I just received a phone call from a prospective client with a wonderful product that has been offered a sweetheart deal. Whenever I hear that someone has received a no risk or sweetheart deal in Korea, a red flag immediately goes up in my head and I immediately request the client to let me do a couple of weeks of due diligence. One of the many, ubiquitous, sweetheart deals is ownership of shares in company in exchange for some benefit
Continue readingCategory: Korean Contract Law
Do you Need to Enter the Korean Market via a Joint Venture/Partnership?
One of the major parts of our law practice here at IPG Legal for international clients, in Korea, is the structuring of joint ventures and the resolution of joint venture disputes in Korean courts and through arbitration. I find, in many of these cases, the non-Korean party is not in need of a joint venture with a a Korean party to succeed in Korea and the Korean party does not realize or has no intent in satisfying obligations under the
Continue readingKorean Jurisdictional and Choice of Law Issues in Commercial Agency & Distributor Agreements with Korean-based Agents & Distributors
In drafting and negotiating a Korean commercial agency agreement between a principal located in one country and an agent located in Korea, proper consideration needs to be given to the choices regarding the governing law and jurisdiction of such agreement. If you are looking for an article on choice of law issues in Korean employment disputes, please see: Choice of Law Issues in Korean Employment Law Disputes. If you are looking for a basic overview of Korean Agency & Distribution
Continue reading14 Things to Consider Before Starting a Manufacturing Business in South Korea
Korea, in many cases, is a better choice for the manufacturing of chemical, petroleum, construction equipment, complex crafted metals, specialty steel, automotive parts, semi-conductor, medical and pharmaceutical equipment and goods than China and most nations in Asia, because of Korea’s skilled work force, government incentives, protection of IP and increasingly transparent business practices. In many cases, manufacturing in Korea will not, in the end, be more costly than manufacturing in China, because of the increased efficiency of Korean workers and
Continue readingBeware of these Common cams in Korea
In South Korea like in many other countries, there are countless scams intended to trick people into giving away their cash or personal information. People in Korea have to stay alert and aware of the most typical tricks played by scammers or con artists because these scams occur in a variety of forms and are continually growing. If you are a victim of a scam, you are not alone. Please read this article: Are you a Victim of a Scam
Continue readingEnforceability of NDAs in Korea
Non-disclosure agreements (NDAs) are legal in South Korea and enforceable. A legally enforceable agreement known as an NDA forbids the publication of sensitive information between two or more parties. In business dealings, employment contracts, and collaborations involving sensitive information, NDAs are frequently employed.NDAs may be subject to contract law or intellectual property law in South Korea. Confidential information and trade secrets are protected under the Korean Commercial Code (KCC) and the Korean Intellectual Property Office (KIPO). For an article on
Continue readingForce Majeure Jurisprudence in the Republic of Korea
Korea has recently been affected by typhoons and severe flooding caused by the heaviest rainfall in centuries. These issues led to the loss of life, property, business and the livelihood of many individuals. Many alleged defaulting/breaching parties to an agreement have claimed Force Majeure as a defense to non-performance of contractual obligations. A Korean court recognized Force Majeure Event offers relief to the alleged defaulting/breaching party, in Korea, if the party fulfils the legal requirements noted below. Force Majeure Defined
Continue readingWhat Constitutes an “Employee” under Korean Law?
Who is an Employee/Worker under Korean Law with the Rights and Protections under Korean Labor Standards Acts and Related Laws & Regulations? The definition of an employee in Korea is a topic that had filled books. The following is a brief introduction to an issue that IPG Legal litigates for foreign employees of Korean companies and for foreign companies doing business in Korea. IPG Legal is the go to law firm for expats and foreign companies doing business in Korea
Continue readingRenewal Rights/Terms for Commercial Leases in Korea Under Amended Commercial Building Lease Protection Act of Korea
The Korean Commercial Building Lease Protection Act (“CBLP”) came into force on August 13, 2013. The Korean CBLP amendments, mentioned below, will solely come into force for leases entered into after August 13, 2013. The changes will assist those with large deposits from being evicted by a landlord in Korea based on no apparent reasons. Please note a new law has come into effect and we shall be writing on this new law within the next couple of weeks. Please
Continue readingDefinition of “Ordinary Wage” in Korea: Korean Employment & Labor Law Basics
The courts of the Republic of Korea, for years, has struggled to find a consistent interpretation of an “Ordinary Wage.” The definition of Ordinary Wage, under Korean Law, was clarified by the Korean Supreme Court in two decisions handed down on December 18, 2013. The calculation of Ordinary Wages is important, since the calculation is utilized to calculate statutory entitlements, and thus has an impact on the aggregate amount of contributions necessary to be paid to employees. For example, according
Continue readingDrafting of Korean Distribution Agreements for your Distributor in Korea.
Drafting of a Korea-centric distribution agreement and a good deal of due diligence of the anticipated distributor/agent is necessary for avoiding issues that may require the litigation services of a law firm. Some of the articles posted by IPG Legal on Due Diligence may be found at: 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
Continue readingKorean Independent Contractor Risks and Obligations under Korea LSA Speech to Amcham Korea
During a recent speech the head of the Korean Labor & Employment Law Team and I gave to the American Chamber of Commerce in Korea, a few interesting topics came up that seemed to be of particular interest to participants. For the Power Point of the presentation click HERE. Factors Courts use to Determine if an Individual is an Employee and Thus Obligated to Provide Severance and Employment Security etc. Under the Korea Labor Standards Act (LSA). These following factors
Continue readingContracts Necessary for Doing Business with a Korean Company?
If you would like to avoid Korean court expenses and headaches related to your business in Korea, please do yourself a favor and have you Korean contracts drafted by an experienced Korean professional prior to doing business with a Korean company. Many of the standard agreements utilized in the West are not adequate for Korea. We handle litigation and arbitration matters for many clients that either used a Korean attorney without adequate experience or that have foregone the use of
Continue readingHow to Successfully Manufacture OEM in Korea: First Break Products Down to the Threads
While China is the factory to the world, Korea is, still, a great choice for those that enjoy less headaches. Even though Korea tends to be easier to painlessly manufacture OEM in, Korea is not without risk or pains. Thus, we advised over the years on these pages to, always, do your due diligence in Korea. We see an alarming number of cases of fraud and, also, an alarming number of cases where a product infringes on a patent or
Continue readingAudit Proof your Independent Contractor Expenses
I just read a great post on an even better blog entitled the New York Small Business Law Blog. The blog post – Tips on Making your Independent Contractors Audit Proof – notes that the feds are increasing their efforts to crack down on misclassified independent contractors. They advise the attorney gave on how to avoid the scrutiny of the government would have also been useful for a client of ours that ran into an issue with the Korean National Tax Service and the Ministry
Continue readingKorea’s Fairness in Subcontracting Transactions Act Amendments of July 2021
The Korean National Assembly passed a bill in July of 2021 that amends the Fairness in Subcontracting Transactions Act (“Subcontracting Act”). The Act makes major changes with regard to discovery in litigation and aims to protect the intellectual property/confidential data/technical data (“Technical Data”) of subcontractors from poaching by prime contractors. For another article on Korea’s Subcontracting Act please see: Fair Transactions in Subcontracting Act of Korea: So Buyer Beware or Simply Avoid the Risk and Buy the Seller. 2021 Amendments
Continue readingAlternative Legal Fee Arrangements at Korean-based Law Firms: Limited Scope Representation Explained
Many Korean law firms have been willing to work in relationships based on a non-time charge flat-fee or contingency basis for Korean clients. However, many of these law firms in Korea have been unwilling to work on alternative fee arrangements with non-Korean clients, because of, among other things, the requirement to represent the client in a far different manner than that of a Korean client and, also, reduced competition in the foreign-client market, because of the reality that only a
Continue readingInternational Arbitrations in Korea under the IBA Rules
Procedural Arbitration rules are key to the efficient and effective adjudication of arbitration disputes in Korea and, also, worldwide. These arbitration rules govern and set out the framework for the arbitration process. Evidence gathering and presentation are important aspects of the above procedure, and yet, institutional and ad hoc rules that provide arbitration guidelines on other matters such as the appointment of arbitrators and the nature of award and costs are, usually, silent on this point. Advantages of such a
Continue readingAdhesion Contract in South Korea: Regulating Unfair Terms and Conditions
Adhesion Contract is a contract drafted by a party with stronger bargaining power and signed by a party with lesser bargaining power. The party that has weaker bargaining power does not have the capacity to negotiate the terms and conditions of the contract and they just adhere completely to what the party with the upper hand has to offer. In South Korea, in order to avoid such unfair one-way contract and prevent business persons from imposing unfair terms and conditions
Continue readingCalculation 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
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