This year is a year of change in Korea because of the upcoming Korean elections, the significant increase in the inflation rate and the increased need for the government to increase tax revenues.
The global financial crisis did not hit Korea hard, but waves are moving through the real estate markets that have destroyed the solvency of many savings banks.
The following are some basic observations on the Korean Legal System that we have noticed.
- The Korean government is doing everything in its power to fight inflation, including using government agencies to push retailers and wholesalers to lower prices. The Korean Fair Trade Commission has been very active “enforcing” Korean Competition Law. Their target has been gas stations, car dealers, travel agents, and other retailers and wholesalers. Korean FTC Fines Korean Refiners for Collusion
- The Korean Fair Transactions in Subcontracting Act has placed more power with the Korea Federation of Small and Medium Businesses, thus, increasing the risk to those that are conducting business with subcontractors in Korea. Expect aggressive enforcement of the new Act. Fair Transactions with Subcontractors Act of Korea: So Buyer Beware or Simply Avoid the Risk and Buy the Seller?
- The Korean government is squeezed for tax revenues, thus, increasing the need to borrow. This, normally, leads to more pressure on the National Tax Service to collect taxes, thus, increasing the risk of a tax audit.
- The Korean legal system has an increased focus on raising its low international transparency ratings. This and other realities have led to the courts to be more willing to assign significant damages in cases where directors have violated their fiduciary duties to the company. Limiting Director Liability under Korean Law: Don’t Drop the Insurance Policy Yet
- The prosecution is systematically losing investigative powers to the police, thus, increasing the power of the police. The police are strongly asserting that most investigative powers should be in the hands of the police and not the prosecution as is the case in the United States. With the increased respect for the police, it is likely that with each incoming administration, that the police will usurp more power from the prosecution. Fundamental changes to laws, however, will need to be made in order for the police to have true investigative powers. These changes are not likely to come anytime soon.
- The courts are more willing to protect the right to free speech when the right doesn’t infringe on “privacy rights.” This was evidenced in the “PD” Notebook case. An article will be posted on this matter in the future.
- Law Firms are getting larger and junior lawyer pay is decreasing. Some law firms are struggling to stay afloat.
- Korean lawyers and Korean law firms are increasing looking abroad for more business. Many local firms, including this one, have established foreign branches or associations.
What do you think? Any additional items needed?
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