Category: Litigation

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eab7b8eba6bc-111South Korean popstar RAIN (Chung, Ji-hoon) and his ex-agency JYP Entertainment had lost their lawsuit in Hawaiian District Court brought by a local promoter, Click Entertainment, alleging Rain’s last-minute cancellation of Honolulu concert in 2007 cost them $1.5 million and caused damage to the company’s reputation.

A couple of days ago, the court found in Click’s favour, ruling that Rain and JYP were guilty of both breach of contract and fraud.  Nearly $5 million of the damages payment are punitive, with Rain himself and JYP ordered to pay half each.

It is reported that Rain has testified he didn’t know why the concert had been cancelled and the cancellation was out of his control.

I think many people, especially outside of Korea, wonder how the singer, the performer himself, couldn’t know the reason of the cancellation and how he could say it was “out of his control”.  In this regard, I think people should know more about Korean music business to understand Rain’s comment.

In Korea, almost every singers and bands are under exclusive contracts with certain entertainment entrepreneurs, called “Ghi-Hoek-Sa”, which is the mixture of agencies and management companies, yes, they’re doing both of jobs in Korea.  The problem is the contract between the singers and the entrepreneur is being criticized as very unfavorable to the singers.  For example, the term of the contract is very long, (more…)

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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…)

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naverLast December 23, the Seoul Central Prosecutors’ Office prosecuted NHN corporation, the operator of Naver (the largest Internet portal in Korea) and Daum Communications Co., the operatot of Daum for copyright infringement.

The prosecutors said two Internet portals have been aiding copyright infringement of their users by ignoring copyright holders(The Korea Music Copyright Association and the Korea Association of Phonogram Producers) request for removing illegal music files on their sites and taking no actions.  The prosecutors found 10 millions of uploaded music files (more…)

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Last September, Supreme Porsecutors Office(SPO) investigated the ex-head of Military Mutual Aid Association(MMAA) and his son as they had received 30,000 stocks of Kenertec, a Korean Energy company, from its representative in response to securing investments from the MMAA.

Mr. Wonil Chung, a partner of Chung & Partners, represented the son and succeeded in making the SPO drop the charge and not prosecuting him.

Afterward, the SPO prosecuted only the ex-head of MMAA to the court, but last Friday, Seoul Central District Court sentenced not guilty stating there is no evidence that supports there had happened any illegal activities.

Under Korean Criminal Law, a person who, administering other’s business, receives property or obtains advantage from a 3rd party in response to an illegal solicitation concerning his duty, shall be punished by imprisonment for not more than 5 yeard or by a fine not exceeding 10 million won.

Established in 1984 as a special organization under the Ministry of National Defense, the MMAA administers assistance for military personnel and veterans. It has 160,000 members and its assets are valued at 7.8 trillion won ($5.94 billion).  The organization has seven businesses and recorded a total profit of 153.7 billion won last year.

This case had drawn big attentions within Korean society because of the MMAA’s powerful position in Korea’s financing & investment market and new government and SPO’s attempt to scrape out public enterprises’ corruption.  But at least in this case, (more…)

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Yesterday it was reported that Intel Corp. had filed a lawsuit to the Seoul High Court against a 26 billion won ($18.7 million) fine handed down by Fair Trade Commission(FTC).

Previously the FTC fined Intel in June for abuse of its market dominating position after a three-year investigation.   According to the agency, Intel had been offering rebates to major local personal computer makers, including Samsung Electronics, on condition that they not buy central processing units from Intel’s rival, U.S.-based Advanced Micro Devices.

Under Monopoly Regulation and Fair Trade Act(MRFT) of Korea, “No market-dominating enterpriser shall commit acts such as unreasonably interfering with the business activities of other enterprisers or unreasonably impeding the participation of new competitors”.  Intel is currently being regarded as a market-domination enterpriser under MRFT.

Intel stated in its complaint that FTC  had made errors both in fact finding and legal reasoning and the Court would confirm there had been no violation of law in Intel’s business in Korea.

© 2008 Wonil Chung, a Korean Anti-trust Lawyer/Chung & Partners, a Korean Anti-trust Law Firm.  All rights reserved. Some copyrights, photos, icons, trademarks, trade dress, or other commercial symbols that appear on this post are the property of the respective owners.

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Last week, the Korean government announced that it would initiate a reviewing process for the approval of the KEB sale soon.  Interestingly enough, today it was reported also that before the government’s announcement, Lone Star Fund had sent an official letter to the Korean government regarding the government’s approval issue on the long-waited sale of Korea Exchange Bank(KEB) from Lone Star Fund to HSBC bank.  Lone Star Fund and HSBC had entered into the stock purchase agreement and the deadline of the agreement is coming at the end of this July.  It was reported that Lone Star Fund stated in that problematic letter that if the Korean government kept delaying the approval, the fund would file a lawsuit domestically and internationally against the Korean government for the compensation of damages by the sale’s deferment(here is a news article).

Well, someone, especially western people, can say that there would be no problem in sending a letter to the other party noticing potential legal disputes.  However, it is quite unusual in Korean legal culture that a private enterprise warns the government stating otherwise it would sue the government.  Of course, it is legally acceptable and in some cases, a statutory right of a private enterprise, to file a lawsuit against the government, but culturally it is not common to take this kind of open and public action to press the government hard in Korea.

By the way, as a matter of law, the fund would be permitted to file a lawsuit to a Korean court, however, the chances are that the fund would not win the case.  Under Korean law, in order for the fund to win the case, the fund must prove there has been an unlawful act of the Korean government in delaying the approval.  But, the approval itself is a right, not an obligation, of the government provided by the law and there have been lawsuits affecting the validity of the ownership of KEB by the fund, which have made the Korean government hold the approval procedures (more…)

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Are Internet portals liable for a defamation caused by articles posted on their web pages?

The Seoul High Court said Yes in a libel suit brought by a man who claimed to have been suffered from an article on Internet portals’ website allegedly saying he had made his ex-girlfriend die.  After the article appeared on-line, hundreds of Internet users identified him and moreover posted his photograph.

The Seoul High Court ordered four Korean major portals ― Naver, Daum, Cyworld and Yahoo! Korea ― to pay a total of 30 million won ($30,000) in compensation to the plaintiff.

The court found the major portals should be regarded as “semi-media” spreading information to unsuspecting persons, as they have rights to position news on the screen and invite tens of thousands of readers everyday.  The court ruled that Internet portals should decide whether the contents of a posting defame a person’s character and should either delete or block access to those postings (more…)

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Today just a few hours ago, the Seoul High Court sentenced partly not guilty to the head of U.S. private equity fund Lone Star’s South Korean operations (Lone Star Advisory Korea).

Last February Seoul Central District Court had sentenced all guilty and had detained Mr. Paul Yoo, the head of Lone Star Advisory Korea, for stock rigging and misappropriation charges. Also, the court had ordered Korea Exchange Bank and LSF-KEB Holdings SCA, a Belgium-based unit that holds Lone Star’s stake in KEB, to pay 25 billion won ($26.50 million) each in fines, saying both secured unfair profits as a result of the stock-rigging.

The defendants all had appealed and the Seoul Court today reversed and amended the lower court’s ruling, saying “as the Lone Star Fund did actually discuss a capital decrease in a meeting of the board of directors, there had been no falsehood in its reporting of possible capital decrease to the public and therefore no stock price manipulating”.

Also, the High court found not guilty in Mr. Paul Yoo’s tax evasion charge and also found not guilty in 2 out of 4 misappropriation charges against Mr. Paul Yoo.  Finally, the court sentenced  2 and a half year of imprisonment to Mr. Paul Yoo, however, suspended the execution for 3 years.  Mr. Paul Yoo Has been released out of prison today by the court’s decree(see the photo). (more…)

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Finally the National Tax Service ruled in favor of Hana Bank in its 1.8 billion tax evasion case.  On February, NTS forced Hana Bank to pay up to 1.7 trillion won ($1.8 billion) in penalty taxes for unfair corporate income tax evasion in the course of a merger with the Seoul Bank back in 2002(Here is my previous post on this case).  Hana bank appealed and NTS ruled on June 6 that the merger was not a reserved merger so the bank do not need to pay the penalty.  The NTS will return the 198.3 billion won Hana Bank paid (more…)

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It was reported on May 15 that Starbucks Coffee Korea was sued by the Korea Music Copyright Association for music copyright infringement.  The KMCA alleged the Starbucks played copyrighted music in its outlets without paying royalties.  The KMCA pointed out most Starbucks branches in other countries are paying copyright fees.  Starbucks Coffee Korea said the copyright issue is dealt with by headquarters in Seattle.

Here is the news article.

© 2008 Wonil Chung, a Korean Entertainment Lawyer/Chung & Partners, a Korean Entertainment Law Firm.  All rights reserved. Some copyrights, photos, icons, trademarks, trade dress, or other commercial symbols that appear on this post are the property of the respective owners.