6/05/2017

Product Liability Act of Korea Amended: Punitive Damages & Burden of Proof in Product Liability Cases in Korea

Product Liability, Act, Korea, Warning Product Label

The Amended Product Liability Act of Korea was published in April of 2017.  The Act shall be promulgated in April of 2018.   The major amendments to the Act are:
  1. Allowing Judges to Award Punitive Damages; and 
  2. Lowering the Burden of Proof. 
Punitive Damages in Product Liability Cases in Korea
The present Korean Product Liability Law limits damage to the actual damages incurred, thus, not allowing a judge to award punitive damages.  

This reality has led to few product liability cases being prosecuted by consumers, because of the conservative calculation of "actual damages" in Korea and, thus, a belief suing, in Korea, large manufacturers leads to nothing but a legal bill and a small damage award.  

The Amended Korea Product Liability Law, however, allows a judge to grant punitive damages if:
(a) the manufacturer of the product in question had knowledge of the defect;
(b) the manufacture failed to make corrective measures to fix the defect; and
(c) the defective product causes serious injury to life and/or body.  

Punitive Damages are unable to obtained against suppliers and is, only, available for personal injuries (not injuries to property). 

Burden of Proof in Product Liability Cases in Korea
The present Product Liability Act of Korea does not specifically address the burden of proof, thus, courts have utilized, prior to a 2000 Supreme Court case, the normal burden of proof criteria utilized in, ordinary, civil liability cases. Thus, Korean courts, even in product liability cases, would look to see, in short, if:

(a) a wrongful/negligent act occurred (defective product);
(b) damages occurred because of the wrongful/negligent act; and
(c) the wrongful act was the cause of the injuries alleged.  

Of course, plaintiffs, in Korea, had a very difficult time proving (c) causation (cause of the injuries) and the Korean Supreme Court in 2000, among other reasons, created a test that assisted in allowing plaintiffs to more easily prove damages in product liability cases in Korea.  If this Causal Relationship Test, noted below, is met the causal relationship between the defective product and the injuries is deemed established.  

Product Liability Causal Relationship Test in Korea
The Supreme Court (98Da15934), in 2000 noted, in part, that: "If a plaintiff indirectly establishes that: (a) the injury occurred while the defective product was in normal use by the plaintiff; (b) the accident occurred in an area of exclusive/total control of the manufacturer; and (c) the injury is of a nature that it would not have occurred, but for the negligent act" the Causal Relationship Test is met and the defective product is deemed the cause of the injuries.    

The amended Product Liability Act in Korea adopted this Test.  

Advice to Manufacturers in Korea
  • Create a Nuanced Internal Compliance Program;
  • Mandate that your Distributors and Agents Notify you of any Reported Defects by Customers;
  • Create Detailed Warning Labels for all Products;
  • Create a Recall Procedure with Specific Triggers; 
  • Revise your Distribution/Agent Agreement based on these New Risks; 
  • Consider Purchasing Product Liability Insurance; and 
  • Have a Dedicated Complaint Department in Korea. 

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

Sean 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.  Sean is known for his proactive New York-style street-market advice and his aggressive and non-conflicted advocacy.  Sean works with some of the leading retired judges, prosecutors and former government officials working in Korea.

Sean's profile may be found at: Sean C. Hayes