Korea’s Legal Measures to Reduce Fine Dust Pollution

The Korean Special Act on Fine Dust Abatement and Management (hereinafter as “Special Act on Fine Dust”) entered into force on February 15, 2019. The law, primarily, focus is restricting producers of fine dust to reduce the fine dust level in Korea. The Special Act on Fine Dust defines different types of dust and enables officials to set certain fine dust reduction measures. Legal Definitions of Fine Dust The Special Act on Fine Dust provides definitions of “fine dust,” “micro-fine dust” and “precursors to fine dusts”: “Fine dust” are particulate matters up to 10 micrometers in diameter. “Micro-fine dust” are particulate matters up to 2.5 micrometers in diameter. “Precursors to fine dusts” are sulfuric oxide, nitrogen oxide and volatile organic compounds. Reduction Measures against Fine Dust for Officials The Ministry of Environment publishes the respective limits on the concentration level of micro-fine dust daily. Mayors and governors in the affected

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Calculation of Korean Hourly Wage Rate under the Minimum Wage Act of Korea

Korea’s minimum wage as per the Korean Minimum Wage Act in 2019 is determined by the Minister of Employment & Labor as KRW 8,350 per hour. The latest decisions of the Supreme Court developed a calculation standard/method for determining an hourly wage rate that is not in line with the opinion of the Ministry of Employment & Labor. In many such cases, a Ministry, simply, pushes to amend the law. This matter is important, since the standard hourly wage rate is a necessary mathematical component to calculate the monthly salary of employees. Korean Minimum Wage Act The Korean Minimum Wage Act’s main purpose is to provide a minimum sum per hour to employees that employers must, at least, pay to employees. The fear, in short, is that without a minimum wage, employers may be able to exploit vulnerable workers. The appropriate hourly minimum wage under the Korean Minimum Wage Act

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Finding a Korean Lawyer/Law Firm for your Business in Korea

We obtain numerous emails and calls from potential clients in search of a great Korean lawyer for companies doing business in Korea.  The majority of these intakes come from referrals from present clients, referrals from other lawyers and a couple trickle in via this blog. From our contacts, we believe that many businesses in Korea are having a difficult finding attorneys in Korea that have business savvy, the ability to efficiently work for the client and/or an inability to handle the issues the client is handling.  The situation seems to stem, primarily, from the high cost of top-notch legal services in the Korea and the lack of many top-notch Korean lawyers working in business space for expat businesses.  Additionally, many lawyers, in Korea, are plagued with conflicts. Finding a Lawyer for the Needs of your Business in Korea Consider the following when hiring an Korean Lawyer or Law Firm in

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Korea Due Diligence for Joint Ventures, Licensing, OEMs and Buying a Korean Company

Intending to execute a joint venture agreement with a Korean company? Buying a Korean company? Licensing technology to a Korean company? OEM with a Korean supplier? Selling to a Korean company?Before going to bed with a Korean company (or individual) do a little due diligence.  The motivation for this article is an article by my friends over at the China Law Blog. Due diligence in Korea is not much different than due diligence in China.  However, don’t forget what is said below: “get someone who truly knows what he or she is doing” to assist with the due diligence.  We see too many Korean lawyers and Korean business professionals with a lot of ego, but little on-the-ground high-level Korean experience or an inability to think strategically and proactively.  The few great due diligence professionals in Korea are, typically, not found easily at the ubiquitous Korean Law Firms, because of issues

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Mergers & Acquisition Arbitration Matters under Korean Law at the KCAB

Mergers & Acquisitions (M&As) lead to disputes around the world, many of which are complex and involve money that may change substantially the future of a company, shareholders, employees and other stakeholders. Korea is no different in this respect. Korea witnessed the number of its cross-border transaction disputes explode during the 1997 IMF crisis and continue to steadily increase ever since. Many of these issues ended in arbitration and many others lead to criminal charges and into the Korean courts. While there are no readily available published statistics on the number of M&A transactions relating to Korea that led to arbitration , market trends show that the number of disputes have grown in relation to the overall growth of the M&A market. This article shall discuss the frequency of M&A disputes in Korea, the most common M&A issues arbitrated in Korea, as well as the procedural norms for damages and

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Provisional Attachments of Assets in Pending Litigation in Korea Courts

A party attempting to collect on a debt or potential liability based on breach of contract or torts in Korea may obtain a Provisional Attachment of an Asset. Another useful tool to expedite proceeding in a Korean civil matter is to Obtain a Payment Order from a Korean Court.  A provisional attachment is considered provisional, since the attachment is executed prior to the final judgement. The, facial, purpose of a provisional attachment is to secure assets necessary for enforcement in cases where a defendant may conceal or dispose of assets. However, a provisional attachment, often, encourages settlement. We advise most creditors attempting to enforce a debt or potential debt against a debtor is to obtain a provisional attachment if the debtor is a company or individual without significant tangible assets.  Companies with significant assets are likely to pay debts after a judgement and, normally, are not significantly harmed by the attachment.   Courts

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Jurisdiction and Choice of Law Issues in Agency Agreements

In drafting and negotiating a Korean commercial agency agreement between a principal located in one country and an agent located in another country, proper consideration needs to be given to the choice of law regarding the governing law and jurisdiction of such an agreement. Jurisdiction determines which country’s courts will hear any proceedings that may be brought in relation to the agreement, whilst governing law is the law that shall be applied by the courts hearing any such proceedings that may arise under the agreement. Ideally, the parties to the agreement should expressly agree as to choice of jurisdiction and governing law. A governing law clause will set out the parties’ choice of the law that will apply to the parties’ agreement, and a jurisdiction clause will set out the parties’ choice as to jurisdiction. These aforementioned clauses are – in general – considered by any courts (for the exemptions

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Termination of Commercial Agent/Distribution Agreements in Korea: Korea’s Agent Compensation Rule

In many cases of termination of a distribution/agent agreement in Korea compensation must be paid to the commission agent.  In many cases, the same rules are applied to distributors.  The law on the termination of Commission Agent-type agreement is governed, mainly, by the Commercial Act of Korea and its enforcement decrees.  Korea law does not facially differentiate between termination and expiration of agent/distribution agreements. The following explanation is, only, a brief overview of Korea’s Distribution/ Agency Law relating to termination of a distributor/commercial agent.  Please note a much more nuanced explanation is necessary and essential for any manufacturer or supplier doing business with a commercial agent in Korea. We suggest taking a look at an article we wrote on the selection of a Korean Distributor.  The article may be found at: Finding a Distributor or Agent in Korea.  Additionally, it is advisable to read an article we wrote on distribution agreements.

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Enforcing Punitive & Liquidated Damages Awards against Korean Companies via Contracts with Foreign Subsidiaries of Korean Companies

A recent amendment of the Korean Civil Procedure Act added Article 217-2.  The Amendment has codified a holding by the Seoul Central District Court and other Korean courts noting, in part, that Korean Courts may refuse to “recognize foreign damage awards that clearly exceed amounts considered reasonable in Korea in violation of good morals and the social order of Korea” (99 KaHap 14496, S. Cent. Distr. Court, 10/20/2000). The Amendment allows Korean Courts, in Korea, the power to not recognize a damage award that the Korean Court’s perceives as “excessive.”  This standard-less “standard” leaves much wiggle room for Korean Courts. A typical situation is a case where an American importer sues a Korean conglomerate in a U.S. Court and damages are awarded to the U.S. company.  The damages may include liquidated, punitive and non-“actual” damages.  The American importer, then, attempts to enforce the judgment in Korea. There is a simple

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Distribution Agreements in Korea: Crawl before you Walk

Prior to going into any relationship with a distributor/agent in Korea, please read my post entitled: Finding a Korean Distributor: The Top 10 Things to Know Before Going to Bed with a Distributor in Korea. Please read that post in combination with this post, prior to engaging a distributor in Korea. We see too many Korean distribution and agency agreements that are mere spun U.S. or European agreements.  Please have your Korean distribution agreement and all agreements you have in Korea drafted by an experienced and proactive attorney that has on-the-ground experience in Korea.  We see too many issues that could have been easily resolved by a carefully drafted agreement and a little due diligence. Issues to consider for your Korean Distribution Agreement: Will your distributor in Korea be your agent?  If the Korean distributor is an agent, generally, you will, only, be paying your agent in Korea a commission and you

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Distribution Agreement in Korea: Factors to Always Keep in Mind

Prior to going into any relationship with a distributor/agent in Korea, please read my post entitled: Finding a Korean Distributor: The Top 10 Things to Know Before Going to Bed with a Distributor in Korea. Please read that post in combination with this post, prior to engaging a distributor. We see too many distribution agreements that are mere spun U.S. distribution or agent agreements. Please have your distribution agreement and all agreements you have in Korea drafted by an experienced and proactive attorney that has on-the-ground experience in Korea. We see too many issues that could have been easily resolved by a carefully drafted agreement and a little due diligence. Issues to consider for your Korean Distribution Agreement: Will your distributor in Korea be your agent? If the distributor is an agent, generally, you will, only, be paying your agent a commission and you will be directly invoicing the client.

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Non-Registered Company Director (Executive Director/Senior Managerial Worker) in Korea deemed Employee under Korean Labor & Employment Law

Article 27 of the Labor Standards Act of Korea stipulates that all “employees” must be notified in writing of the reason for dismissal.  In most cases, 30-days notice or 30-days pay in lieu of notification is required.  Employees may, also, only, be terminated for “fault attributable to the employee” or “urgent managerial necessity.”  The burden is on the employer to prove “justifiable grounds for termination.”  All good proactive employment lawyers in Korea have detailed programs in place that assist in justifying termination.  However,  sadly, it is very difficult to find good proactive employment lawyers in Korea. Directors are, typically, not deemed “employees” under Korean Law.  However, exceptions exist.  We wrote an article on these exceptions at: Factors in Determining if a Worker is an “Employee” under the Korean Labor Standards Act of Korea. A recent cases filed against TongYang by an unregistered “director” sheds light on the risks associated with terminating

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Korean Arbitration: An Introduction

Korean Arbitration has come a long way since the ratification of the New York Convention in 1973. The Korean Commercial Arbitration Board (KCAB) went from a small organization handling a handful of cases to, now, and organization handling hundred of arbitration cases each year. The number of international arbitrations is, also, on the rise. This article shall give readers the backstory of how Korean arbitration as a dispute mechanism tool has developed over the years in Korea; review the key industries involved in arbitration; and provide a quick overview of the mainstay arbitration institution in Korea: the KCAB. 1973 – 2020: Arbitration in Korea Over the Years The Korea Arbitration Act was enacted into law in 1966. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, aka the “New York Arbitration Convention” or “New York Convention,” is the Magna Carta of international arbitration. The New Arbitration Convention was

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Challenging an Arbitrator at the Korean Commercial Arbitration Board

In our last post we discussed, at length, the benefits of arbitration in Korea over litigation in a Korean court. We shall be updating the reader of numerous issues related to arbitration over the next couple of weeks. The following posts concerns challenging of an arbitrator at the Korean Commercial Arbitration Board. Thus, what happens in a situation when you, as a party in a Korean arbitration, feel that the arbitrator is acting in a manner inconsistent with his or her duties as an arbitrator? At a minimum, all arbitrator should be “independent and impartial” and “capable” – the vast majority of arbitrators are independent, impartial and capable. However, issues can sometimes arise that require the challenging of the arbitrator – we suggest proceeding with caution and care – an unsuccessful challenge can, of course, prejudice your case. Impartiality/Independence of an Arbitrator in Korea Korean Law lays out the duties

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The Case for Arbitration over Litigation in Korea

Many of you are prospectively weighing the options of executing contracts with and without arbitration clauses in Korean contracts (aka setting yourself up for prospective litigation battles in Korean courts or resolving a dispute in Korea with the help of an arbitration panel). Thus, this article is intended to consider the option of arbitration over litigation in Korea. In most cases, IPG recommends arbitration over litigation for expat companies doing business in Korea and/or with Korean companies. While of course every case is unique, we at IPG have found great success over the years fighting for our clients amidst the backdrop of arbitration. Our Korean International Arbitration Team was, recently, ranked the top Dispute Resolution Firm in Korea. Benefits of Korean Arbitration over Litigation in Korean Courts Language: If you are not a native to Korea, there is a high chance that you do not speak the Korean language fluently

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Korean Tax Incentives for 2020: Korean Tax Law Updates

Because of increased tax liabilities of many companies in Korea and because of perceived deteriorating market conditions, the Korean government implemented programs that may assist some SMEs, and larger companies doing business in Korea. Numerous conditions apply for each of these incentive/abatement tax programs below. The following is, only, intended as a basic explanation of the programs that may be available to businesses operating in Korea. Tax Support for Investments in Korea Investments in facilities that “improve productivity” shall receive an increased tax credit for a period over two years. For large businesses, there shall be an increase from 1% to 2%; medium-sized businesses, from 3% to 5%; and small businesses, from 7% to 10%. Relaxed standards for family business inheritance tax deductions. After-care periods shall be reduced from ten years to seven years. For seven years, the business is required to maintain its present headcount or aggregate payroll. Expansion

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Korean Workplace Discrimination Laws

There are numerous Korean labor and employment laws that prohibit employers from discriminating against their employees in a Korean workplace. These Korean workplace discrimination laws are found in a myriad of Korean statutes and regulations. This article on Korea’s discrimination laws shall provide a quick guide as to where employers and employees can locate the basic requirements under law. The major pieces of legislation are the following: the Korean Labor Standards Act; the Korean Equal Employment Opportunity Act; the Korean Fixed-term Workers Act; and the Act on Prohibition of Age Discrimination in Employment and Elderly Employment Promotion of Korea. The Labor Standards Act of Korea The Labor Standards Act (“LSA”) is one of the primary sources of labor law in Korea and provides minimum standards for conditions of all employment. As far as discrimination is concerned, Article 6 of the LSA prohibits employers in Korea from discriminating based on gender.

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How to Invest in Korean Free Economic Zones (KFEZs): Korean Market Entry

Korean Free Economic Zones (KFEZs) are specially designated areas designed to improve the business and living environments for foreign firms looking to invest in Korea. In 2003, Korea’s very first KFEZ was launched in Incheon following the passing of the adoption of the “Act on Designation and Management of the Free Economic Zones.” Since then an additional seven have begun operation, bringing the grand total of KFEZs in Korea to eight. Companies with business in KFEZs are eligible for tax credits and other incentives under the Foreign Investment Promotion Act (FIPA). FIPA’s recent amendments passed in 2019 to provide better analysis on FDI impact on the Korean economy. For an article on this issue please: Revision to Korea’s Foreign Investment Promotion Act. As shown above, there are KFEZs operating in Incheon, Busan-Jinhae, Gwangyang Bay Area, Daegu-Gyeongbuk, Saemangeum-Gunsan, the Yellow Sea Coastal Area, and in Chungbuk. Each FEZ focuses on attracting

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Suspending Korean Workers without Pay due to Economic Fallout from the Coronavirus: Korean Employment Law Basics

IPG has numerous client-employers in Korea that are facing serious economic conditions because of the spread of the coronavirus across Korea. In my nearly two decades, in Korea, we have never seen such a dire situation. This situation seems, on its face, even more dire for those in F & B and certain manufacturing sectors than the 1997 Asian Financial Crisis (IMF Crisis). Yes, I was even in Korea during the Asian Financial Crisis. Korea, as of the writing of this post, is approaching 6,000 confirmed cases (35 confirmed deaths) of the novel coronavirus. While arguments exist that this virus is less serious, in the aggregate, than the seasonal flu, the reality is that business in Korea, and throughout much of the world, has been drastically affected by COVID-19. Some of these companies doing business in Korea have no logical choice but to, among other things, temporarily layoff workers, reduce

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Leading Commercial Arbitration Law Firm in Korea

IPG is one of the leading Korean law firms retained for international arbitration matters by multinational companies in need of efficient, proactive and non-conflicted advocacy in Korea, North America and East Asia. IPG was recently ranked as a top Dispute Resolution Law Firm. We work on complex international commercial arbitration disputes, investor-State arbitration disputes, construction arbitration disputes, and a myriad of other commercial disputes for international companies doing business in Korea and/or with Korean companies. Locally Connected – Globally Experienced: International Arbitration Team IPG is, often, chosen over the ubiquitous Korean-based law firms when non-conflicted, aggressive and efficient advocacy is necessary for success. We are, intentionally, different from the crowd. All international arbitration matters are personally handled by attorneys with significant international and local experience. Our attorneys have judicial, large law firm, in house and/or government experience and most have studied and practiced law in Korea & abroad. IPG shall

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