1.

E-Commerce Platform Operator’s Liabilities under Korean Laws
 

(1)

The Product Liability Act (“PLA”)

The PLA, enacted in 1999 and effective since July 1, 2002, is Korea’s primary legislation on providing relief to consumers for harm caused by defective products. The PLA achieves this objective by alleviating the consumer’s burden of proof in establishing a manufacturer’s liability for damage to life, body or property caused by a product defect (Article 3 (1) of the PLA). Further, if an injured party does not know the identity of the defective product’s manufacturer, a qualifying commercial supplier of the product can also be held liable (Article 3 (3) of the PLA).

The PLA imposes such liability on manufacturers and their commercial distributors to strengthen consumer protection, taking into consideration their roles in the traditional product supply chain. However, since an e-commerce platform operator is neither a manufacturer nor a commercial supplier (wholesaler or retailer) in the traditional sense, whether an e-commerce platform operator may be held liable under the current PLA may depend on the similarities and differences between the roles of the e-commerce platform operator and traditional suppliers. Thus far, however, there have been no clear precedents in Korea holding an e-commerce platform operator liable under the PLA.

Against this backdrop, there have been calls to hold e-commerce platform operators liable under the PLA, given that (i) consumers often conduct transactions online, trusting the reputation of the e-commerce platform and not the individual manufacturer/seller, (ii) defective products are nevertheless being sold on such platforms, and (iii) the platforms are often involved in multiple aspects of such transactions (e.g., contract execution, payment, and refund) beyond mere market formation. Proponents also argue that the PLA essentially imposes tort liability on manufacturers or importers without establishing true fault or negligence as a matter of consumer protection policy, and advocate for an expansion of such principles to cover e-commerce platform operators. However, the fact that e-commerce platform operators normally do not directly handle the products, in contrast to traditional suppliers, presents additional hurdles for such justification.
 

(2)

Court Precedents

A pair of Korean Supreme Court decisions have held that e-commerce platform operators are liable for products or postings on their platforms as follows.

In the first decision, the Supreme Court held that a platform operator is jointly liable for the tortious acts of an individual seller in a case involving the posting of copyrighted content, stating that “if it is technically and economically possible to manage and control postings which infringe upon copyrights, the service provider is obligated to take appropriate measures, such as deleting such postings and blocking future postings with similar contents in the same Internet space” (Supreme Court Decision 2009Da4343, March 11, 2010).

In the second decision involving a platform operator who offered discounts on books, the Supreme Court held that the platform operator is liable for non-compliance with a fixed price book sales brokerage system, stating that “it is reasonable to interpret that online sales brokers are included in the scope of publication sellers who are obligated to comply with the fixed price book sales system” (Supreme Court Decision 2019Ma5464, September 10, 2019).

While the above cases do not pertain to liability based on product defect, they represent cases where an e-commerce platform operator was found liable based on certain public interest or consumer protection laws and regulations in relation to its brokered products.
 

(3)

The Act on the Consumer Protection in Electronic Commerce, Etc. (“E-Commerce Act”)

The E-Commerce Act sets forth other liabilities of e-commerce platform operators (or online sales brokers) that are unrelated to defective products. First, if an online sales broker fails to provide notice that it is not a party to the online transaction brokered on its platform, the online sales broker will be jointly and severally liable with the seller for any property damage to the consumer caused by the seller’s willful misconduct or negligence (Article 20-2 (1) of the E-Commerce Act). In order to avoid such liability, which is intended to protect consumers, the online sales broker must enter into an agreement with the seller (for the seller to assume responsibility for the sales transaction) and provide the above notice to the consumer (Article 20-2 (3) of the E-Commerce Act). In addition, an online sales broker performing a key role (order or payment processing, etc.) in the online transaction will be held liable for certain obligations (provision of information on refund, etc.) (Article 20-3 of the E-Commerce Act). This provision also takes into account the status and role of e-commerce platforms in the distribution process of the relevant products and services in relation to consumers.
 

2.

Legislations, Precedents, and Trends in other Jurisdictions
 

(1)

European Union

The EU Product Liability Directive (85/374/EEC), approved by the European Parliament on March 12, 2024 to be adopted by the Member States, stipulates that economic operators, including not only manufacturers, but also authorized representatives, importers, distributors, and fulfillment service providers, are liable for defective products, and further, that provisions on distributors shall apply mutatis mutandis to e-commerce platform operators.
 

(2)

United States

In California, two separate bills, which would have imposed product liability on e-commerce platform operators, such as Amazon, failed to pass in 2020 and 2021. Nevertheless, US courts have held that e-commerce platform operators can be found liable for defective products based on consumer protection related factors (Oberdorf v. Amazon.com Inc., Third Circuit Court of Appeals, No. 18-1041; Bolger v. Amazon.com, LLC, 53 Cal.App.5th 431; Loomis v. Amazon.com LLC, 63 Cal.App.5th 466; Lee v. Kitchables Prds., 2021 US Dist. LEXIS 140045; Diew v. Amazon.com Serv., LLC, 2021 US Dist. LEXIS 112000).
 

3.

Outlook on Product Liability for E-Commerce Platforms in Korea

There are currently no pending legislations, court cases, or other firm developments concerning an e-commerce platform operator’s liability for a defective product. However, the unabated growth of several high-profile e-commerce platforms in Korea continues to spur heavy debate on their responsibilities and impact on consumer safety and protection. Accordingly, the above-discussed global trends strengthening consumer protection against defective products from e-commerce platforms are likely to influence ongoing discussions and potential legislation in Korea.