Civil Court Proceedings in Korean Courts: Korean Civil Litigation Basics

The following is a timetable-based outline of Korean Civil Court Proceedings at Korean Courts.  Please note, this is the typical civil court proceedings and exceptions do and, often, exist at Korean civil courts.  Korean civil courts are less procedure focused than U.S., British, German and other Western nations’ courts, thus, allowing more flexibility for judges and the parties. The proceedings at Korean courts of first instance is, typically, completed within one year from the filing the complaint to a district court and appeals to the High Court in Korea (court of second instance), typically, is completed with ten months of filing the appeal to the Korean High Court.  Appeals to the Korean Supreme Court may, sometimes, take multiple years to complete. We have excluded from this list proceedings within the Constitutional Court of Korea, Korean Family Courts, the Korean Administrative Courts, Patent Courts, Small Claims courts and other special courts. 

Continue reading

South Korean Act on International Judicial Mutual Assistance in Civil Matters: Obtaining Evidence via Korean Courts and the Korean Government for use in Proceedings Abroad

In some cases in Korean courts, it is advisable to obtain evidence held in a foreign jurisdiction for use in a Korean civil proceeding in a Korean court.  The need often assists in establishing damages, course of dealings or the basis of liability.  Additionally, in cases in non-Korean courts, evidence held in Korea may be useful in these foreign court proceedings for similar reasons.  The Korean Act on International Judicial Mutual Assistance in Civil Matters sets out specific requirements that need to be met before the Korean government may order the production of this requested evidence. We have assisted foreign law firms in obtaining evidence in Korea and, also, we have requested evidence from foreign jurisdictions in pending cases in Korea.  Korea has, thankful, improved, in recent years, its protocols for handling requests from foreign courts. Please note, in a Korean lawsuit a Korean judge may request from a foreign

Continue reading

Enforcement of Arbitral Awards in Korean Courts: Arbitration Law Basics

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 reading

Dismissal 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 reading

Duty 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 reading

Bithump 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 reading

Definition 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 reading

Arbitration against Korean Government Agencies in Korea: Korean Arbitration Law Basics.

The Korean National Assembly amended the Act on Contract to Which the State is a Party, partially, on December 1, 2017.  The amendment was intended to encourage the Korean Government to arbitrate more disputes with parties that have contracted with the Korean Government.  To date, few cases have been resolved via Arbitration when disputes occur between the Korean Government and parties to a contract with the Korean Government.  The reason stems, mainly, from realities within many Korean-based law firms, within in house legal teams at government agencies and the lack of knowldge of the benefits of arbitration for the Korean court system, Korean government agencies and those doing business with the Korean government.  For a general article on Arbitration in Korea, please see: Arbitration in Korea.  ACT ON CONTRACTS TO WHICH THE STATE IS A PARTY Article 28-2 (Settlement of Dispute Resolution) (1) The head of each central office or

Continue reading

Tax 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 reading

Privity 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 reading

Does a Korean court have the power to issue a preliminary attachment on Korean assets stemming from a foreign court claim?

A situation often arises when a plaintiff is suing a Korean debtor in a foreign court and the non-Korean plaintiff wishes to attach the Korean-based assets of the Korean defendant in Korea.  Typically, the plaintiff found no assets of the defendant abroad and fears the disposal of the assets in Korea.  Thus, typically, the plaintiff wishes to file to a Korean court a request for a provisional attachment of the assets of the prospective defendant.  While, provisional attachments of assets of Korean defendants in lawsuits pending in Korea courts is common – this situation is not common and few courts, or Korean law firms, have handled these type matters. Thus, the question is, in short, does a Korean court have the power to issue provisional/preliminary attachment of Korean-based assets based on a claim stemming from a pending or future foreign lawsuit against the owner of these Korean-based assets?   Yes.  Korean courts may

Continue reading

Expiration 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 reading

Future 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

Is Bitcoin Banned for Foreigners in Korea? Korean Bitcoin Law Updates

This Law Firm has wrote a few articles on Bitcoin Law in Korea.  This Alt Currency/Bitcoin Law articles may be found at: Court Challenges to Governments Ban on Cryptocurrency in Korea and Will the Korean Government Ban Bitcoin? Other article can be found via searching the Blog.  A Forbes article notes, with one significant caveat, that: “All foreigners, including residents, nonresidents and “kyopo” ethnic Koreans with foreign citizenship, will be banned from trading cryptocurrencies in Korea, the FSC’s foreign media department said by email. Minors are banned after Prime Minister Lee Nak-yeon earlier claim the cryptocurrency craze could lead the youth toward crime.” However, the article, additionally notes that: “However, Kang noted a loophole. In the new system, foreigners and minors can’t possibly make investments as it operates on a bank’s real-name account, but they could potentially use corporate accounts to make additional investments. ‘There’s no limit to that for now. We haven’t

Continue reading

Legality 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 reading

Korean Cryptocurrency Case Filed to the Korean Constitutional Court: Korean Bitcoin Updates

The author of this blog, formerly worked for the Constitutional Court of Korea and he is excited to see this matter being litigated in Korean courts.  The issue, as I have always noted, is simply if government are willing to protect the freedom of individuals to trade and speculate in asset classes of the choosing of the investor.  While, I am far from sold on Bitcoin (and other Alt Currencies) as a long-term asset class plays – of course any free democracy shall allow its citizens to invest in asset classes the government doesn’t favor.  The key to this issue, seemingly, is just if Alt Currencies shall be considered mere asset classes. As the reader likely knows, various branches of the Korean government have noted that the Korean government shall either ban Bitcoin exchanges in Korea, prohibit banks from linking accounts to exchanges or otherwise prohibit the use of Alt

Continue reading

Apple Sued in Korea for Battery Gate

A local newspaper has reported, today, that 150 plaintiffs have sued Apple for not reporting that the Company slowed down the speed of old phones.  Apple claims it slowed down the phones in order to increase battery.  Similar suits have been filed in the West.  We, likely, will not hear an outcome to this matter until the 4th Quarter of 2018. The articles notes: The main point of contention in the lawsuit, which has gathered 150 plaintiffs, will be whether Apple’s lack of disclosure was intended to push consumers to upgrade to a newer model of the iPhone. The iPhone 6 was released in 2014. After facing global backlash, Apple released an official statement on Dec. 28. “We have never — and would never — do anything to intentionally shorten the life of any Apple product, or degrade the user experience to drive customer upgrades,” the company said. According to

Continue reading

Trade Dress Law in Korea. The Copycat May Catch the Mouse

A blog I just, recently, ran into posted an interesting post on Hermes trouble with copycats in Korea. The blog may be found at: Fashion Law Blog. Hermes lost, recently, a High Court case in Korea.  Hermes argued, in part, that: ” [Defendant’s] bags – which bear a striking resemblance to its famed Birkin and Kelly styles – run afoul of the Unfair Competition Prevention and Trade Secret Protection Act, which prohibits, ‘causing confusion with another person’s goods by using signs identical or similar to another person’s name, trade name, trademark, container or package of goods or any other sign widely known in the Republic of Korea as an indication of goods, or by selling, distributing, importing or exporting goods with such signs.’” Hermes, in short, specifically argued that: “. . . that in recreating the trade dress in its most famous bags – namely, the distinctive three lobed flap

Continue reading

Fleeing Korea while under Police/Prosecutor Investigation: International Hold in Korea

From changes a couple of years ago in the computer system and policy of the Korean Immigration Services, even if the Korean prosecution/police have not requested that an accused be placed on an International Hold, some records of police investigations, indictments and proposed fines and sentences by the prosecution/police are being reported to the Korean Immigration Service at airports and ports of departure. An International Hold, in Korea, is an official procedure that flags passports and fingerprints & prevents one, under this International Hold, from departing Korea prior to the lifting of the International Hold. Even if you are not under an official International Hold, Korea Immigration may refuse your departure or entry into Korea based on information from data being shared between the Police, Prosecution, National Tax Service and other Korean government agencies.  Please note that the Korea Immigration is a branch of the Ministry of Justice. The Ministry

Continue reading

Abuse of Market Dominance in Korea: Competition Law in Korea

The Seoul Central District Court ruled earlier this year that Namyang Dairy Products Co. (“Namyang”) was in violation of the Monopoly Regulation and Fair Trade Act of Korea by abusing its market dominance and “unfairly taking advantage” of retailers. For more Antitrust/Competition Law articles please click on the labels noted Antitrust Law on the right. Namyang, a major Korean dairy company, was accused by retailers of, among other things, forcing retailers to purchase expired or soon to expire products and purchase unpopular products.  The Seoul Central District Court in 2014GaHab592238 ruled the company was in violation of Article 23 of the Monopoly Regulation and Fair Trade Act of Korea and awarded damages to the plaintiffs. Monopoly Regulation and Fair Trade Act of Korea Article 23(1), no. 4 prohibits a company or individual from: “Trading with a certain transacting partner by unfairly taking advantage of his/her position in trade.” The Court

Continue reading