The Korean Ministry of Justice (the “MOJ”) introduced in 2020 a bill to establish a strong class action system in Korea (to cover all damage claims).  The bill has been receiving strong support from the ruling party, with some level of support also from opposing parties.  Most observers expect the bill to ultimately become law, perhaps with some amendment during the legislative process.  There were previous legislative attempts to create a broad class action system in Korea, but this is the first time the Korean government is championing the effort.  Taken together with the proposed amendment to the Korean Commercial Code to increase punitive damages (up to five times of actual damages), this raises significant implications for companies doing business in Korea. 
 

• Recap and update on the legislative process

The MOJ held a public hearing in early December 2020.  The bill was then forwarded to the Ministry of Government Legislation (the “MOLEG”), where it is currently pending.  Once the MOLEG concludes its review, the bill will be forwarded to the cabinet and President for approval.  The MOJ plans to submit the bill to the National Assembly in February 2021, where the Legislation & Judiciary Committee will first review its constitutionality and legality.  Thereafter, the National Assembly will deliberate and take a final vote on the bill.  Once passed, the bill would become law after six months from its promulgation date.  
 

• Next steps

At the National Assembly, companies will have another opportunity to submit an opinion on any provision raising concerns (e.g., retroactivity, fairness of the mechanism for challenging class certifications, jury trials, etc.) through (i) public hearings, (ii) submitting comments during the legislative notice period, or (iii) a petition (through a supporting lawmaker or public petition). 
 

• Stakeholder responses

Various stakeholders have submitted opinions to the government on the bill, with many industry groups expressing strong concerns and consumer advocacy groups stating their support.  While industry groups argued that the bill will impede corporate innovation, discourage foreign investment and increase legal costs due to frivolous litigation, consumer advocacy groups stated that the proposed law would help address the limitations of the current Korean legal system by imposing corporate responsibility for mass tort events.

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