SOUTH KOREA Law and Practice Contributed by: Jeena Kim, Sodam Kim and Bochan Kim, Bae, Kim & Lee LLC
• Article 15 enables the Minister of Unification to order necessary adjustments to the price, quan - tity, quality or other terms and conditions of goods or services to be exported or imported. These adjustments may be imposed in connection with (i) fulfilling obligations under treaties or international customary law, (ii) contributing to the maintenance of international peace and security, (iii) ensuring compliance with the same act, (iv) preventing unfair competition, and (v) protecting South Korea’s international credibility. In addition, the Minister of Unification may require exporters or importers to submit reports – such as records of exports or imports – pursuant to the Enforcement Decree of the Act on Inter-Korean Exchange and Coopera - tion, in connection with trade in such goods or services. 5.2 Goods As explained in 5.1 Services , the Foreign Trade Act imposes restrictions on export or import of certain goods. Separately, pursuant to Article 5 of the Foreign Trade Act and the Public Notice on Special Trade Measure, the following special trade measures are implemented to fulfil obligations for maintaining international peace and security. • Special measures concerning the trade of rough diamonds under the Kimberley Process – the export and import of rough diamonds to/from non-member countries of the Kimberley Process is prohibited. Importers of rough diamonds from member countries must obtain a Kimberley Pro - cess Certificate, and exporters of rough diamonds to member countries must obtain export approval from the MOTIE. • Special measures concerning conflict zones/coun - tries such as Iraq, Somalia, the Democratic Repub - lic of the Congo, the Republic of the Sudan, Leba - non, Libya, Syria, North Korea, and South Sudan – unless the MOTIE approval has been obtained for limited purposes such as humanitarian aid or the implementation of UN resolutions, the export of military goods such as weapons and ammuni - tion is prohibited, and the export of services such
as military-related technical support and training is also prohibited.
6. Civil Litigation and Arbitration 6.1 Force Majeure Korean courts generally find that if sanctions make it impossible to carry out a contract, the person respon - sible is not at fault. The following are some example cases. • On 29 August 2024, the Seoul Central District Court ruled that Bank A’s refusal to return funds to Bank B – after Bank B was designated as a Specially Designated National (SDN) under the Iranian Transactions and Sanctions Regula - tions while the funds had not matured – did not amount to a breach of contract or a tort. The court found that the SDN designation was a significant change in circumstances beyond Bank A’s control (Seoul Central District Court Judgment dated 29 August 2024, Case No 2023GaHap87561). • On 9 January 2024, Seoul Central District Court decided that no breach of obligation or tort had occurred when an exporter did not receive pay - ment because the importer’s bank (a Russian bank) had been designated as an SDN by the Office of Foreign Assets Control (OFAC). The court held that, under these circumstances, the exporter’s bank was not legally liable for withholding the proceeds, as the SDN designation of the importer’s bank was outside its control (Seoul Central District Court Judgment dated 9 January 2024, Case No 2023GaDan5208229). • On 30 June 2011, the Seoul High Court ruled that the plaintiff was not at fault for failing to fully perform a supply contract for anthracite coal with Korea Coal Corporation. The plaintiff had agreed to import anthracite coal from North Korea and sup - ply it to Korea Coal Corporation, but was unable to deliver the full quantity due to an export ban involv - ing North Korea during the contract period. The court denied Korea Coal Corporation’s claim for liquidated damages on the basis of not receiving all of the coal promised under the supply contract, finding that the plaintiff’s non-performance was caused by circumstances beyond its control (Seoul
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