그림 2A distributor from the U.S. entered into a distributorship contract with Korean supplier (exporter) for certain goods.  Of course, the U.S. distributor was thinking to resell the goods in U.S. market for a markup. But the problem broke up after the contract was duly singed and executed.  With no reason, Korean supplier suddenly refused to sell the goods and rescinded the contract.  Due to this unexpected turmoil by the foreign supplier, the U.S. distributor could not properly perform the reselling deals with the local warehouse stores, which the distributor had thought very lucrative. There would be no doubt that the act of Korean distributor constitutes a breach of distributorship agreement. But, the U.S. distributor did not pay anything, yet.  The only loss they encountered was they lost a good deal with 3rd party by reason of the Korean supplier’s breach of contract.  Now, the U.S. distributor tries to recover damages and loss of profits from the supplier in Korea which they suffered from the failure of the reselling deal with the local warehouse stores.  In this case, can the U.S. distributor prevail in Korean court and under Korean law?

The key legal issue would be whether the Korean supplier knew of the fact that the distributor had completed their negotiation with 3rd party for the resale agreement.  According to the ruling from the Supreme Court of South Korea, if the supplier knew of the fact, the supplier is liable for the distributor’s loss relating to failure or non-performance of the resale agreement with 3rd party.  By contrast, (more…)

[Updated on April 29, 2020] Let’s say you obtained damages recovery judgment from a U.S. court against a Korean residing in the states.  Soon after your excitement for the winning judgment, however, you found he had no assets in the states to fulfill your judgment.  This could also happen in litigation between U.S. citizens in a U.S. court where the losing defendant moved to South Korea and there are no assets left in the U.S.  You might have spent quite a large amount of legal fees to win the judgment already, but you think your judgment is now in great peril to become useless.  This horrible situation might frustrate you.

But, don’t worry too much.  You can enforce your duly obtained U.S judgment in South Korea.  If you are sure the defendant has enough assets to cover your claims in the judgment and your legal fees, you are encouraged to file for an enforcement order for a foreign judgment to a Korean court.

Requirements for the Recognition and Enforcement

According to Article 218 of the Civil Procedure Act of South Korea, a final and conclusive judgment by a foreign court shall be recognized and enforceable in Korea, when all the following requirements are met:

1. The international jurisdiction of such foreign court is recognized under the principle of international jurisdiction pursuant to the statutes or treaties of South Korea;

2. A defeated defendant was served, by a lawful method(excluding cases of service by a public notice or similar), a written complaint or document corresponding thereto, and notification of date or written order allowing him/her sufficient time to defend, or a defeated defendant responded to the lawsuit even without having been served such documents;

3. The approval of such foreign judgment does not undermine good morals or other social order of South Korea in the perspective of the contents of such foreign judgment and judicial procedures; and

4. Mutual guarantee exists, or the requirements for recognition of a foreign judgment in South Korea and in the foreign country where the foreign court belongs are not far off balance and have no substantial difference between each other in important points.

Any foreign judgment which orders the defendant to do a specific action such as money payment and delivery of goods can be recognized and enforced according to the above rules.  Korean Court had ruled that a foreign alimony order can be enforced, although the Korean legal system doesn’t recognize alimony.

Punitive Damages Award Unenforceable in Korea

As to the 3rd requirement above, please note that punitive damages award by a U.S. court is currently not recognized by the Korean court and therefore not fully enforceable in Korea.  That is because the concept of punitive damages is not accepted by the Korean law and the court sees it violating the social order of South Korea.

In torts law of Korea, the damages a plaintiff is entitled to are only actual damages which can be found legally and reasonably caused by the tortfeasor, which amount is eventually quite smaller than punitive damages.

So, if you bring a punitive damages award from a U.S. court to a Korean court in order to get it recognized and enforced, the Korean court will reduce the amount of the award to the level where Korean law would find it consistent with Korean torts law.

Existence of Mutual Guarantee

As to the 4th requirement, the mutual guarantee which the act requires is similar to the concept of comity and reciprocal recognition of judgments in the U.S.  The Korean law requires the foreign jurisdiction where the judgment was issued has established the standard for recognition of a Korean judgment which should not be more difficult to be met when compared to the Korean legal standard.

This is somewhat hard to grasp, but if your judgment came from a U.S. court, you don’t have to struggle, because the Korean court has been ruling that there exists a mutual guarantee between Korea and the U.S.

The Korean courts have so far recognized the mutual guarantee with, among others, California(U.S.A.), New York(U.S.A.), Texas(U.S.A.), Washington(U.S.A.), Minnesota(U.S.A), New Jersey(U.S.A), Ontario(Canada), China, Japan, Taiwan, and Russia.

By contrast, the Korean court had denied the existence of a mutual guarantee with Malaysia.

If you have any questions about the enforcement of foreign judgments in Korea, please send your inquiry to Mr. Wonil Chung by clicking here.

© 2012 Wonil Chung. All rights reserved.

Because of the generality of this update, the information provided herein may or may not reflect the most current legal development at the time of view, nor is it applicable in all situations nor should be acted upon without specific legal advice based on particular situations. 

Let’s assume a creditor has a monetary claim against a debtor in Korea but the debtor refuses to pay it.  The creditor would proceed to file a lawsuit to get a judgment to collect his claim.  Unfortunately, however, the chances are that, knowing the complaint was filed, the debtor would try to conceal or transfer his assets to evade from the liability under judgment.  This shows why provisional attachment is highly required to secure the judgment effectively.

Provisional attachment is a judicial measure available to anyone who has a monetary claim to lock down certain assets to keep the debtor from selling or giving them away until the court issues a judgment on the merit. The creditor can, and usually does, seek a provisional remedy before she files a complaint on the merit.  So, this is a very powerful weapon for the creditor.  For example, as many Korean creditors do, if the creditor succeeds in putting a provisional attachment on the debtor’s bank account, the debtor would not be able to use the money and could face several penalties regarding its banking/financing transactions with the bank.  This could heavily deteriorate the ability for a small com­pany to con­duct business, which makes the debtor (more…)

Basically Korean labor Law doesn’t regulate employee’s having concurrent and/or additional job.  However, most employment agreements(EA) prohibit employees from having additional jobs.  So there have been many cases where employers fire employees based on his or her breach of prohibition of additional job clause in EA.

In this regard, the court’s standpoint is that as having additional job is a matter of privacy (more…)

It is reported that Mr. Matthew Deakin, the president of the HSBC Korea, said on last Wednesday that HSBC Holdings Plc had no plan to acquire a local Korean bank for now.  Last year, HSBC walked away from the deal with the Lone Star, a U.S. private equity fund, which provided HSBC the right to buy 51 percent stake of Korea Exchange Bank due to the global financial crisis and continued legal disputes surrounding the 2003 purchase of the bank by Lone Star Funds. (Here is a related previous post)

Things have changed.  The Seoul Central District Court in last November ruled the purchase legal, and as the financial markets are now stabilizing.  But Mr. Deakin, at the press conference which took place for the purpose of introducing the bank’s new Emerging Markets Index, said “right now, we have no interest in any acquisition of Korean banks”.

Here is a related news article.

We’ve been asked about a criminal charge against an adultery under Korean criminal law quite often.  Foreign employees in Korean should be cautious that adultery is a crime under Korean law.  Here is a real example of such a case where a foreign officer committed an adultery and the company(employer)’s legal concern made them ask for some legal consultation to our law firm regarding the adultery law and criminal law process in Korea.

Q) Mr. XX, who is a head director of our company, committed an adultery and was charged by the Korean prosecutor.  He has confessed his guilty and the prosecutor demanded one year’s imprisonment for his crime to the court.  If the court finalizes that Mr. XX is guilty, does that mean Mr. XX will be imprisonment for one year or lesser?

A) Finding guilty does not always mean Mr. XX will be imprisoned.  The Court may SUSPEND the imprisonment for certain years even though Mr. XX is guilty.  The Korean Criminal Act provides that a married person who commits adultery shall be punished by imprisonment for not more than two years.  However, the Act also provides the execution of the sentence for an adultery can be (more…)

Recently, Mr. Wonil Chung, a partner at Chung & Partners, has successfully represented NHS, Inc., an internationally renowned U.S. company which sells skateboards, apparel under various trademarked brand worldwide, in policing their trademark in South Korea.  NHS, Inc. and its Korean distributor had found that counterfeits of SantaCruz, one of the NHS, Inc.’s premium brand, had been made and sold in numerous online shopping mall sites in Korea.  They requested Mr. Wonil Chung to stop them from selling the counterfeits.  Mr. Wonil Chung sent cease and desist letters to the online shopping sites which sold the counterfeits, notifying (more…)

Recently there are so many lawsuits being filed against domestic and foreign banks in Korea with regard to the bank’s irresponsible fund sale.  The Korean fund buyers are alleging the losses in the funds which are still on-going were caused by the fund-sellers’ not informing sufficient information on the risk and possibilities of losses when they put the money to the funds.

As a matter of law, Korean court has ruled that the banks have legal duties to inform the customer sufficiently of the structure of the investment such as fund or option transaction and the risk of possible losses when they solicit the customers for investments.  If they neglect that obligation, it constitutes a breach of contract and (more…)

Recently I got an email question from a foreign teacher working for a Korean private university.  He’s wondering why the university is insisting on a retirement pension plan instead of the severance payment.

There is an act called Pension for Private Teachers and Staff Act(PPTSA) in Korea, which regulates severance payment issues in private schools.  As a matter of law, PPTSA is applied prior to the GWRBA(Guarantee of Workers’ Retirement Benefits Act) and it allows the private schools to set a retirement pension plan for its employees instead of the severance payment.

With respect to the relationship between the employment contract and the pension plan under PPTSA, Private Universities usually, pursuant to the PPTSA, put the retirement pension clauses, instead of severance payment, in the Rules of Employment(RE) of its own.  As a matter of law, the RE is applied to all the workers in the workplace.  That means, if there exists (more…)

Recently we got a question from a gentleman asking what the exact meaning of the below, an Internet post he’d found:

“It is possible that as of 2011, what was severance pay will be vested in the country’s pension plan. This means that workers (including teachers, etc.) will no longer receive one month’s pay for every year worked at the end of their contract. The legislation is set to discuss/vote on this in 2009.”

He was worrying that he might lose his right to severance payment under Korean law.  But the above article is quite misleading.  The severance payment is the property right of workers.  It can not be vested to anything without workers’ consent.  If the article says the amended law will give the employer or any party but the workers the power to vest the severance payment to the country’s pension plan (or whatever) without workers’ consents, it definitely violates (more…)