directly. Given Hoka’s strong brand recognition in Korea, there is a scenario in which Deckers could establish a local subsidiary and operate without a domestic partner.

Another industry source emphasized, "If a final decision is reached and legal risks are resolved, major companies are likely to re-enter the competition for the licensing rights."

Joyworks CI

Beyond Hoka, Other Brands at Risk... Concerns Over 'Domino Effect'

This dispute is critical for Joyworks because Hoka is a core part of the company’s business. Since Hoka accounts for a significant portion of Joyworks’ sales, defending the licensing rights is a matter of survival for the company. Hoka’s domestic sales last year are estimated to have been between 100 billion and 120 billion won.

Joyworks currently distributes other brands in Korea, including Saucony, Satisfy, and Noda. Industry observers warn that if the contract with Deckers is ultimately terminated or the legal dispute drags on, it could negatively impact partnerships with other foreign brands as well. This is because global brands consider stability and reputation to be key factors when selecting local partners.

A senior industry official stated, "Although Joyworks may be able to buy some time with interim orders, if the parent company is determined to terminate the partnership, it will be difficult to defend the distribution rights in the long term. Ultimately, once the legal risks are fully resolved, the true competition for licensing rights among companies seeking to take the lead in the market will resurface."

This content was produced with the assistance of AI translation services.