South Korea is the eighth largest world trade power with annual volume of over US$1 trillion according to the World Trade Organisation. South Korean economy remains strong and its export figures (in the first half of this year) show continuing growth.
The South Korean domestic legal market as a whole is said to be worth about £1.58 billion per year according to the Financial Times. The full liberalisation of the Korean legal market took place in July 2016 in accordance with the Free Trade Agreements entered into with both the US and the EU.
Due to South Korea’s strong economic trade position including not only increased marine cargo transactions but also general insurance disputes in the domestic market, the potential for such disputes to be heard in the South Korean courts is an ever increasing possibility. In light of this, we asked our Korean expert, Deug Rong Lee, some questions regarding the general features of civil proceedings in the South Korean courts.
Q: Describe the court/legal system for commercial claims
Civil claims are brought in the district courts and appeals can be made to the High (appellate) courts and finally the Supreme Court. Larger commercial claims will be heard by a panel of three judges. There is no single trial – normally hearings take place every three to four weeks instead.
Q: What is the limitation period?
In general, 10 years for contract and three years for tort claims.
Q: How are proceedings started and served?
A complaint is filed at the relevant district court by the claimant. If it meets the statutory requirements, the court will serve it on the defendant via the postal system. Service will usually be on the defendant but it is possible to also serve the defendant’s family members or work colleagues. If the defendant cannot be found, service can be made by publication on the court’s bulletin board.
Q: What disclosure/discovery rules apply?
There is no duty to preserve documents and no obligation to disclose documents which are adverse to the party’s case. However, if the other side requests, a party must disclose documents referred to in pleadings, documents created for the benefit of the requesting party and documents relating to the parties’ legal relationship. Legal professional privilege does not exist, although a lawyer cannot be compelled to disclose confidential information if called as a witness. Settlement negotiations can be presented as evidence but the court is usually not inclined to give weight to such evidence.
Q: Do the parties appoint their own experts?
Yes, but in practice expert opinion from the parties is not accorded much weight. Instead, the court can appoint its own expert if it wishes to do so (although the parties can ask for a particular expert to be excluded).
Q: How long does it generally take to get to judgment?
It depends on the complexity of the case and the backlogs of the court. However, cases usually reach judgment within one year.
Q: How are local judgments enforced?
The judgment can be submitted to a court for enforcement which will enforce it by means of a seizure and sale of goods.
Q: What is the attitude of local courts to arbitration?
Supportive. There is a growing trend of arbitrating large commercial disputes.
Q: Can an award be appealed to the local courts?
No. An award can be set aside, though, for serious procedural defects and/or the violation of public policy.
Q: What is the attitude to mediation?
Court-supervised mediation is commonly used and conducted by a single judge or mediation committee. However, parties cannot be compelled to mediate. It is far less common to have a private mediation, although this is still possible.
Q: Can you obtain security for costs?
Security for costs can be required if the claimant has not got a domicile or place of business in South Korea or if there is a risk of insolvency or if the claim is obviously groundless.
Q: Will you recover your fees if you are successful?
A winning party can only recover fees to the extent permitted by Supreme Court regulations.
Comment
Therefore, while there are many significant differences in the procedural system, South Korea can be a relatively quick jurisdiction to resolve legal disputes.
Please do not hesitate to contact Deug Rong Lee if you have any further queries.
