After an arbitration panel outside of Korea renders an arbitral award against a Korean company or individual, typically, if the non-prevailing party lacks assets outside of Korea or the prevailing party needs to enjoin acts in Korea, the prevailing party chooses to enforce the arbitration award in Korea. Enforcement is not as easy as just giving arbitral awards to non-prevailing Korean parties. For enforcement of foreign judgments in Korean courts please see: Enforcement of Foreign Judgments in Korean Courts. When enforcing foreign arbitral awards in Korea, Article 37(1) & (2) of the Arbitration Act of Korea comes into play, thus, leading to the need to apply Korean Law to the enforcement of the arbitral awards and utilize a Korean court for enforcement. The good news is that in 2016, the Arbitration Act of Korea was amended to, among other things, allow for a quicker and less cumbersome manner of enforcing
Continue readingCategory: Korean Corporate and Compliance
Korean FTC Criminal Referral Guidelines: Monopoly & Franchise Korean Law Updates
The Fair Trade Commission of Korea (“Korean FTC” or “KFTC”) amended the Korean FTC’s Criminal Referral Guidelines (“Amended Guidelines”) to motivate more active and aggressive enforcement of Korea’s Franchise, Monopoly and other related laws. We have seen a much more active enforcement of Korean law by the Korean FTC and expect more criminal referrals. The Amended KFTC’s Criminal Referral Guidelines places a very low threshold for referring a case for a criminal prosecution of employees and companies. The Amended Guidelines are effective since April 9, 2018. Prior to the present amendment, the prior Guidelines emphasized on, mainly, making criminal referral against key management and company representatives that were alleged to have taken in part in “high level” violations. The Amended Guidelines places a bulls eye also non-management employees and lowers the threshold for referring a case for prosecution. The Guidelines notes that adjudicating officers shall look, mainly, to: (a) the
Continue readingKorea’s Occupational Safety and Health Act Amendments for 2018 (OSHA Korea Updates)
Because of the perceived need, in Korea, to protect workers’ emotional and physical health in the service sector, the Occupational Safety & Health Act of Korea (“OSHA Korea”) was amended. The major OSHA Korea amendments impose a: Duty on Employers to Protect the Emotional & Physical Health of Employees The OSHA Korea Amendment mandates employers, in the service sector, to protect the emotional and physical health of employees from abusive acts of customers. We do not, yet, have substantial details on the actions needed to be taken by employers to meet these legal obligations. Enforcement actions against employees and an enforcement decree shall shed light on the specifics and we shall update the reader when more is known.We advise that employers in the service sector review policies in place in order for employers to not run afoul of the new OSHA law. It seems like a proactive approach that includes
Continue readingDismissal of Employees in Korea: Supreme Court of Korea Precedent
The Korean Supreme Court ruled, in March of 2018, that a company may terminate employees for one incident of employee gambling. The case stems from the termination of drivers that were caught on one occasion gambling prior to driving buses. The lower courts ruled, in short, that gambling was not a serious enough offense to justify termination since: The act of gambling, only, occurred on one occasion and thus trust between the employee and employer has not broken down; The employees performed their job functions adequately; and The non-termination of employment of the employees would not significantly interfere with the ability of the employer to successful continue its business- if the employees do not engage in these acts in the future. The Supreme Court reversed the decision of the lower court and noted that: Gambling could effect the rest period of the drivers and the job of the drivers requires
Continue readingDuty to Report Product Defects in Korea
Korean law emphasizes the obligations a seller of goods has to a buyer in the event that a good that the seller manufactures, imports, sells, or supplies is defective. The product defect reporting obligations are extensive and not reporting may have significant impact on your business in Korea. This Duty to Report is codified, in part, under Korea’s Framework Act on Consumers and Framework Act on Product Safety. This post is, only, intended as a short introduction to these acts. Additional explanations shall follow in posts over the next few weeks. For a general article on damages for product liability please see: Product Liability Damages in Korea and for a general article on mass torts and class action law suits in Korea please see: Class Actions/Mass Torts in Korea. In short, in some cases, business entities are required to report defects of goods which cause or are likely to cause danger
Continue readingBithump Crypto-Currency Exchange in Korea to Ban Trading in 11 Countries
With the Korean government auditing Korean Alt Currency exchanges and the Korean government looking at the regulation of crypto-currency, a major exchange, in Korea, has banned the trading on the exchange from Iran, Syria, Iraq, Ethiopia, Serbia, Sri Lanka, Trinidad and Tobago, Tunisia, Vanuatu, and Yemen. These aforementioned nations are on the Financial Action Task Force’s Non-Cooperative Countries or Territories black list. This Task Force, an intergovernmental agency, has deemed these countries to not have sufficient legal procedures in place to assist in preventing the laundering of money. The Korean government has raided Korean exchanges and investigated these raided exchanges for violation of Korean law. On of the major worries was the use of Alt Currencies, including, Bitcoin for nefarious reasons including money laundering and the purchase of drugs. No criminal charges were levied against any individual from Bithump, however, charges of embezzlement and fraud were levied against executives from Coinnest
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 it 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 to Article 56 of the Korean Labor Standards Act, an employer must pay 50% of the Ordinary Wage plus the Ordinary Wage for overtime, night and weekend work performed by the employee. Because of the potential for a large unknown future liability, this issue became the most significant issue, in the last few years, among domestic and foreign employers in labor and employment law in Korea. The basic Korean test is
Continue readingCivil Liability of Companies for Actions of Employees Off the Company Property and After Work Hours
Korea imposes, in some cases, liability on companies for actions of employees of companies even when the employee conducts an intentional wrongful act outside the workplace, after the work hours and beyond the duties imposed by the employer. The employer is not relieved of civil liability by a mere limiting the scope of duties of employees, warnings to employees or having comprehensive sexual harassment education programs. A, typical, sexual harassment situation, related to this issue, occurs after a company office party. The manager takes his team out to dinner and drinks. After the dinner and drinks, the inebriated co-worker is asked by the manager to a local motel. The inebriated co-worker alleges, in the morning, that she was incapable of consenting to the sexual advances or that she was pressured either implicitly or explicitly by the manger to have sexual relations with the manager. The courts even when a employer
Continue readingRights of “Non-Registered” Shareholders in Korea
Questions arise, often, in Korean companies if a non-registered shareholder (not placed in the Korean corporate registry), that can prove that the shareholder is the beneficial “owner” of shares of the company, may exercise rights of a owner of the company. The Supreme Court has recently made a running on this issue. Supreme Court 2015Da248342 Decided March 23, 2017 The Supreme Court, in this case, ruled that: “In light of the legal nature of a company whereby its ownership structure constantly changes depending on the issuance and transfer of shares, the purpose of the shareholder registry system under the Commercial Act lies in making it easier for a company to externally distinguish its legal relationship with numerous shareholders based on a cursory and uniform standard, thereby improving efficiency in handling matters related to the exercise of shareholder rights and ensuring legal certainty. Only a person owning a company’s shares and
Continue readingCompany Car Expense Deductions in Korea: Korean Tax Law Updates
Companies, in Korea, sometimes provide senior employees of the company a company car. A tax issue arises concerning the deduction of car expenses and the refunding of VAT. In practice “company cars” are, often, used for the company as well as private use. Thus, Korea has excluded deduction of expenses and exclusion of VAT for some automobiles. Corporate Tax Law formalities require Korean companies and Foreign Capital-Invested Companies, in Korea, to have detailed operation records or sufficient evidence to claim deductions and exclusions. The rules have tightened over the past few years and a proactive and detail-oriented accountant is necessary. For example, if the legal defined size of the company car is less than nine passengers: No VAT refunds are legally allowable (we have fund that some accountants in Korea are not even aware of this reality); Maintenance expenses are not deductible expenses; and Other expenses, including fuel are not
Continue readingTax Liability of Controlling Shareholders in a Korean Company: Tax Law Updates
Under Article 39 of Korea’s Framework Act on National Taxes, unpaid taxes owed to the Korean government are enforceable against certain “ologopolistic” shareholders of respective debtor company’s shareholder. This secondary liability of shareholders is codified within the Framework Act on National Taxation. Article 39 of the Framework Act on National Taxes, specifically, notes that: “Where the property of a corporation is not enough to pay national taxes, additional dues and disposition fees for arrears imposed upon or to be paid by the corporation, any person who falls under any of the following as of the date on which the national tax liability is established shall have the secondary tax liability for the amount of such money shortage: Provided, That in case of an oligopolistic stockholder under subparagraph 2, his/her secondary tax liability shall be limited to the amount calculated by multiplying the amount obtained by dividing the amount of such
Continue readingPrivity of Contract in Franchise Agreements in Korea: Korean Franchise Law Updates
Normally, in Korea, a contract/agreement cannot confer rights nor impose obligations upon a person who is no a party to the contract/agreement. One interesting case, in franchise law, applied this principle to the benefit of the franchisor and the detriment to a supplier. A Supplier delivered food through a Distributor to a Franchisee based on a franchisee requirement iterated in a franchise agreement with a franchisor. The case brings to light, also, the potential liability of franchisors for acts of Korean franchisees. The dispute occurred, of course, since the Supplier was not paid for an outstanding order, since the Franchisee was insolvent. The Franchisor (deep pocket) was not insolvent and, thus, the only available option for collection was via the Franchisor. One caveat is that the Franchisor was paid a commission by the Supplier/Distributor for sales to the Franchisee and as noted above, the Franchisee was mandated to use this specific Supplier. Thus, the
Continue readingExpiration Versus Termination of a Distribution Agreement in Korea: Korean Distributor Basics
While Korean Law does not specifically detail the differences in treatment in law between the non-renewal (expiration) of a distribution agreement versus the termination, in reality, Korean courts are less likely to rule in favor of distributors in cases where a distribution agreement is not renewed. Thus, typically, it is advisable to have a distribution agreement based on a specified term of years. However, even with the expiration of the Korean Distribution Agreement, termination risks exist. In some cases, Korean courts have noted that termination and even non-renewal is a violation of Korean Law since the non-renewal or termination of the Korean distributor was not based on “good faith.” In many cases, Korean courts have required a showing of “good cause” to terminate or even to not renew a relationship. Contractual formalities and structural realities often assist in allowing a non-performing distributor from prevailing in court. Thus, a nuanced and
Continue readingFuture of Bitcoin in Korea according to FTC: Korean Cryptocurrency Updates
The head of the Korean Fair Trade Commission has noted to local vernaculars that he does not agree with Justice Minister Park Sang-ki’s comment that “cryptocurrency investment is gambling.” He further noted that: “cryptocurrency recently emerged as an issue in Korea and other laws do not have the exact legal clauses that relate to closing exchanges.” Thus, indicating, in part, that the Korean government doesn’t have the specific power to close the Korean cryptocurrency exchanges. Of course, the FTC Chairman’s opinion does not have any legal binding effect, however, his opinions are widely respected by academics and legal practitioners. Many legal practitioners I have spoke to, in Korea, believe that the government shall not have the power, because of the number of traders in Alt Currencies to ban trading in Alt currencies. This reality may lead to a settling of this issue via the imposing of capital gains tax on
Continue reading“Fair Use” Korean Copyright law
Dear Professor Hayes : I am in the process of completing a book on the modern history of the Republic of Korea. A good deal of my work cites news reports, published journals, and first hand reports mentioned in other books, Web sites and personal blogs. My book chronicles the modern developments from the eyes of foreigners who reside or resided in Korea. My publisher wants to confirm that Korea has a “fair use” doctrine, therefore, allowing me to cite the works of others. Author in Rhode Island Dear Author: In general, the copyright holders, in Korea, may solely economically exploit a copyrighted work for the life of the author of the work plus 50 years. Korean Copyright Law provides that copyright infringers may be held liable in civil court and even punished in criminal court. In recent years, the Korean prosecution has been vigorous in prosecuting copyright infringers and
Continue readingLegality of an Employer Lockout in Korea: Korean Labor & Employment Law Basics
Korea, in the eyes of many domestic and foreign companies, has been lax in the enforcement of the rights of employers to run a business. One noted cases that lead to a decision by the Supreme Court of Korea comes to mind. Because of a labor strike at a major automobile parts manufacturer and the physical blocking of the use of replacement workers and employer machinery by the employees, the employer implemented a partial unpaid lockout of certain employees (employees were employed by a unit of the employer), thus disallowing certain workers to enter the workplace in order to prevent further disruption of the manufacturing process. The employees physically blocked production and thus did not allow certain orders to be fulfilled by the employer, thus affecting the employer’s business. The case is a great case to demonstrate Korea’s Lockout Law. Following the lockout, the locked-out employees, on several occasions, expressed
Continue readingIPG’s Korean Employment & Labour Law Chapter in Global Legal Insights 2018
IPG is proud to announce the contribution of the Korean chapter to GLI’s 2018 Edition of Employment & Labour Law. The publication contains chapters from 29 different countries. The publication may be found at: Employment & Labor Law, Sixth Edition. Key Issues addressed are, among others,: -General Labour Market Conditions in Korea -Employment Policies under the Moon Administration -Litigation Trends in Korea -Definition of “Ordinary Wage” in Korea -Korean Supreme Court’s Regular Interval Bonus Case -Director as an Employee for Korean Employment Security Purposes -Korean Employee Lockouts -Layoffs and Dismissals Based on Fault of the Employees in Korea -Korean Restrictive Covenants Law -Trade Secrets Protection in Korea -Severance Payments in Korea -Childcare Leave in Korea -Maternity Leave in Korea -Paternity Leave in Korea -Annual Leave in Korea Please see the other articles below and via the Employment Law Tag. [ABTM id=1137] (c) Sean Hayes – SJ IPG. All Rights reserved.
Continue readingPart-time Worker Annual Paid Leave Obligations under the Korean Labor Standards Act
Employers, in Korea, are in most cases required to grant annual paid leave to full-time and even part-time workers working in Korea-based companies. Exceptions to this Korean annual paid leave law exist for Korean workers that work, on average, less than 15 hours per week for these Korean-based companies. Article 18 of the Korean Labor Standards Act notes that: “(1) The terms and conditions of employment of part-time workers shall be determined on the basis of relative ration computed in comparison to those work hours of full-time workers engaged in the same kind of work at the pertinent workplace.” However, annual paid vacation leave and other articles/obligations under the Korean Labor Standards Act do not apply to “workers whose contractual work hours per week on an average of four weeks (in cases where their working periods are less then four weeks, then, based on such period of work) are less
Continue readingKorean National Tax Service Tax Law News Release to Foreign Corporate Taxpayers: Korean Tax Law Updates
The following Korean Tax Law News is a publicly released Korean tax notification that is intended for foreigner companies in Korea. The notification was not translated or drafted by this law firm. For any questions on this notification please Contact Us. Korean Tax Law News 【January 2018】 ☞ The following Korean tax information is translated from Korean for foreign-invested companies, and is not legally binding. ※ Year-end tax settlement by foreign workers in Korea □ With the increase in foreigners residing in Korea, the number of foreign workers in Korea has increased every year as well. ○ For the convenience of foreign workers‘ year-end tax settlement in Korea, here are a few tips on year-end tax settlement for foreign workers this year. □ If a foreigner has wage and salary income generated in Korea, he/she should perform year-end tax settlement just like domestic workers, regardless of his/her sojourn period and
Continue readingKorean Tax Law Amendment Press Release by Korean Government
The following is a Press Release by the Korean Government on recent Korean Tax Law enforcement decrees. We shall update the reader when more is known. The following press release was not proofread or translated by this firm. The Press Release was published by the Ministry of Strategy & Finance in the English language and copied, in its entirety, below. Decree Focuses on Boosting Investment and Broadening Tax Base The government announced a revision to a total of 17 tax enforcement decrees, including ones to help create jobs, improve income and broaden the tax base. Major revisions to the 2017 tax enforcement decrees are as follows. – Expand the angel investment tax incentives (30 to 100 percent income tax deduction): Include crowdfunding investment in companies run for less than 7 years, or investment in companies run for less than 3 years if they are qualified by credit rating agencies –
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