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South Korea > Legal market overview
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A significant amount of domestic activity in the Korean market over the past year has focused on the employment sector, in particular relating to the disputes arising from the jurisdiction’s singular ‘ordinary wage’ policies.
A number of class action lawsuits are currently pending before the Korean courts and the substantial retrospective wage pay-outs that could be ordered are potentially ruinous for small and medium sized companies. These companies are therefore choosing their counsel carefully, and many of the country’s biggest firms – including Lee & Ko and Kim & Chang – have been highly active in this area, as have Bae, Kim & Lee LLCYulchon, Yoon & Yang LLC and Shin & Kim.
Elsewhere, lawyers report a steady increase in outbound transactions and investment, fuelled largely by the importance the Korean government is now attaching to such activity. Korean companies are still mainly active in Asia and the US in this area, but European markets and projects are starting to be explored. There has also been a small spike in capital markets activity.
For foreign firms entering the market, the competition is stiff. A number are well positioned to compete with the domestic market leaders for cross-border corporate, banking and M&A work, but all are having to identify a USP to guarantee prosperity in the long term.
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The Personal Information Protection Act ("PIPA") was enacted as a general law of personal information in March 2011 to fulfill the need for presiding rules to govern personal information protection. In fact, there have already been a number of special laws governing personal information protection in various special areas and cases, such as The Act on Promotion of Information and Communications Network Utilization Information Protection ("Network Act") governing information and communications services, and the Use and Protection of Credit Information Act ("Credit Information Act") governing personal credit information. Special laws prevail over the general law, when in conflict with individual articles of the general law.
The following is a summary of the press releases made by the Financial Services Commission on 10 March 2014. These are action items and policies that the FSC and relevant ministries are seeking to implement. The following measures have developed from a series of measures previously announced since the data leakage from the three credit card companies were revealed last January.
In its press release on March 17, 2014, the Korea Fair Trade Commission (the "KFTC") blocked the proposed acquisition of 50% shares by Essilor Amera Investment Pte. Ltd. (a subsidiary of Essilor International S.A., the largest optical lens maker in the world) in Daemyung Optical Co., Ltd. (the second largest optical lens maker in Korea) citing inter alia the likely lessening effect on price competition and the probable future abuses of the enhanced market power. On top of the expressed competitive concerns, the KFTC observed that allowing foreign firms to acquire local firms and turn them into their local sub-contractors worsens the competitive market structure of the domestic optical lens industry.
1. First Trial Court Decision on Employer's Good Faith Argument On December 18, 2013, the Supreme Court of Korea made an en banc decision that ordinary wage includes regularly paid fixed bonus amounts. The Supreme Court also expressly noted that if an employer is able to prove that (i) there is an agreement between the employer and the labor union that fixed bonuses are excluded from ordinary wages and (ii) paying employees for past underpayment of overtime wages will cause a substantial detriment to the management or a major threat to the existence of the company due to the unexpected financial burden, then employees' claims for past underpayment can be denied based on the principle of good faith. However, the Supreme Court did not provide specific criteria for such denial, which caused controversy over the definite scope of application of its judgment (please refer to our newsletter of December 19, 2013 in this regard).
Criminal breach of duty, or bae-im in Korean, is a typical crime on which owners, directors, officers or managers of corporations and businesses in Korea are frequently indicted. A person commits bae-im when he or she, in dealing with the affairs of another person, breaches his or her duty and obtains, or enables a third person to obtain, a pecuniary advantage through such breach, thereby causing a loss to the person to whom the duty is owed. Bae-im is similar to the concept of Untreue under German law, while bae-im is broader in scope than Untreue in that a mere attempt to commit bae-im is also punishable in Korea.
On September 19, 2014, the Act on Protection of Fixed-Term and Part-time Workers ("Temporary Workers Act") and the Act on Protection of Dispatch Workers ("Dispatch Workers Act") were amended to offer greater protections to non-regular workers. In particular, (i) employers will be subject to greater economic implications if they receive a corrective order for discriminatory treatment of non-regular workers and (ii) part-time workers will be entitled to receive compensation for any overtime work performed.
The Korean Government has launched a government project to establish a system to compensate and insure against environmental pollution damage, and is pursuing the introduction of a legal relief system for environmental pollution damage. Such Government initiative is intended to address the current situation where environmental pollution accidents inflict serious damage on society due to the enormous amount of tax money that is required for curing the pollution, while companies that caused the accident sometimes go bankrupt because they cannot bear the financial burden of paying the compensation. Moreover, the victims of environmental pollution accidents are often unable to obtain proper compensation due to the burden of proving that their injury resulted from the pollution or due to the prolonged litigation process which is unavoidable in light of the nature of environmental pollution.
On March 12, 2014, the Commissioners of the Korea Fair Trade Commission ("KFTC") approved a consent decree with Korea's major Internet portal companies, Naver and Naver Business Platform (collectively "Naver") and Daum Communications ("Daum"). This was the first time since its introduction that a consent decree was used to conclude a case before the KFTC. With this consent decree, the KFTC's investigation of Naver and Daum for their alleged abuse of market dominance ended without any finding of liability.
Recent regulatory developments in the ever-changing broadcasting environment are summarized below.
On October 28, 2013, the Financial Services Commission (the “FSC”) announced an accounting system reformation plan related to the amendment to the Act on External Audit of Stock Companies (the “Plan”) aiming primarily at improving transparency of limited companies ( yuhan heosa ) and non-listed large company’s accounting system.
VEGAS LEX experts discuss Russian roads and PPP projects at the fifth international specialized exhiRoad 2014, the 5th international specialized exhibition and forum held in Moscow earlier this month and attended by VEGAS LEX, focused on effective development mechanisms for Russia's public road system and on legal aspects of public-private partnership projects
The VEGAS LEX law firm has held a seminar, Signing a Concession Agreement: an Insider's Insight , for the staff of Bank of Moscow legal department and business divisions.
Julia Tormagova, head of VEGAS LEX Commercial Group, will speak about trends in the law enforcement practice on the market for pharmaceuticals in 2014.
Popov & Partners Law Office was chosen by Ministry of Finance once again for consultant service of MPopov & Partners Law Office is finishing successfully and before the appointed time, its work on concluded in May 2013 contract with Ministry of Finance for conducting subsequent control of public procurements financed by Operational programme "Administrative capacity". As a result of the quality and effective implementation, in the beginning of September 2014, Ministry of Finance entrusted a second time team of the Law Office for implementing activity for subsequent control of public procurements financed by Operational programme "Administrative capacity", as choose Popov & Partners Law Office for executor of a public procurement. Term of the second contract concluded with Ministry of Finance is until the end October 2015. During its implementation, Popov & Partners Law Office will aim increasing transparency and efficiency in the field of implementation of projects, financed by European social fund, and will contribute for lawful utilizing of funds on Operational programme "Administrative capacity".
Goltsblat BLP , the Russian practice of the leading international law firm Berwin Leighton Paisner (BLP) , is providing the Italian clothing brand TWIN-SET Simona Barbieri with legal support for its entry on to the Russian market, including setting up a joint venture and opening a number of own-brand stores across Russia.
Leading Hungarian law firm, Lakatos, Köves and Partners, has been advising Bayerische Landesbank ("BLB") on the sale of its Hungarian subsidiary MKB Bank Zrt. which closed on Monday 29 September 2014.
Kyiv, 17 October 2014 - AstapovLawyers has advised Lexmark International Technology S.A. (Switzerland) on legal matters pertaining to the signing of distribution agreement with a Ukrainian company. The advice included review and adjustments of the wholesaler contract, drafting arbitration clause and on Ukrainian law matters applicable to the contract.
Zavadetskyi Advocates provided for tax clearance of the transaction for cross-border transfer of the loan portfolio from the balance sheet of the Ukrainian bank to the balance sheet of the UK bank of a Greek banking group. As a result of this work an official tax clarification has been obtained that allowed favorable conditions for the transaction.
Kyiv, 11 August 2014 - Avellum Partners announced that it has acted as the Ukrainian legal counsel to Ferrexpo in connection with the following three export financing credits:
Kyiv, 2 September 2014 – Avellum Partners announced that it has acted as the Ukrainian legal counsel to Ferrexpo in connection with the acquisition of an electrified railway of over two kilometers long and a power line.