1/23/2015

Not Guilty Verdict for U.S. Government Employee with U.S. 8th Army: Announcement

We are proud to announce that, today, we received a not guilty verdict at the Seoul Central District Court for a crime concerning the trafficking in contraband into Korea.  The Korean prosecution requested, in the matter, a three-year jail sentence for the defendant.  The defendant, a former U.S. senior NCO and, now, U.S. government official working with the 8th Army was found not guilty by a three-judge panel.

Last week, we also, had a guilty verdict overthrown in an appeals court for a senior NCO.

We are proud to be one of the only law firms, in Korea, to obtain multiple non-guilty verdicts for the men and woman proudly serving the American and the Korean people.

Articles on Korean Criminal Law and Korean Criminal Lawyers that may be of interest:
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.

1/22/2015

Bye Bye Uber in Korea?

We may see the end of Uber in Korea.  The Korea Telecommunications Commission has requested the Korea Prosecution to file charges against the management of the company for the violation of a law related to location monitoring technology.

The Korea Telecommunications Commission claims Korea's Telecommunication Law requires all companies to register with the Commission any location monitoring services utilized in Korea.  Many of our favorite apps use location monitoring and are not registered with the Commission. 

The Seoul Government is in a fierce fight to ban the app in Korea, seemingly, as a means to protect taxi companies and private tax drivers. 

We suspect that the Korea Telecommunications Commission will soon block the app from usage in Korea.  The Commission blocks the usage of many websites in Korea that are, inter alia, against the interest of the nation.

The blockage of the app, may lead to the end of the Uber app in Korea.  This decision will be a welcomed occurrence for hotels, that will, likely, use this holding as a precedent to ban AirBnB.

As of the posting of this article, the Uber app is not blocked in Korea. 

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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.

1/21/2015

So you Want to Start a Partnership/Joint Venture in Korea?

Business, in Korea, can be profitable and enjoyable.  However, business in Korea can, also, lead you to a jail cell and premature balding. 

One key to success, in Korea, is to get the Korean joint venture structured by a professional from the start of the relationship with your joint venture partner(s).  Don't just download a joint venture agreement or partnership agreement from the internet.  Vet your partner and, also, learn the expectations of your partner.

We know you have "limited funds" (we all have limited funds -even multinationals and Donald Trump have limited funds) choosing to forgo having the deal structured by a professional and just downloading an agreement off the internet will, likely, lead to you having even less funds, less time and less hair.

Do not be what my father likes to call young kids these days - knuckleheads.  I saw cases that ended up in the Prosecutor's Office (we even filed some) and cases that lead to deportation. The amount of money that it costs to have a professional draft these agreements, must, be considered part of the cost of doing business. The amount should be no major issue for most.

Hey, I recently did a deal where one of the partners exclaimed that your final invoice was less than the cost of his pizza oven.   I love having our services being compared to a pizza oven.  That agreement, normally, will last longer than that pizza oven.

While this law firm, typically, assists multinational companies we, also, enjoy assisting some of the more entrepreneurial SMEs.

However, be prepared for some time with me. We never just slap in front of you a form agreement and have you make some comments on it. This is a waste of time and a sign of a hack.

Some basics that you lawyer, must, consider with considering your joint venture and articles of incorproation prior to starting a joint venture in Korea.
  1. Duties, Responsibilities, Roles, Titles and Expectations of each Partner?; 
  2. Arbitration, Language and Forum for Dispute Resolution?; 
  3.  Management Structure?; 
  4. Valuation, Windup, Termination?; 
  5. Remedies for Breach?; 
  6.  Exit Strategy;
  7. Outside Investors;
  8. Due Diligence, Due Diligence, Due Diligence - Did I mention Due Diligence?; 
  9. Limit Powers of the Representative Director?; 
  10. Retain Power to Appoint and Remove the Representative Director?; 
  11. Expansion Plans;
  12. Retain Majority Control or include other Minority Protection Clauses?; 
  13. Investment of Proceeds. 
  14. Hire an Independent Accountant and Utilize a Neutral REAL Statutory Auditor?; 
  15. What are you Getting out of the Joint Venture?; 
  16. What are you Giving Up?; 
  17. What is the Purpose of the Joint Venture?; 
  18. Financing Options?;
  19. Chushik, Yuhan etc.?;
  20.  and The List Goes On 
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.

1/20/2015

Retail Business in Korea by Tom Coyner

The following is an article written by Tom Coyner in 2007 that still has relevancy in today's evolving retail market.  Interesting read on an issue that hasn't changed much since 2007. 

It’s amazing what a decade can bring in a rapidly evolving economy such as Korea. In my recent article I discussed how traditional stores have seen their markets nibbled away by first department store and later convenience stores.

As important as these developments may be, Korean consumers are now being offered new alternatives Consider it was only a bit more than a decade ago, 1994, that Costco entered a joint venture with Shinsegae Department Store to create Korea’s first major discount store in Seoul, Price Club Korea.

Until the Asian financial crisis three years later, the two partners learned from each other. Shinsegae became familiar with warehouse-like discount super stores and Costco learned about Korean retailing. The two companies split apart with Costco buying out most of Shinsegae’s interests in the three existing stores for $94 million.

While Costco failed to meet its plans to expand to a total of 10 stores, its Seoul store became its most profitable single store worldwide, specializing in the retail of imported goods at low prices. Stodgy Shinsegae, Korea’s oldest department store, took its lessons and launched E-Mart, a hybrid of a Costco operation and what the Koreans guessed correctly what might work best in Korea.

Free from partner consensus, E-Mart aggressively started buying up cheap parcels of land and opening new stores at the rate of 10 a year. Listening to Korean consumers who liked the cheap prices but felt uncomfortable with bulk purchases, E-Mart offered discounted pricing in smaller quantities and in familiar environments similar to conventional department stores rather than warehouses. Furthermore, E-Mart -- and other Korean major discounters -- offer more fresh produce and feature special in-store events.

Korean discounters also provide additional retail experiences such as fast food outlets, food stalls and full restaurants. Within a few years, E-Mart has moved to the number one slot and represents as much as one third of discount retail sales that amounted to some 8.1 trillion won or roughly in excess of $8.1 billion.

That figures consisted of about 80 percent of the total Shinsegae retail sales of 10.4 trillion, in 2005, generated by 71 stores in 2004; and by 2006, there were 102 stores (including 16 Wal-Mart outlets in Korea with sales of roughly $2.6 billion, plus seven in China).

In many ways, E-Mart has become the model after which Lotte Mart (as of 2006, 47 outlets with $4 billion sales), Home Plus (as of 2206, 51 outlets with $6 billion sales) and others have followed. France’s Carrefour and America’s Wal-Mart took a more Western approach in line with their global strategies -- and proved to be much less successful than the market leaders. Britain’s Tesco PLC, who partnered with Samsung Group to form Samsung Home Plus, had done better than other foreign investors into this market sector.

In fact, in 2004, Home Plus ranked second in market after E-Mart with annual revenue of $3.5 billion generated by 31 stores. Wal-Mart had only 16 stores in all of Korea with just one store in the Seoul metropolitan area.

As a result, Wal-Mart could not achieve the economies of scale and most Koreans did not become familiar with the company’s name. Furthermore, the tall shelving and the bulk packaging, that were beyond most local consumers’ imagination, put off Korean shoppers. Later, Wal-Mart moved to break down the bulk packaging, but it was too late. In May 2006, Wal-Mart sold all 16 stores to E-Mart owner, Shinsegae, 825 billion won (approximately $825 million).

In 2006, Carrefour sold its Korean operations to E-Land, originally a fashion retail company, but one with superior logistics and distribution outlets capable of handling a wider variety of goods. As of this writing, the Carrefour stores number 32 and are undergoing remodeling under the new name of Homever. Nationwide, sales for all large discount stores came to W21.4 trillion, or more than $20 billion.

Online Retailers: TV Home Shopping and Cyber Malls As one foreign consumer products company country manager put it, ``Technology is changing Korea! Korea is one of the most advanced countries in the world regarding high-speed Internet and cell phone penetration. There has been incredible growth behind home shopping channels and Internet channels. I see great access to Korean consumers. It is now possible for a company to get their own shopping mall on the Internet, etc.’’ In 1996, Korea’s TV home shopping industry came into existence.

TV home shopping sharply expanded during the first two years of the new millennium, averaging over 60 percent growth annually. In 2003, the industry’s growth slowed to 10 percent with market sales totaling about $3.5 billion. The first two TV home shopping operators were LG and CJ, later joined by Hyundai, Woori, and Nongsusan in 2001.

Since then, Hyundai made the most aggressive advances in terms of sales, market share, and customer satisfaction. All five of these original five operators provide Internet and catalog shopping services reaching an estimated 12 million cable-connected television receivers.

While TV home shopping remains a strong and competitive retail channel, the fastest growing channel has been and continues to be the Internet. As of October 2005, according to the Korea National Statistical Office, there were 2,229 Korean Cyber Malls mainly dealing in retail e-commerce transactions between business and consumer -- an increase of 22.2 percent year-on-year. In October 2005, clothes/fashions and related good made up 17.2 percent of all cyber mall purchases followed by home electric appliances/electronics/telecommunication equipment (16.7 percent), travel arrangement and reservation services (13 percent), household goods/motor vehicle parts and accessories (10.5 percent), and computer and computer-related appliances (9 percent).

Not content with conventional Internet shopping malls, Korean Internet retailers are constantly trying to upgrade the shopper’s experience.

For example, in 2006, GSeshop installed on its Web site a three-dimensional depiction of a department store, where visitors can click on displayed products, in 3-D, on the shelves. Not to be outdone, GS3shop’s competitor, CJ Mall, began screening live broadcasts on its shopping site. Similar to television home shopping, a "shopping jockey" introduces various goods, and chats real time with potential customers, answering their questions on the spot.

Today online retailing has been a boon for delivery companies -- and a bane for Korean drivers who find the roads even more congested with delivery motorcycles and trucks. And it is no wonder. In 2006, total sales for all Korean online retailers were as much as $14 billion. That includes online retailing, however, from brick & mortar establishments such as major discount stores and department stores. In fact, online sales by these two major retail sectors are larger than those from the pure online Internet shopping malls. There are special problems, however, with Korean online retailing.

Consumers have often complained about ending up with different products than what were displayed. And, not surprisingly, there can be serious customer dissatisfaction caused by product size and specification disputes. As quick as it may be to find and order an online product, delivery can be exasperatingly slow. And, finally, some online retailers may find themselves in legal jeopardy by unwittingly acting as jobbers for potentially dangerous products, such as high-pressure air guns, etc.

How Does Korea Stack Up? Today, South Korea’s retail turnover is roughly one-eighteenth of the U.S. and a seventh of Japan markets. But the two most striking characteristics, like much of the Korean economy, are the market share domination by the largest players and the rapid growth in the underdeveloped sectors. Lotte stores have a whopping 6.3 percent and Shinsegae outlets have an even larger 6.5 percent of total retail sales. The biggest consolidated retailers in the U.S. (Federated Stores) and in Japan (Takeshimaya) can only boast about half that percentage of their markets. These two giants are in a fierce competition to open up new premium and television home shopping channels while continuing to increase the number of large retail stores.

Korean large store chains (department stores and large discounters) cover as much as 48 percent of retail sales. But that is much smaller than the like enterprises in the U.S. with 78 percent market share and Japan with 75 percent market share. The real growth, however, lies elsewhere. According to a late 2006 analysis by Hannuri Investment & Securities, the underdeveloped retail distribution market has potential growth by as much as 48 percent by modernization and consolidation.

Today professional distribution companies are achieving this at a much faster rate than in the U.S. and Japan. So while Korea’s top two distribution giants’ market shares are expected to increase, there still remain much greater opportunities in Korea’s relatively backward retail distribution supply chains. Today the Koreans are aggressively moving to upgrade this important part of their economy.

By Tom Coyner. Tom is a Senior Consultant for IPG Legal.
info@ipglegal.com

Appeared in the Korea Times on April 20, 2007

1/19/2015

Piercing the Corporate Veil in Korea: Suing the Shareholders of the Bankrupt Korean Company

It is possible, in some situations, for a shareholders to be sued for acts of a corporation.  The concept is called piercing the corporate veil.

The Supreme Court of Korea has noted that the corporate veil may be pierced and a shareholder may be sued:
"Where a company maintains the external appearance of a juristic person while it merely takes the form of a juristic person and, in substance, it is equivalent to other person's private enterprise behind the corporate veil or used without justifiable reason in order to circumvent the application of laws against the person behind the corporate veil, the denial of any responsibility of the person behind the corporate veil with respect to an action of the company, based on the ground that such person is a separate entity and the legal effect of such action is attributed only to the company, cannot be permitted. It cannot be allowed in light of justice and equity for the individual to abuse the corporate entity in violation of the principle of trust and good faith. Therefore, the company as well as the person behind the corporate veil must be responsible for the actions of the company."
The "test" imposed by the Korean Supreme Court has lead to Korea courts to look to, inter alia, whether:
  • Funds were commingled between a shareholder and the company; 
  • Corporate formalities were observed; 
  • All the assets were transferred to another company controlled by a dominate shareholder; 
  • Company failed to maintain an arm’s length relationship with a related entity or individuals;
  • Siphoning of corporate funds by a dominant shareholder occurred; 
  • Two or more companies acted as a single economic unit; 
  • Company falsified corporate records; and/or
  • Company is otherwise being utilized as a facade to shield a shareholder from liability. 
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.

1/16/2015

Korean Criminal Law: Double Jeopardy in Courts in Korea

The double jeopardy protection afforded by the Korean Constitution in Article 13 is applied in a different manner than in, most, common law nations.  The application, in Korea, allows the prosecution to have three chances to obtain a guilty verdict.

For example, in the United States, a defendant may not be tried for the same or similar offense, within a specific jurisdiction, when a "conclusion" is made in any court.

Thus, if a jury or judge finds a defendant not guilty, the prosecution may not bring the same or similar charges against the defendant.

However, if all jury members are unable to come to the same conclusion (thus, some vote guilty and some not guilty), the jury is deemed "hung" and the prosecution may request another trial.

In Korea, the rules is, essentially the same, however, the application of the "conclusion" determination is different.

A "conclusion" of the case is, only, deemed when the Supreme Court makes a final a decision or the prosecutor chooses not to appeal a decision.  Thus, the prosecutor has, in most instances the District Court, the High Court (or three judge panel in District Court) and the Supreme Court to establish the guilt of a defendant.

An exception is with those under the U.S.-Korea Status of Forces Agreement (SOFA) that are prosecuted in Korea.  The SOFA protects the right to an American-style double jeopardy.  However, we have seen cases where the prosecutor has appealed, thus, placing the burden on the court to dismiss the case based on SOFA grounds.

Other articles on Korean criminal law that may be interest.
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.

Good Criminal Lawyers in Korea Obtain Non-Guilty Verdicts

We are proud to announce that we received a not guilty verdict for a U.S. service member in an appeal of a conviction at the first trial court.  We did not handle the case at the case of first instance.

Please when ever you consider hiring an attorney, in Korea, it is best to retain an attorney that, formerly, was a retired judge and will actually work on your case in any matters involving the Korea courts.

Please check out the following articles on Korea's criminal law:
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.