Newsletter | August 2014, Issue 3
	INTERNATIONAL ARBITRATION & CROSS-BORDER LITIGATION
	Amendment of Civil Procedure Act on Recognition of Foreign Decisions
	The provisions regarding recognition of foreign decisions in the Korean Civil Procedure Act has been recently amended and went into effect on May 20, 2014.  The amendment has increased the scope of authority that Korean courts may exercise in recognizing a foreign decision.  How the change will impact the recognition of foreign decisions in Korea remains to be seen. The main substance of the amendment is as follows. Recognition of Final Decision on Damage Compensation (Newly Created Article 217-2 of the Civil Procedure Act) The biggest change to the Civil Procedure Act is the newly created Article 217-2 regarding the recognition of foreign courts’ final decisions on damage compensation.  Under Section 1 of the Article, if a foreign court’s decision on the amount or the type of damage compensation is in clear violation of the fundamental principles of the laws of Korea or any treaty ratified by Korea, Korean courts may refuse to recognize such judgment, in whole or in part.  This allows Korean courts to refuse to recognize any foreign decisions that exceed the scope of compensatory damage generally allowed under Korean legal practice.  This amendment codifies prior decisions from lower courts which had held that courts may “limit the recognition of foreign damages awards that clearly exceed amounts considered reasonable in Korea in contravention of good morals and other forms of social order in Korea” (See 99GaHap14496, Seoul District Court Southern Division, October 20, 2000, etc.). In addition, under Section 2 of the new Article, when determining whether a foreign court’s decision is in clear violation of Korean laws, Korean courts must consider whether the amount of damages awarded by the foreign court includes legal costs, such as attorney’s fees, and review the scope of such damages.  It remains to be seen how Korean courts will review and decide on foreign courts’ damage awards that include attorney’s fees and other legal costs. Expanding Recognition to Foreign “Decisions” and Court’s Investigation Obligation (Article 217 of the Civil Procedure Act) There were also amendments to the existing Article 217 to provide further clarity on the intent of the Article as follows.
	Section 1:  Before the amendment, the subject of recognition was limited to “foreign court judgment,” but the amendment extended the recognition to “foreign decisions” to include not only final foreign court judgments but other types of decisions that have the same effect as a final court judgment.
	Section 1 (4):  Given that the meaning of the “reciprocity” requirement, one of the existing conditions for the recognition of foreign decisions, was considered ambiguous, a clarification has been added that “the conditions to recognizing final decisions in Korea and the foreign country are not clearly unequal or substantially different in important aspects.”
	Section 2:  Korean courts must now investigate into whether foreign courts’ final decisions satisfy the conditions for recognition as set forth in Section 1.
	Any party considering a foreign court proceeding for damages that may need to be enforced in Korea should be aware of the possible risks under the amended Civil Procedure Act and strategically plan ahead to increase the chances of a successful recognition and enforcement of the final foreign decision in Korea.  Dispute experts should be consulted in advance to ensure that the impact of the amendment on the enforcement process and the corresponding risks are properly understood.
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	Byung-Chol (BC) Yoon bcyoon@kimchang.com Byung-Woo Im bwim@kimchang.com Harold Hyunshik Noh hyunshik.noh@kimchang.com
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	www.kimchang.com International Arbitration & Cross-Border Litigation Practice Group