Is Seoul in this heated battle with Uber for no reason other than protecting a vested interest?

The Seoul Government is vigorously fighting to shutdown Uber.  We suspect other shared economy/new economy initiatives are soon to be on the government’s radar.   It sure seems like President Barrack Obama’s Head of the Global Development thinks Uber and like technologies are a positive for the economy and consumers. Why such a vocal opposition from the Seoul Government?   Mohamed El-Erianis the chief economic adviser of Allianz SE and the chairman of Barack Obama’s Global Development Council wrote an article that appeared, today, in the Korea Heard (syndicated). Mr. Mohamed A. El-Erian noted, in part that: “Arriving earlier this week in New York at Penn Station, I joined many others in a rather slow-moving line for taxis. I did so out of habit. But a few minutes into my wait, I realized that the smart thing to do was to pull up the Uber app on my phone. In

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Korea’s Competitive Advantage Shrinking: Korea’s Education System to Blame? by Tom Coyner

The U.S. in particular has taken notice of Korea’s academic excellence. Korea’s education system has been held up as a contrary example to what’s not quite right with America. That is, until recently when the Huffington Post, the New York Times, and other American media began publishing accounts by Koreans of the purgatory that had been previously passed off as merely childhood here. One may suppose that the long-term future in terms of international competitiveness looks much more promising for South Korea than the U.S. But further examination suggests that may not be so. The good news for South Korea is over 80% of its young have some kind of college education, with a high school dropout rate being virtually zero. In contrast, the U.S. high school dropout rate is over 25%, with some states exceeding 40%. While Korea has one of the best-educated populations in the world, there are

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U.S. Court Refuses to Enforce Taiwan Arbitral Award: Lesson for Drafting Arbitration Clauses in Korea

My friends over at the publication The International Law Office directed me to an interesting case involving the enforcement of arbitral awards that brings light to the fact that, in most cases, arbitration should not be held in a nation that is not a signatory to the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Award (“New Convention”). U.S. Court Reuses to Enforce Taiwan Arbitral Award In Clientron Corp. v. Devon IT, Inc. a U.S. Federal Court in Pennsylvanian refused to enforce a US$ 6.5 million award rendered at the Chinese Arbitration Association in Taiwan.  A Taiwanese Court accepted the award for enforcement in Taiwan.  The U.S. Court in Clientron refused to enforce the judgment under the New York Convention and Pennsylvania’s version of the U.S. Uniform Foreign Money Judgment Recognition Act based on the argument noted below. Likely, Korean courts would come to the same

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Class Action/Mass Tort Actions in Korea

Plaintiffs in Korea, with rare exceptions, are unable to file class action lawsuits in Korean courts.  The, only, two exceptions are under the Securities-Related Class Action Act of Korea (derivative/shareholder suits) and certain limited product liability claims under the Consumer Act of Korea (Suits by designated consumer advocacy groups or organizations). However, because of a recent massive data leak by major Korean-based banks, numerous NGOs, some attorneys and legislators have, again, demanded the implementation of a US-style class action system. Two bills are pending at the National Assembly of Korea entitled The Class Action Act of Korea and Consumer Basic Lawsuit Act of Korea.  The Korean Class Action Act is modeled after Rule 23 of the Federal Rules of Civil Procedure. We don’t see these bills coming to a vote anytime soon or the Korean Court System demanding the implementation of a class action law for consumers, because of Korean

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Korea Contracts Don’t Forget the Counter-party: Due Diligence before Executing an Agreement in Korea

We see numerous matters coming before us from parties in the States or Europe that are importing a product from a Korean company.  Of course, the products are either faulty or never come. We, also, see cases where a Korean company is importing a product and the importing party ends up not being the party that the American or European company thought they were doing business with. Also, often, companies in Korea are broken up into smaller companies.  The manufacturing arm may be one company, the sales arm one company and these companies are wholly owned by a holding company.  Of course, the agreement ends up being with the broke sales arm. Thus, know the counter-party.  Due Diligence is required.  Due Diligence is not checking the firms website or simply matching up the name on the PO with the Wire Instructions.  A wire will, normally, clear even if the name

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Law of the Sea: Vessel Security

My friend over at Norwich University has some interesting stats on Article 110 of UNCLOS. While Somali incidents have dropped 95 percent to seven cases in 2013, piracy in Southeast Asia is exploding. As you may have heard, eight hundred thousand gallons of diesel was recently pilfered from a large oil tanker in the Strait of Malacca. Korea has sent ships to the region. The area is clearly the world’s new piracy hotspot. Attacks and attempts in the waters of Indonesia, which controls much of the Malacca Strait, totaled 107 last year, meaning a 700 percent increase in just five years. To help generate awareness of maritime trade and the law of the sea, my friends at Norwich University created this infographic that addresses the freedom of the seas, security and piracy. Interesting. ___Sean Hayes may be contacted at: [email protected] Sean Hayes is co-chair of the Korea Practice Team at IPG

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Starting a Business in South Korea

We wrote many posts on this Korean Law Blog on entering the Korean market.  However, the list is getting so large that many people have requested that we make a list of the posts that we feel are the most useful for those entering the Korean Market.  Thus, here we go.  More posts will be added to this list. Selling to Korea via Distributors, Agents & other Non-Direct Sales Channels Joint Venture/Partnerships in South Korea Test the Korean Waters and Then Hit China Protecting your Intellectual Property in Korea Korean Outsourcing: Legal Basics Tax Qualified Mergers in Korea Due Diligence in Korea New Corporate Forms in Korea Please, also, take a look at the labels to the right and, also, click through to the other articles noted within the articles above.  We are, presently, attempting to compile are blog posts into a more usable format, however, with over 700 posts

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Korean Distribution Agreements: So you Want to Work with a Korean Distributor

We have noted, on a number of occasions, that the drafting of a Korea-centric distribution agreement and a good deal of due diligence of the anticipated distributor/agent is necessary for avoiding the issues that will require our litigation services.  Some of the articles on Due Diligence matters may be found below: Doing Business in Asia: Due Diligence, Agreements, Attorneys and Street Smarts Listen to My Mother: JVs in Korea (Translated from Korean) Debt Collection Cases in Korea on the Rise: Due Diligence Brother I have been informed by one of my more frugal of clients that his company would appreciate a basic rundown of a decent distribution agreement (I know you will be drafting this on your own – don’t) – so here we go. The basic clauses we include in most of our Korean Distribution Agreements are as follows: Exclusivity:  Exclusive/Non-exclusive Territory & Products Term of Agreement Renewal/Termination Pricing &

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Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 28, 2014

Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 28, 2014Korean Legal News Reported by the Media on the Week of July 28, 2014 IMC may blacklist Korean builders over collusion Prosecutors continue probe into ferry owner’s driver Foreign workers upset by severance pay formula Restructuring urgent for big Korean companies Relocation of USFK Headquarters to Go Ahead Most Recent Posts from the Korean Law Blog This slot is reserved for the new article Korean Franchise Law Basics for Franchisors “Samsung’s First Family Struggles to Keep Grip on Company” Report by Bloomberg Debt Collection in Korea: Foreign Creditor vs. Bankrupt Korea Debtor Opportunities in Korea’s Growing Tuning & Performance Modification Industry for Foreign Companies ___ Sean Hayes may be contacted at: [email protected] Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked

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Samsung Faces Challenges as It Tries to Win Smartphone Wars

CNBC released an interesting article on how the largest smartphone maker can win the smartphone war. The article pointed out that despite the recently lowered guidance, Samsung is likely to deliver strong results. The article also mentioned four points that Samsung needs to improve in order to retain its edge in the smartphone market. User interface – “In order to retain its lead over the long term, Samsung needs to build a platform that’s as compelling for app developers and users as Apple.” Customer service – “Good communication between users and the smartphone company is crucial to long term” success. The OS challenge – “Even if Samsung is able to differentiate itself through better customer service and improved user experience, it may face other challenges as it tries to build out Tizen, its first attempt at its own operating system.” Profit margin – “Profit is increasingly important as analysts see a plateauing of the

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Korean Franchise Law Basics for Franchisors

Over the next week couple of weeks we will be posting articles on the updated Korean Franchise Law.  The articles will be listed below.  The articles will address the major issues facing franchisors in the Korean market. If you have any topics that interest you or will interest other readers – please advise.  Articles on the Basics of Korean Franchise Law: Distribution Agreements in Korea: Crawl before you Walk Korean Small Business Partnerships/Joint Ventures: Pubs, Distributors, Exporters, Boutiques, Franchises and Basic Manufacturing etc. Dispute Resolution Clauses in Franchise, Joint Venture, Partnership Agreements in Korea Business Opportunities in Korea for Entertainment Companies Korean Franchise Law Basics: Korea’s Act on Fairness in Franchise Transactions ___Sean Hayes may be contacted at: [email protected] 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

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Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 21, 2014

Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 21, 2014Korean Legal News Reported by the Media on the Week of July 21, 2014 South Korea Plans $40 Billion Stimulus to Tackle Weakening Growth Seoul to push tax on corporate cash reserves U.S. Chamber of Commerce chief urges FTA implemantation Workers in Their 60s Outnumber 20-Somethings Mortgage deregulation raises concerns Most Recent Posts from the Korean Law Blog Debt Collection in Korea: Foreign Creditor vs. Bankrupt Korea Debtor Opportunities in Korea’s Growing Tuning & Performance Modification Industry for Foreign Companies Korean Fugitives on the Run: Getting more Difficult with Change of Law Distribution Agreements in Korea: Crawl before you Walk Is Samsung Doomed? No Innovation Price Trap ___ Sean Hayes may be contacted at: [email protected] Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney

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“Samsung’s First Family Struggles to Keep Grip on Company” Report by Bloomberg

The Samsung saga continues.  Lee Jae-Yong is likely to take over from his father soon.  It looks like Lee Kun-Hee’s health is not improving.  Bloomberg has an interesting article on this issue that may be found on the link below.   The Lee Family owns less than two percent of the total shares of Samsung Group, though they near absolutely control 74 companies “through a web of share holdings.” However, because of recently enacted regulations and tax laws, the family may lose its influences over the companies.  President Park has banned “new cross holdings.” Under current tax law in Korea, heirs have to pay inheritance taxes of 50 percent of the asset value which means that Lee Jae-Yong may have to pay about  $6 billion as inheritance taxes. While the Lees are planning to take two companies public in order to raise money to pay the inheritance taxes, Lee Jae-Yong has faced another challenge. According to

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Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 14, 2014

Weekly Korean Legal News From International Law Firm – IPG Legal For the Week of July 14, 2014.Korean Legal News Reported by the Media on the Week of July 14, 2014 LG outpaces Samsung in UHD TV panel market in May: data Hana Bank set for merger with KEB Economists Doubt Korea Can Return to Solid Growth Line to Be Listed on Tokyo Stock Exchange Korea ranks third in e-trade readiness Most Recent Posts from the Korean Law Blog Opportunities in Korea’s Growing Tuning & Performance Modification Industry for Foreign Companies Korean Fugitives on the Run: Getting more Difficult with Change of Law Distribution Agreements in Korea: Crawl before you Walk Is Samsung Doomed? No Innovation Price Trap Foreign Account Tax Compliance Act (FACTA) in Korea ___Sean Hayes may be contacted at: [email protected] Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean

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Opportunities in Korea’s Growing Tuning & Performance Modification Industry for Foreign Companies

Korea has been behind its Asian neighbors in its love for modifying cars, partially, because of Korea draconian laws related to car modifications.  Police, regularly, impose fines on those that modify the look and performance of cars. The tuning industry in Korea is estimated to be around USD 500mil, while Japan tops in at over USD 14billion.  We suspect this will change soon. The good news for foreign aftermarket parts manufacturers, looking to enter the Korean market, is that the present administration has vowed to change laws to allow cosmetic and performance modifications to cars. We assume the changes to law (or application of law) will occur this year. A decent article on the issue may be found at: Legal Tune-up to Help Koreans Pimp Their Rides ___Sean Hayes may be contacted at: [email protected] Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first

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Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 7, 2014

Weekly Korean Legal News From International Law Firm – IPG Legal For the Week of July 7, 2014Korean Legal News Reported by the Media on the Week of July 7, 2014 Science Ministry to Introduce Laws for Better Mobile Service Plans Validity of Financial Holding Firms in Question Bank of Korea Hints at Rate Cut Pantech Sinking into Deeper Liquidity Crisis Samsung Chief Marks 2 Months in Hospital Most Recent Posts from the Korean Law Blog Is Samsung Doomed? No Innovation Price Trap Is Korea’s “Copy Culture” the Largest Threat to the U.S.? On Fox Business Korean Immigration Law’s 20% Rule Challenged Material Breach of Contracts Under Korean Law: Primary Obligations vs. Secondary Obligations Samsung’s Shareholdings Explained by Wall Street Journal ___ Sean Hayes may be contacted at: [email protected] Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked

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Foreign Account Tax Compliance Act (FACTA) in Korea

From this month, the Korea Financial Services Commission will require banks to request all to disclose if they are U.S. nationals or U.S. permanent residents when opening a bank account in Korea. Most U.S. taxpayers residing abroad must report, under U.S. law, the details of all foreign financial accounts held and controlled by the taxpayer under FACTA and also Foreign Bank and Financial Accounts (FBAR). Get the picture?  The IRS is watching and now has more tools to watch. More information may be found at: Foreign Account Tax Compliance Act: IRS Website._____Sean Hayes may be contacted at: [email protected] 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. He is ranked, for Korea, as

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Korean Immigration Law’s 20% Rule Challenged

Increased direct foreign investment to Korea is, facially, Park Gun Hye’s Administration’s top priority. However, according to the Korea Herald, it seems like the Korean bureaucracy is not following the Park Administration. The Korea Herald reported that foreign companies have increased complainants about the current Korean immigration law as exemplified in at a government-organized forum in Seoul last week.   The complaints have come, in part, because “[u]nder Korean immigration regulations, companies are allowed to employ a workforce with up to 20 percent of their employees being foreign semi-professionals or skilled laborers on an E-7 visa.” Some participants argued that under the current regulations, foreign companies have to employee more local workers in order to increase their foreign workforce, which “adds to the financial pressure to many small and medium-sized foreign companies.” We see this and other issues with Immigration that we have seen, first hand, is causing many foreign

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Finding a Distributor or Agent to Sell/Market Your Products in the South Korean Market

Finding a quality distributor for your products is not an easy task in Korea.  We regrettably have dealt with numerous issues related to distributors not paying invoices, misrepresenting products, violating intellectual property rights and even selling fake products alongside the real imported products. The major reason for these occurrences is the client to quickly rushing into “opportunities” without vetting out a distributor and poorly drafted distributions agreements. Many distributors in Korea are fantastic, others are mere order processors and some are downright criminals.  It is not too difficult to avoid the latter two if you consider, at least, some of the following: 10 Ten Things to Consider Prior to Doing Business with a Distributor in Korea. Has the Korean distributor worked with other foreign companies? If not, you are, likely, dealing with a very inexperienced distributor.  Check, also, if the distributor was educated abroad.  We find that those with, only,

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Samsung Threatens Suit Over Reports of Chairman’s Condition

Irked by continuing reports of chairman Lee Kun-hee’s failing health, the Samsung Group has threatened legal action against media outlets carrying the stories fueling the speculation.  Commenting on this possibility, a Samsung spokesman stated that “we’ve repeatedly requested media with unsubstantiated reports for corrections. If they do not comply, we may file suit.” Rumors of the chairman’s health have been widespread since he suffered a heart attack earlier this month. One report this past week had the Samsung chairman dying on May 16th, explaining that Samsung was hiding the news in the meantime. The company has maintained that Lee is steadily recuperating. Chairman Lee is South Korea’s richest man.  He has been at the controls of the Korean conglomerate since 1987. The Power of Samsung in Korea: Ways to Protect Your Business from the Powers to Be in Korea Apple vs. Samsung: Koreans are Furious at China for Copying Samsung

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