Litigation:  Filing lawsuit in Korea

Views : 116 views

Let’s assume you (a foreign individual or company) have a legal claim against a company or individual in Korea arising out of a commercial dispute. What are the proper steps?

  1. Send a formal demand letter. This is the same as what you would normally do in the United States or in any Western country. However, for certain cultural reasons, keep in mind that such a demand letter may be more effective if sent by a Korean attorney.
  2. Do an asset check on Defendant. This is also the same as what you would normally do in the United States.

III. If you discover that Defendant has sufficient assets to satisfy any probable judgment, you might consider applying for a preliminary attachment against Defendant’s properties before filing a lawsuit or even while the case is pending. You have to, however, provide security or bond with a Korean court by depositing cash with the court. (If you have established a residence in Korea, security deposit may be made by a bank guarantee or insurance rather than cash.) The required amount of the security varies from court to court. If the property to be attached is a real property or vessel, the amount usually ranges from one-eighth to one-tenth of your claim amount. In case the property to be attached is a personal property, the security amount usually ranges from one-third to one-fifth of the claim amount.

  1. Let’s assume you are forced to sue the Defendant in Korea. What do you need to do?

You first have to file a written complaint with a district court with the following documents attached: 1) power of attorney properly notarized and translated; 2) if you and/or Defendant are corporations, commercial registry extracts of Defendant corporation and a “certificate as to corporate nationality”, properly notarized and translated. You also have to pay a court stamp fee to file a lawsuit. The amount is usually around 0.5% of the claim amount, and you can pay this amount by affixing revenue or payment stamps (this is a stamp showing the amount you paid to file a lawsuit) in the required amount to the Complaint document. If you have no address, office, or other place of business in Korea, the court will order that you provide security for litigation costs, if Defendant requests it. The purpose of this security amount is to secure the Defendant’s claim for reimbursement of the litigation costs expended by Defendant should you lose the case. You should understand that because the Korean trial system does not use pre-trial discovery methods such as depositions and interrogatories, evidence is mostly gathered during trial. Therefore, a typical Korean trial consists of many hearings scheduled two to four weeks apart conducted over a lengthy period of time. Most of the evidence-gathering is conducted between hearings and the parties are permitted to present their evidence up to the close of the hearings.

  1. Interest can be recovered from the judgment. Although there are laws specifying the permissible rate of interest, in practice, the court usually declares the 25 percent rate applicable from the date of judgment.
  2. What can you do if you lose the trial? You can appeal to an appropriate court. An appeal from a judgment of a three-judge court within the district court is made to a High Court. A judgment of a single-judge court of the district court must be appealed to a three-judge court of the same district. It depends on the amount of claim and type of claim whether or not your claim will be heard by a single judge or three judges. The court fees for filing an appeal are twice that of the amount you had to pay to originally file the claim at the district court. If you lose on appeal, you can appeal to the Supreme Court, although in civil cases, the grounds for appeal to Supreme Court are limited to constitutional and legal issues which are material to the case. You have to pay three times the court fees to appeal to the Supreme Court.