SOUTH KOREA Law and Practice Contributed by: Byung Chang Lee, D&A LLC
Article 26-2 (1) of the Lawyers Act stipulates that “an attorney and a client or a person intending to become a client may not disclose the contents of the confi - dential communications made between them for the purpose of providing or receiving assistance regarding legal cases or legal affairs”. And Article 26-2 (2) of the Lawyers Act stipulates that “an attorney and a client may not disclose documents or materials prepared for litigation, investigation, or inquiry in connection with a case accepted by the attorney including those prepared and managed in electronic form”. 7. Special Rules and Laws 7.1 Rules for Claiming Punitive or Exemplary Damages No General Rule Recognising Punitive Damages In principle, the Korean legal system does not recog - nise so-called punitive damages in fraud claims and there is no general rule accepting punitive damages. Among the various kinds of damage compensation, the Korean legal system typically accepts compensa - tory damage in a tort or breach-of-contract claim. Adoption of Punitive Damages in Some Special Acts Since 2011 In 2011, in a case of compensation for damages caused by abuse of power by contractors, punitive damage compensation (more precisely, triple-damage compen - sation) was first introduced in Article 35 (2) of the Act of Fair Subcontract Transactions. This is the first legal provision to recognise punitive damages in Korea. Since the adoption of punitive damages in the Act of Fair Subcontract Transactions, special acts on vari - ous areas have adopted punitive damages clauses, including the following: • Act on the Protection of Fixed-Term and Part-Time Workers; • Act on the Protection, etc of Dispatched Workers; • Act on Fairness of Agency Transactions; • Act on Fairness of Franchise Transactions; • Product Liability Act; and • Antitrust and Fair Trade Act, etc.
Although there is no general provision on punitive damages in fraud claims, special acts where fairness of transactions is thought to be needed, and special clauses adopting triple-damage compensation, have been introduced. The Supreme Court’s Ruling Recognising That the US Court’s Punitive Damages Award Can Be Enforced in Korea Recently, the Korean Supreme Court held that a Hawaii court’s judgment, which approved punitive damages for a US company due to a Korean company’s unfair trade practices, can be enforced in Korea (Supreme Court Decision 2018Da231550). In this case, the Kore - an Supreme Court specifically held that “the domes - tic Fair Trade Act does not allow compensation for damages that exceed the scope of compensation for unfair trade practices, but is introducing a system that allows compensation within three times the actual amount of damages for unfair joint actions of business operators. It is difficult to see that it is unacceptable in light of the principles, ideology, and system of our country’s damage compensation system to approve a judgment of a foreign court that ordered damages equal to three times the actual amount of damage”. The Korean Supreme Court also held that even if the foreign law applied to a foreign judgment determines a certain multiple of the actual damage amount as the final damage amount, it is not possible to deny approval of the foreign judgment based on that alone. In the past, it has been acknowledged that punitive damages cannot be recognised and enforced in Korea, mainly because it is against public policy. However, since the recent aforementioned Supreme Court case, there will be recurring considerations on whether to rec - ognise punitive damages in a specific case. No General Rules on Exemplary Damages There is no special rule in relation to exemplary dam - ages in addition to compensatory damages in the Korean legal system; however, when there is difficulty in proving damage amounts, such as mental distress or something similar, courts have a tendency to set a nominal amount of money as compensatory dam - ages.
333 CHAMBERS.COM
Powered by FlippingBook