Overview of North Korean Legal System & Law Online

Professor Patricia Goedde wrote, many years back, a decent basic explanation of the basics of the Democratic People’s Republic of Korea’s Legal system.  The article is worth a read if you are interested in a basic explanation of the North Korean legal system.  Please note the bottom of the article lists a decent list of North Korean legal resources. The article on the North Korean Legal System may be found at:  North Korean Legal System and Legal Research [ABTM id=1137]

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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

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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

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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

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Civil 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

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Rights 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

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Company 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

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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

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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

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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

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Korean Child Abduction Law Explained

Child Abduction Law in Korea is a developing area of Korean law because of Korea’s Criminal and Family Law’s interaction with the recently ratified Hague Convention on the Civil Aspect of International Child Abduction and recent noted issues that have been covered in the local and international press.  Please note this area of law in Korea is developing and Korea’s child abduction jurisprudence is quickly developing and local law is necessary to consider with the interaction between the laws of the jurisdiction of the Mother and Father. One case sheds light on international child abduction law in Korea.  A Vietnamese Mother and a Korean Father with marriage difficulties were planning to divorce.  The Vietnamese Mother removed the child of the couple to Vietnam and returned to Korea for employment purposes.  The child was moved to Vietnam to be raised by the family of the Vietnamese Mother. The couple divorced after the alleged

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Korean Pretrial Detention: Korean Criminal Law Basics

Korea allows a prosecutor, via approval by a court, the right to hold a defendant pending trial in a criminal case for up to 180 days.  The approval by the Court is the granting of a Pretrial Detention Warrant, also, often referred to, in English, as Korean Arrest Warrant.  In most cases, a decision, in a criminal case, must be rendered within 180 days of the time of the detention or the Defendant must be released from detention prior to the rendering of the judgment by the court.  While bail is possible, in Korea, bail is not typically granted.  In the not so distant past, when a prosecutor requested a Pretrial Detention Warrant (Pretrial Arrest Warrant), the court nearly universally approved this Pretrial Detention Warrant. Prosecutors, normally, rarely fail to obtain a Pretrial Detention Warrant, however, with a proactive Korean Defense Attorney, often a release pending the disposition in a case

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Korean Adoption Law Protests at Olympics in Korea

A good broadcast on issues with Korea’s Adoption Law may be found at: Channel 11 News.  We, regrettably, have handled litigation against the Korean government on issues related to adoption law.  Because of changes to Korea’s adoption law it is much more difficult to adopt children from Korea.  The number of abandoned children is on the rise and it doesn’t seem like Korean families shall pick up the slack anytime soon. The broadcast notes, in part, that: “Abandoned at a fire station in Seoul, South Korea, Dr. Eckerle says she is thankful that her adoptive family in Minnesota found her at 6 months of age. “I wouldn’t have had a family, I wouldn’t have had a chance for education or what I wanted to make of myself, which was to be a doctor and an advocate for children and for families, and I would not have had any of those

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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

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Lesson I: Korean Legal Terms & Phrases

This is a first in a serious of posts I shall make for those wanting to learn a little about Korean legal terms. I shall try to post a lesson every week.   I shall try to make this simple at first.  This may be a useful tool, also, for those that are just learning Korean, since I added a few simple sentence.  If you can’t read Korean characters – learn.  The alphabet is easy to learn and I promise that you shall never be able to pronounce words without learning the Korean alphabet. Lesson I: Korean for Korean Law I. Korean Words of the Week A. Supreme Court: 대법원 B. Constitutional Court: 헌법재판소 C. High Court: 고등법원 D. District Court: 지방법원 E. Administrative Court: 행정법원 F. Family Court: 가정법원 G. Patent Court: 특허법원 E. To Go: 가다 F. To Be : 이다 II. Weekly Korean Sentences A. I am going to

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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

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Debt Collection Cases in Korea on the Rise: Buyers and Sellers Beware

My firm has noticed a sharp increase in the number of requests for the debt collection services of my team. One of these cases involves an unpaid invoice from a British company to a Korean wholesaler for over USD 700,000. The British company was duped by a small paid invoice which was quickly followed by an unpaid large invoice. Of course, the Korean company (not a company –one guy and a personal bank account) was not capitalized and has few assets. The case shall be handled through a criminal filing. The other matters are for mainly low six-figure debts or claims based on faulty or non-delivered goods. Some of the cases involved nothing more than scams to the less than careful foreign businesses. Others were caused by the squeeze that the liquidity crisis has put on local small businesses. I have written articles on this in the past. Please conduct

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Law Review Article on Korean Legal Education

I stumbled upon a good law review article on issues with Korean legal education.  The article can be found at: Legal Education in Korea. The abstract for the article is found below.  Worth a read. Korean legal education has been functioning differently from the American legal education system. Comparing it with the American legal education system, this article investigates the meanings of Korean legal education and its aspirational goals under Article 2 of the Law School Act, attempts to identify and analyze the current issues of Korean legal education, and makes recommendations to the Korean legal education reformers to help to create a successful legal education system. Adopting the U.S. graduate law school system in 2007 before the 2008 economic crisis, Korean law schools failed to see the current changes in U.S. law schools and to adopt more practical pedagogy with specific learning outcomes. Additionally, law schools failed to cure

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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

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“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

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