Criminal Liability under the Occupational Safety and Health Act of Korea for Actions and Omissions of Subcontracts and Project Owners

The Supreme Court of Korea, recently, ruled on whether a project owner and contractor is criminally culpable for violating the Korean Occupational Safety and Health Act (한국산업안전보건공단) (“KOSHA”) for actions and omissions in supervision of a job site. The Court ruled, in short, that criminal liability may vest if “the contractor has actual control or management authority over risk factors related to the prevention of industrial accidents that may occur during the construction process being carried out at his or her workplace.”(2023do14674). For an article on Korean OSHA risks and amendments please see: Korean OSHA Amendments Increases Criminal & Civil Liability for Company Directors.

The case establishes and details the differences between a construction “orderer” and a construction contractor with the power and responsibility to control and manage.

The case should lead any company hiring subcontractors or another party to handle a matter for your company to consider that criminal liability may be passed on to the general contractor or project owner even when a project or task is delegated to another party.

IPG Legal advises a compliance audit on your operations and the operations of your subcontractors and other companies that you do business with and the revision of agreements to reflect this substantial increase in potential criminal and civil liability. This case led to a company president receiving a jail sentence.

Criminal Culpability for
Industrial Accidents in Korea

Facts

Incheon Port Authority signed a contract with Company A and others for regular maintenance of the Incheon Port lock. An accident occurred at the maintenance site leading to the fall death of a worker of Company A. The Supreme Court overturned the not guilty verdict of Incheon Port Authority and the former CEO of Company A, thus, finding the head of the maintenance company and the Incheon Port Authority criminally negligent.

The CEO was charged with a crime under the Occupational Safety and Health Act for, among other things, for not installing safety harnesses and not having an industrial work plan.

The court of first instance found the CEO guilty and sentenced him to eighteen months in jail and sentenced the Incheon Port Authority to a KRW 100,000,000 fine. The court of first instance ruled that the Incheon Port Authority was akin to a business owner and found that the “Former CEO . . . was aware, even if negligibly, that work was being done without safety measures in place at the workplace and that such work would continue in the future.”

The appellate court overturned the decision and found the Incheon Port Authority and the CEO not guilty noting that the Incheon Port Authority is not a “contractor” under the Occupational Safety and Health Act and therefore cannot be considered as having intent to violate the Korean Occupational Safety and Health Act.

The appeals court opined that the Incheon Port Authority “had no qualifications or ability to directly perform the construction, so it had no choice but to subcontract, and it is only a construction orderer and cannot be considered a contractor who oversees and manages the construction. . . [and] did not have the qualifications to perform steel structure construction work, and it was unlikely to have the qualifications to construct the above construction work, so it did not have the manpower or expertise to directly construct the lock gate maintenance work.”

Korean Supreme Court Decision
The Supreme Court remanded the case ordering the Incheon Port Authority and the CEO to be found guilty. The Supreme Court ruled that the Incheon Port Authority “had a dedicated department for the maintenance and repair of the lock gate, and had actual control and management authority over hazardous and risk factors related to the prevention of industrial accidents that could occur during the regular maintenance work on the lock gate at the IPA workplace . . . [and] it had a high level of expertise in regular maintenance work on the lock gate, it should be viewed as having actual influence over the contractor. . . as the one who leads and manages the construction of the regular maintenance work on the lock gate, should be viewed as a subcontractor under the Occupational Safety and Health Act who has the same safety and health measure obligations as the subcontractor, not just a simple construction project orderer.”

This case is the first case in the history of Korea that established guidance on criminal liability related to alleged mere “orderers.” It is advisable to schedule a call with an attorney in Korea and make sure your processes, procedures, company documents, company manuals, and agreements are in line with Korean norms and best practices. Additionally, in many cases it is essential, in many industries, to do a compliance audit.

Sean Hayes 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, and IPG Legal is consistently ranked Top Dispute Resolution Law Firm for our litigation services.

To schedule a call with Sean Hayes, please Schedule a Call Here.