Ask Korea Law

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[Q&A] Leaking Employer’s Confidential Information and Employment Termination : What Is Confidential Information under Korean Law?

“Hello, I am a U.S. citizen working for a Korean listed company.  Recently my company sent me a dismissal notice saying I had breached the employment contract by leaking their confidential information.  Informations at issue are a set of sale/purchase statements of the company.  I downloaded those informations from the company’s server to my personal email account.  But, there has been no warning mark of confidentiality.  My other colleagues have a free access too, and the information sometimes was provided to our suppliers.  Did I really breach the confidentiality of my Korean employer?”  

Leaking employer’s confidential information could result in a termination of the employment contract.  The legal issue, however, still remain whether or not the information can be regarded as a confidential information.

Most employers in Korea have their own rules of employment which state what is a confidential information.  And even an employment contract could list a set of confidential informations which the employee should not disclose to 3rd parties.  But, defining what is a confidential information is a matter of law and, therefore, the Korean court does not always follow the definition which an employer had been set in their internal documents.

The Korean court has well-established precedent that the confidential information should be Continue reading


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Classifying a Foreign Incorporated Corporation as a Domestic Corporation for Korean Tax Purposes: “Actual Business Management Place” Rule

그림 67When a foreign incorporated company does a business in Korea, it is very fundamental to determine whether the company is a domestic or a foreign corporation for Korean tax purposes.  A major difference in tax liability is that, in principle, a foreign corporation is liable for taxes only on the incomes generated in Korea rather than a worldwide income.

In this regard, the Corporate Tax Ac of Korea(“CTA”) defines a “domestic corporation” as a corporation with its headquarter, main office, or actual business management place located in Korea, and a “foreign corporation” as an organization which has its head office or principal place of business in a foreign country.  What makes distinguishing domestic corporation for a foreign corporation under CTA difficult and challenging is the meaning and application of the term of “actual business management place” set forth in CTA.  For example, in a case decided by the Supreme Court of South Korea in 2016, a Singapore incorporated company had challenged the Korean tax authority’s decision that its actual business management place was in Korea.

The Singapore company had a wide variety of international business portfolio and among them was a trading foreign issued corporate bonds including a Korean corporate bond.  The Korean tax authority decided that the company’s actual business management had taken place in Korea after finding the facts that the company had a liaison office in Korea, one of the directors was residing in Korea and financial documents relating to the Korean business was stored and managed in Korea.  And this Continue reading


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[Q&A: Labor Law] I Work for Korean Branch of U.S. Company. My Employment Contract Provides U.S Law Shall Apply and Severance Pay Is Not Granted. Can I Still Get a Severance Pay Pursuant to Korean Labor Laws?

Question) I am an American citizen working in South Korea.  Originally I was working for a U.S. company incorporated in the state of New York, but 3 year ago I was seconded to the Korean branch of my U.S. company, and have been working for the branch until now.  When I was seconded, my new employment contract provided that the New York state law shall apply to my employment relation in Korea.  Now, my employment contract is expiring and I would like to know whether I am entitled to the severance pay under the Korean labor law.  I know my employment contract and my company’s policy do not provide the right to severance pay.  But, as I have been working in Korea for 3 years, I am wondering if the statutory rights of severance pay under the Korean labor law could be given to me.

Answer) The answer is Yes.  You are entitled to the severance pay under the Korean labor laws.  (check here as to how the the severance pay under Korean law is recognized and operates)  This answer could be accepted quite surprising considering the fact that the parties had previously agreed (i) the Korean labor should not apply and (ii) the severance pay should not be awarded.  How come the Korean labor law intervenes in the parties’ employment relation which is seemingly irrelevant to the Korean law implications other than the fact that work place of the employee is in Korea?  The answer lies in the provisions of Private International Act of Korea which provide the general principles for the choice of law in Korea.

When a legal relation has certain foreign elements, the court must decide which jurisdiction’s law shall apply to interpret that legal relation.  In Korea, the Private International Act provides the general rules and principles for the governing laws of the various types of legal relations.  Specifically, the Act provides that if the employer and employee agree to their own choice of law, the employment contract is governed by the law chosen by the parties.  But, this does not mean the parties can freely determine which law and regulations apply to their employment relation.  It is true in Korea that the party autonomy is a general principle of governing laws, but party autonomy is subject to limits imposed by the overriding public policy and mandatory rules.  Accordingly, Continue reading


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Attorney Wonil Chung Successfully Obtained a Supreme Court’s Ruling in a High-Profile Overture Sponsored Links Case Reinforcing Unrestricted Access to Internet Network

그림 2In April 2013, attorney Mr. Wonil Chung successfully obtained a Supreme Court’s ruling which overturned lower court’s decision in connection with the sponsored links, Internet keyword advertising services, operated by Overture Services Inc., a wholly-owned U.S. subsidiary of Yahoo! Inc.  Before this ruling from the Supreme Court of South Korea, there had been an increased controversy over whether Overture system user’s deployment of an automated program to access to the sponsored links could fall into a crime causing a harm to the Internet network system.  In this case, attorney Mr. Chung argued before the Supreme Court of South Korea that it cannot constitute a statutory crime, otherwise the result would be an over-reaching of Korean criminal statute and cause an excessive chilling effect on the free access to the Internet.  Responding to Mr. Chung’s arguments, the Supreme Court of South Korea held that it does not constitute a statutory crime of interference with stable operation of the Internet network.  With its ruling, the Court struck down the prosecutor’s attempt of excessive criminalization and reinforced online service user’s right of free and unrestricted access to the Continue reading


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[Q&A: Immigration Law] Can I Appeal the Deportation Order Issued by the Korean Immigration Office?

Q) My friend was convicted of a crime and sentenced to 1-year probation.  It was an accident which happened while he was drunken.  After then, the immigration officer ordered him to leave South Korea within a month on the ground of the conviction.  He is having an E-2 visa and was married to a Korean national.  He has a very good reputation around him and planned to live in Korea permanently.  I think it is too harsh for him to leave Korea.  Does he have any chance to appeal?

A) At the outset, the deportation order or an exit order from the immigration office is subject to the review of the court.  It can be overturned by the court based on the theory of misuse of discretionary power.  The court has ruled that the decision of the immigration office to deport a foreigner should not only meet the requirements provided by the relevant statute, but also it should not do more harm to the foreigner’s individual life than benefits to the public, otherwise it constitutes an abuse of discretion and therefore shall be revoked by the court’s order.

For example, the court has ruled that the deportation order against a HIV positive personnel is an abuse of discretionary power considering  the person’s long-time living base established in Korea.  Also a deportation order against the person with one and half year jail time sentence with 3 year suspension for the violation of (then-existing) Anticommunist Act was struck down, as the court found it an abuse of discretionary power after finding his solid living base in Korea supported by other character evidences is a legitimate interest which should be preserved by allowing his legal residency in Korea.  Also there have been many successful appeal cases Continue reading


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Is Defaulting Korean Supplier Liable for the Foreign Distributor’s Damages and Loss of Profits Resulting from the Failure of 3rd Party Reseller Deal?

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, Continue reading


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Recognition and Enforcement of Foreign Judgments in South Korea

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 a 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 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 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 foreign judgment to a Korean court.

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

  1. the foreign court which issued the judgment had a jurisdiction over the case consistent with the principles of jurisdiction under Korean law and relevant international treaty;
  2. the defeated party received, in a timely manner, a service of complaint and summons by lawful method excluding a service by public notice, or that she responded to the lawsuit Continue reading