By Chung & Partners, a Korean Law Firm

If you are doing business in Korea—or simply living here—what appears to be a “local” legal issue can quickly develop into a cross-border dispute. Cargo may be released without proper documents. A Korean counterparty may demand payment under a bond you believed was limited in scope. An employment structure that seemed administratively convenient may later become a statutory wage dispute.

Below are several relatively recent decisions of the Korean Supreme Court that are particularly relevant to foreign companies, overseas investors, and expatriates in Korea. Each case is briefly summarized, followed by a practical comment on what it means for foreign parties—because in real disputes, that practical implication is what ultimately matters.

Disclaimer: This post is for general information, not legal advice. Facts matter a lot in Korean litigation.

---

1) Warranty / Performance Bonds: Courts Look at Real Deal Structure, Not Labels (2021다220628)

What happened

A Korean supplier issued multiple bonds to satisfy a buyer’s staged risk concerns (e.g., advance payment, performance, warranty). After a dispute, the issuer paid out under a “warranty bond” and sought reimbursement under its own insurance or guarantee arrangements. The dispute centered on whether the warranty bond covered only post-delivery defects or broader contractual non-performance.

Key holding and conclusion

The Supreme Court held that interpretation of the bond must be based on its wording, the background of the transaction, and the structure of the staged guarantees, rather than the label alone.

It found that the lower court had not sufficiently examined the relationship among the various bonds and the wording describing the guaranteed obligations. The Supreme Court therefore reversed and remanded for reconsideration of the bond’s coverage.

Practical implications for foreign readers

In this case, the phrase describing “guaranteed obligations” was decisive.

Foreign buyers relying on Korean bonds should:

• Review the precise language of coverage.

• Consider how multiple bonds may be interpreted together.

• Avoid assuming that a bond titled “warranty” is automatically limited to defect liability.

Drafting clarity remains central.

Judgment link: https://glaw.scourt.go.kr/wsjo/panre/sjo100.do

---

2) Performance Bonus and Ordinary Wage (2023다216777)

What happened

Employees received a basic performance bonus paid in a given year based on the company’s results from the preceding year. They argued that the bonus constituted part of the ordinary wage of the year in which it was paid, thereby increasing overtime and related statutory payments for that year.

Key holding and conclusion

The Supreme Court rejected the employees’ position.

It held that, even if the basic performance bonus could qualify as ordinary wage, it must be attributed to the target period for which it was calculated, not the year in which it was paid.

In other words, the relevant wage period was the preceding year, which was the performance and accrual period of the bonus.

The Supreme Court therefore partially reversed and remanded, directing the lower court to reassess wage calculations on that basis.

Practical implications for multinational employers

In this case, the decisive issue was allocation timing.

If a bonus is calculated based on prior-year performance:

• Even if it qualifies as an ordinary wage, it may affect the prior year’s statutory wage calculations rather than the payment year.

• Claims structured on a payment-year theory may not succeed if the accrual period is different.

• Employment contracts and bonus policies should clearly define the performance period and accrual basis.

For foreign employers operating in Korea, bonus structure and documentation directly influence exposure in wage disputes.

Judgment link: https://glaw.scourt.go.kr/wsjo/panre/sjo100.do

---

3) “Baby Shark” and Derivative Work Protection (2023다247450, 상고기각)

What happened

The dispute concerned the well-known children’s song “Baby Shark.”

The plaintiff argued that its version of “Baby Shark” constituted a protected derivative work based on a pre-existing folk melody, claiming that sufficient creative modifications had been made.

The lower court concluded that the work did not contain enough creative transformation beyond the folk source.

Key holding and conclusion

The Supreme Court affirmed the lower court and dismissed the appeal.

It held that, in order to qualify as a derivative work under Korean copyright law, the work must both maintain substantial similarity to the original material and contain creative elements sufficient to be recognized as a new work.

In this case, the Court agreed that the creative additions were insufficient to meet that threshold.

Practical implications for foreign content businesses

The Court focused on originality rather than commercial success.

If you acquire or license Korean adaptations based on folk or pre-existing material:

• Confirm that the adaptation contains identifiable creative contributions.

• Do not assume that market recognition guarantees independent protection.

• Assess whether the claimed derivative rights are legally sustainable.

Judgment link: https://glaw.scourt.go.kr/wsjo/panre/sjo100.do

---

4) Foreign Corporation Criminal Liability for Trade Secret Violations (2022도8664, 상고기각)

What happened

A Taiwanese corporation was prosecuted in Korea under the Industrial Technology Protection Act under a corporate liability provision (양벌규정), based on alleged employee misconduct involving Korean trade secrets.

Specifically, employees who had previously worked for the victim company later joined the defendant company, and in the course of performing duties for the defendant company, were alleged to have leaked, disclosed, used abroad, or otherwise unlawfully acquired the victim company’s industrial technology and trade secrets. Based on those acts, the defendant company was indicted under the corporate liability provision.

The corporation argued that Korean courts lacked jurisdiction because it was a foreign entity.

Key holding and conclusion

The Supreme Court dismissed the appeal.

It held that where essential elements of the offense occurred within Korea, criminal liability may attach to a foreign corporation under the corporate liability provision, even if certain downstream acts occurred abroad.

Practical implications for foreign corporations

In this case, the alleged disclosure of trade secrets occurred in Korea, and that territorial element was sufficient to ground jurisdiction.

Foreign companies hiring employees from competitors in Korea should:

• Carefully review whether the employee’s prior work may give rise to trade secret infringement or allegations thereof.

• Ensure that onboarding procedures prevent the use or transfer of a former employer’s confidential information.

• Be aware that even if the employee’s subsequent use of the information occurs abroad, if the leakage or acquisition took place in Korea, the foreign employer may face criminal prosecution in Korea under the corporate liability provision.

Judgment link: https://glaw.scourt.go.kr/wsjo/panre/sjo100.do

---

5) Online Harassment in Korea: “It Reached the Victim” Can Mean “Objectively Viewable,” Even if Blocked (2025도986, remanded)

What happened

After an argument on Twitter/X, the victim blocked the offender. The offender then posted obscene content using the “mention” function targeting the victim’s account. The lower court found “no delivery” because the victim was blocked and did not receive an alert.

Key holding

For the offense of transmitting obscene content via communication media, “delivery/reaching the other party” includes placing the content in a state where the victim can objectively recognize/view it, not only when the victim actually reads it. The Supreme Court held that posting with mention-targeting can satisfy the requirement, even if the victim had blocked the account.

Why foreign readers should care

Foreign residents sometimes assume “if blocked, no legal exposure.” This case suggests Korean courts may treat certain targeted posting behaviors as legally reaching the person and, thus, constituting harassment, if it is objectively accessible in context.

---

Because of the generality of this update, the information provided herein, which may or may not reflect the most current legal development, may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.