SOUTH KOREA Law and Practice Contributed by: Sung Jin Kim, Jay J. Kim, Chunsoo Lee and Joe Kim, Kim & Chang
the reporting entity is a foreign company, it must designate a local representative who is capable of communicating with KATS to report the recall and conduct a recall inspection. Further, regardless of whether the product defect is “serious” , a business entity must report the defect to KATS within 48 hours if the product causes an accident involving death, injury/dis - ease requiring four weeks or longer of medical treatment, or a fire or an explosion, or if the prod - uct causes repeated accidents. FAC Under the FAC, if a business entity becomes aware of a serious defect in the product it manu - factured, imported, sold or provided that poses a risk to the life, safety or property of consum - ers, it must file a report within five days to the competent central administrative agency. Here, a product is deemed to have a serious defect if it causes accidents resulting in death, injury/dis - ease requiring three weeks or longer of medical care, or food poisoning of two or more individu - als, or if it fails to comply with the safety require - ments under relevant laws or regulations. 1.5 Penalties for Breach of Product Safety Obligations FAPS Under the FAPS, a company may be punished by imprisonment of up to three years or a criminal fine of up to KRW30 million if the company fails to (i) comply with a recall order; or (ii) take cor - rective action even if it has discovered a material defect in the company’s product that may cause harm to the consumer’s life, body or property. If a company fails to comply with the reporting obligation for a serious defect, it is subject to an administrative fine of up to KRW5 million. If a company fails to report any incidents of actual
injury or damage, it is subject to an administra - tive fine of up to KRW30 million. FAC Under the FAC, a business entity that fails to comply with a recall order issued by a compe - tent agency may be punished by imprisonment of up to three years or a criminal fine of up to KRW50 million. A company that fails to comply with the notifica - tion obligation for a material defect is subject to an administrative fine of up to KRW30 million. 2. Product Liability 2.1 Product Liability Causes of Action and Sources of Law Product Liability Act (PLA) The PLA imposes strict liability for defective products causing injury and damage beyond the product itself. The term “product” is defined as any movable object that is industrially manu - factured or processed, including those incorpo - rated into other movable or immovable objects. There are no products or classes of products that are excluded from the scope of the PLA. The “manufacturer” is the primary party that may be found liable under the PLA. According to the PLA, the manufacturer is defined to include: (i) any person who is engaged in the business of manufacturing, processing, or importing prod - ucts, and (ii) any person who has indicated (or misrepresented) on the product (by incorporat - ing their name, trade name, trademark, or any discernible sign) that such person engages in the business of manufacturing, processing or importing the product (eg, a purchaser in an OEM transaction). Further, where an importer or indicated manufacturer has compensated an
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