The proposed amendment bill on the Private International Law Act of Korea (the “PILA”), submitted by the Ministry of Justice in August 2020, was passed by the National Assembly on December 9, 2021. As a result, the amended new PILA is scheduled to take effect on July 5, 2022. The new PILA is especially meaningful in the sense that it expressly provides rules on international jurisdiction, which is considered to be the most fundamental issue in international litigations. The new PILA enhances the predictability of courts and parties by introducing detailed rules on international jurisdiction, and adopts the doctrine of forum non conveniens in order to ensure specific validity in individual cases. Forum non conveniens refers to a doctrine that, even if the Korean court has international jurisdiction over a certain case, the court has the right to stay or dismiss a lawsuit or legal action brought before it if, in its view, a foreign court is considered to be a more appropriate forum to deal with the lawsuit or the legal action in question.
Introduction of Detailed Rules on International Jurisdiction
The current PILA has only one provision that deals with international jurisdictions (Article 2 of the current PILA) whereas the new PILA will introduce 35 new provisions setting out more detailed rules on international jurisdiction.
The new PILA will contain provisions dealing with “equity between parties,” “suitability of court proceedings” and “speediness or economy of trials” in line with the Korean Supreme Court precedents that considered general principles of international jurisdiction. As a result, the new PILA will contain provisions materializing the “principle of substantial connection,” which is a fundamental criterion for international jurisdiction (Article 2(1) of the amended PILA).
Under the new PILA, the following provisions will be introduced for the first time as general provisions for international jurisdiction: (i) general jurisdiction (Article 3), jurisdiction of related cases (Article 6), jurisdiction of counterclaims (Article 7), jurisdiction by agreement (Article 8), jurisdiction of pleadings (Article 9) and exclusive jurisdiction (Article 10); (ii) international concurrence of litigations (Article 11); (iii) non-exercise of international jurisdiction (Article 12); and (iv) jurisdiction over injunctive relief and non-contentious cases (Articles 14 and 15). Hence, the new PILA will introduce the doctrine of forum non conveniens to allow Korean courts to exhibit flexibility and dismiss a case where another court or forum is better suited to hear the case. In this connection, the Korean court will have the power to dismiss a case even when the Korean court has the jurisdiction to hear that case (Article 12). However, Korean courts will be allowed to reject their jurisdiction only in limited circumstances provided that requirements are strictly met, i.e., “where there clearly exists exceptional circumstances, in which a Korean court is inappropriate to exercise its international jurisdiction and a foreign court with international jurisdiction is more suited to resolve the dispute at issue.”
In addition, the new PILA will have special jurisdiction provisions amended in line with the governing legal provisions stipulated in the current law. Depending on the type of each case, the following individual provisions on international jurisdiction have been amended: (i) cases concerning declaration of disappearance, etc. (Article 24); (ii) lawsuits concerning employees of corporations, etc. (Article 25); (iii) lawsuits concerning contracts on and infringement of intellectual property rights (Articles 38 and 39) and protection of intellectual property rights (Article 40); (iv) lawsuits concerning contracts and torts (Articles 41 through 44); (v) cases concerning relatives and inheritance (Article 76); (vi) lawsuits concerning bills and checks (Article 79); and (vii) maritime cases (Articles 89 through 93).
As such, the amendments made in the new PILA are meaningful in that, compared to the current PILA, which contains only one provision dealing with the topic of international jurisdiction, the new PILA will introduce 35 provisions, including general and topic-oriented provisions, and these amendments will increase predictability concerning the question of whether or not a Korean court has the international jurisdiction to hear a particular case in question.
Limited Recognition of Jurisdiction Based on Defendant’s Place of Business
With respect to a foreign corporation’s place of business (branch office), a Korean court will recognize its international jurisdiction only in connection with lawsuits arising from the business of a foreign corporation’s domestic branch office in question (Article 4 (1)). Previously, the Korean Supreme Court held that it would be reasonable to recognize international jurisdiction over disputes of a foreign corporation that has a branch office in Korea even if the disputes are not related to business conducted by the branch office in question (Supreme Court Decision Nos. 98Da35037, 99Da62388, etc.). However, the new PILA explicitly provides that international jurisdiction shall be recognized only in the case of “business-related lawsuits” of a domestic branch office to limit the scope of recognition of international jurisdiction. This is to minimize the possibility of over-jurisdiction by taking the position that the location of a place of business can only be the basis of special jurisdiction, not the basis of general jurisdiction.
Therefore, while it is currently possible for a foreign corporation to file a lawsuit in Korea if it has a place of business in Korea, with the enforcement of the new PILA, international jurisdiction will be recognized by Korean courts only in cases where a lawsuit is considered to have arisen from a dispute specifically relating to the business of a domestic branch office.
Recognition of Jurisdiction Based on Defendant’s Activities Targeted Towards Korea (Activity based jurisdiction)
The new PILA will expand the scope of international jurisdiction over acts conducted in foreign countries. In other words, the new PILA will explicitly recognize international jurisdiction over: (i) lawsuits related to the business or business activities of any person, corporation or organization that does not operate business in Korea but still continuously conducts systematic business activities targeted towards Korea (Article 4 (2)); (ii) cases where the act of infringing upon intellectual property rights has been targeted towards Korea, even if such act has not taken place in Korea (Article 39 (1) 3); and (iii) cases where a tort has been targeted towards Korea, or the result thereof has taken place in Korea even if such tort has not taken place in Korea (Article 44). Such recognition seems to be based on the “defendant’s act or activity” requirement, which is a requirement to recognize “purposeful availment,” the core concept of “minimum contact” originated in the US.
As such, by explicitly allowing Korean courts to recognize jurisdiction based on activities targeted towards Korea, we expect that the new PILA will clarify matters that have been unclear so far as to the existence of international jurisdiction over certain cases. What is especially noteworthy is that even if a business or an activity is not conducted in Korea, international jurisdiction can be recognized if the results thereof have an impact in Korea. In particular, special jurisdiction based on defendants’ activities is expected to be particularly useful in cases related to e-commerce.
Under the current PILA, it may be difficult to assess with certainty in advance whether or not a Korean court has jurisdiction to hear a legal dispute related to a foreign country until a court decision is rendered on a case-by-case basis. Through the introduction of detailed provisions on international jurisdiction, the new PILA is expected to balance legislations and governing law provisions, and enhance predictability regarding international jurisdiction and reduce unnecessary legal costs. We believe that this will provide positive clarification regarding issues of international jurisdiction to Korean companies and individuals.