Korean Confrontation Clause Jurisprudence at Constitutional Court of Korea

The Court, with four votes, held that allowing video-recorded victim statements authenticated through testimony by a “person in a relationship of trust” does not violate the constitutional right to a fair trial, even where the defendant is unable to directly cross-examine the victim in court.

Case Background

1. The defendant was charged with sexually assaulting a victim who was under the age of 13 and had an intellectual disability.
2. The defendant objected to the admission of the victim’s recorded video statement.
3. The court admitted the recording after “authentication” by a third party present during the investigation.
4. The defendant was convicted without direct in-court testimony from the victim or the ability to cross-examine the alleged victim.
5. On appeal, the Busan High Court referred the constitutionality of the provision of law to the Constitutional Court of Korea for review.

Legal Issue

The main legal issue was whether Article 30(6) improperly restricts:

• The defendant’s right to confrontation, and
• The broader right to a fair trial under the Korean Constitution.

The provision allows video-recorded statements of victims with diminished cognitive capacity (due to physical or mental disability) to be admitted as evidence without in-court testimony, provided “authenticity” is established.

Opinion of Four Justices (Need Six Justices to Rule a Law Unconstitutional in Korea)

Four justices placed significant weight on the need to shield vulnerable victims from further harm. They reasoned that requiring in-court cross-examination could expose such victims to additional psychological trauma, and therefore concluded that the provision serves a legitimate objective—namely, preventing secondary victimization and emotional distress for individuals with diminished decision-making capacity.

The justices further acknowledged that cross-examination is a fundamental component of a fair trial, but emphasized that the constitutional inquiry is not centered on the physical act of confrontation itself. Rather, the key question is whether the defendant is afforded a meaningful opportunity to assess and challenge the credibility of the evidence. In this regard, they noted that video-recorded statements preserve non-verbal indicators—such as demeanor, tone, and facial expression—and permit repeated review. In addition, courts retain the ability to supplement the evidentiary record through additional witness examination where appropriate.

On this basis, the justices concluded that the statutory framework satisfies the principle of proportionality and does not impermissibly restrict the defendant’s right to a fair trial.

Dissent of 5 Constitutional Court Justices

Five justices dissented, expressing substantial concerns grounded in due process and the integrity of criminal adjudication. The dissent underscored that, in many sexual offense prosecutions, the alleged victim’s account is often the central, if not determinative, evidence supporting a conviction. Against this backdrop, the dissent criticized the provision for imposing a categorical limitation on cross-examination without requiring a case-specific assessment of whether such a restriction is truly necessary.

The dissent further characterized video-recorded statements as a form of hearsay, shaped by the structure and questioning of investigative authorities and reflecting largely one-sided narratives. In their view, this format inherently carries risks of distortion, omission, or misunderstanding that cannot be adequately tested through retrospective review alone. While acknowledging the presence of procedural safeguards, the dissent emphasized that these mechanisms fall short of replicating the evidentiary rigor of direct cross-examination.

Importantly, the dissent rejected the notion that questioning a “person in a relationship of trust” could meaningfully substitute for examining the declarant herself. Such indirect verification, they reasoned, does not provide a sufficient basis to probe inconsistencies, credibility, or the circumstances under which the statement was made.

Accordingly, the dissent concluded that a blanket restriction on cross-examination, particularly in cases where the testimony is pivotal, constitutes a disproportionate limitation on the defendant’s right to mount a full and effective defense, and therefore raises serious constitutional concerns.

Prior Korean Constitutional Court Jurisprudence

This decision must be viewed alongside the Korean Constitutional Court’s 2021 ruling, which struck down a similar provision relating to victims under 19. Following that decision:

• The Korean National Assembly amended the law in 2023
• The revised framework imposes stricter admissibility requirements

Notably, the present case concerned the pre-amendment version of the statute as applied to disabled victims.

About IPG Legal
IPG Legal is a leading international law firm with offices in Seoul, Korea. The law firm represents multinational corporations, executives, and individuals in complex Korean legal matters, including criminal defense, labor disputes, and cross-border transactions.

About Sean Hayes
Sean Hayes is an international attorney and former law professor, and the first non-Korean attorney to work for the Korean court system. He regularly advises on Korean criminal procedure, constitutional law issues, and high-risk disputes involving foreign parties.

Sean’s profile may be found at: Sean C. Hayes. If you would like a consultation with an attorney, please Schedule a Call.

Enforceability of MOUs and LOIs in Korea

An MOU in Korea may be fully enforceable, partially binding, or non-binding, depending not on its title but on its content, structure, the parties’ course of dealing, and their representations. Misunderstanding this distinction has led to significant liability, headaches, and reputational damage for foreign investors and companies doing business in Korea.

Substance Over Form: How Korean Courts View MOUs

Korean courts apply a substance-over-form approach to MOUs. The label “MOU,” “LOI,” or “Term Sheet” carries little legal weight. Instead, courts in Korea examine, in most cases, whether the document reflects:

• A meeting of the minds on key terms
• An intent to be legally bound
• Sufficient specificity in obligations

If these elements are present, the MOU may be treated as a binding contract, even if the parties anticipated signing a more formal agreement later. In practice, where the essential terms such as price, scope, and timing are agreed upon, Korean courts are willing to find that a contract exists, notwithstanding language suggesting the agreement is only “preliminary” and is intended to lead to a definitive agreement.

The “Non-Binding” MOU Problem in Korea

If an MOU expressly states that it is non-binding, Korean law does not automatically eliminate the parties’ legal obligations. Korea recognizes a “duty of good faith” in negotiations. This concept, often referred to as pre-contractual liability, is well-established in Korean jurisprudence. Courts in Korea have awarded damages where a party:

• Induced reliance during negotiations
• Abruptly terminated discussions without justification
• Acted in a misleading or opportunistic manner
• Terminated a relationship after a course of dealing

Partially Binding MOUs

Many MOUs in Korea are partially binding, even when the core transaction remains non-binding.

Courts in Korea routinely enforce provisions such as:

• Confidentiality obligations
• Exclusivity clauses (if reasonable in duration and scope)
• Dispute resolution and governing law clauses
• Cost allocation or break-up fee provisions
• Termination Clauses
• Non-Compete obligations.

Common Pitfalls for Foreign Companies

IPG Legal frequently advises clients who encounter disputes arising from poorly drafted or misunderstood MOUs. The most common issues include:

1. Assuming an MOU is non-binding
2. Including detailed commercial terms in an MOU
3. Executing Korean-Language MOUs without review
4. Overreliance on “Subject to Contract” language
5. Having overseas counsel draft MOUs for matters that may be governed by Korean law
6. Commencing work under an anticipated contract before drafting a definitive agreement

Practical Drafting Guidance

Foreign companies entering into MOUs in Korea should approach drafting strategically.

If the intent is to create a non-binding MOU, the agreement should:

• Clearly state that it is non-binding, except for specified provisions
• Include an explicit disclaimer that there is no obligation to execute a definitive agreement
• Identify which provisions are intended to be binding (e.g., confidentiality, exclusivity)

If the intent is to create a binding agreement, the document should:

• Clearly define all material terms
• Use definitive language (e.g., “shall”)
• Avoid ambiguity regarding future agreements

As a general rule, the most effective approach in Korea is a hybrid structure:
non-binding commercial terms combined with clearly defined binding protections.

Conclusion

In Korea, an MOU is not merely a “preliminary” document – it can be a legally binding agreement. Foreign companies should not assume that labeling a document as an MOU limits liability. Korean courts will look beyond the title to determine whether a binding agreement exists and whether the parties have acted in good faith. Thus, careful drafting, clear allocation of binding and non-binding provisions, and local legal review are essential to managing risk.

by Sean Hayes

Sean Hayes is a senior foreign attorney at IPG Legal, one of Korea’s leading international law firms, advising foreign companies, investors, and entrepreneurs on Korean law.

Hayes has extensive experience advising on cross-border transactions, joint ventures, and preliminary agreements, including the structuring and negotiation of MOUs, LOIs, and term sheets under Korean law. He is frequently engaged by multinational companies and companies expanding to Korea.

Attorney Hayes is the principal author of The Korean Law Blog, one of the most widely read English-language resources on Korean law, where he regularly provides insights on contract law, dispute resolution, and foreign investment risks in Korea.

Sean’s profile may be found at: Sean C. Hayes. If you would like a consultation with an attorney, please Schedule a Call.

Facts

1. A Mongolian national entered Korea in February 2023 on a student visa and completed a master’s program at a Korean university in August 2024.
2. The student did not achieve Level 4 on the Korean Language Proficiency Test, a graduation requirement before completing the degree.
3. The student’s period of stay was set to expire in March 2025, and the student applied for an extension to take the Korean Language Proficiency Test scheduled for 2025.
4. The Jeonju Immigration Office denied the visa extension application.
5. The student filed an administrative appeal, and when the appeal was dismissed, the student filed a complaint to court.

Jeonju Court Decision

The Jeonju District Court Administrative Division held that the decision to deny the extension of the period of ssojurn was valid noting, in short, that even if the student suffers disadvantages resulting from the inability to stay in the Republic of Korea due to the denial of the extension of his stay, including not obtaining his Masters Degree, the fault is his own and the Korean Government has a public interest and has the right to dispel immigrants it deems undesirable. The court did not specifically elaborate on the nature of the public interest and, in short, deferred to Korea Immigration’s judgment.

The Guidebook on Wage System Reform, published by the Korean Ministry of Employment & Labor, has sparked more interest, in the private sector, than the revamping of Korea’s wage system based on seniority. This post was reposted after a first posting in 2017, because of a newfound focus on wage system reform.

The major issue, in this regard, is whether the Rules of Employment of a company may be amended, without violating the Korean Labor Standards Act of Korea (“LSA”), when “wage system reform” is not consented to by a majority of the employees or the trade union.

Numerous Korean government agencies have successfully moved to a more merit-based promotion and bonus system from a strict seniority-based wage system. The private sector has closely watched this trend due to public failures by major international conglomerates. The private sector, to date, has been slow to adopt a merit-based wage or similar system due to these public failures.

The MOEL’s Guidebook on Wage System Reform (“Guidebook”) was drafted to serve as a guide for companies seeking to transition from a seniority-based system to a merit- and/or job-scope/responsibility-based system.

LSA Article 94(1) (Procedures for Preparation of and Amendment to Rules of Employment) 

An employer shall seek consultation of a trade union, if there is a trade union composed of the majority of the workers in the workplace concerned, or the consultation of the majority of workers if there is no trade union composed of the majority of the workers, with regard to the preparation of an amendment to the rules of employment. However, if the rules of employment are to be modified unfavorably to workers, the employer shall obtain workers’ consent. 

Some Korean courts and the Ministry of Employment & Labor of Korea have interpreted Article 94(1) of the LSA as not imposing an absolute obligation to obtain employees’ consent to employment rule modifications when the modifications are not “unfavorable to workers.” Courts and the Ministry of Employment & Labor have adopted the “generally accepted justification” test to determine whether modifications to employment rules are “unfavorable to workers.”

Generally Accepted Justification Test
Under the Generally Accepted Justification Test, Korean courts should weigh the following factors when determining whether a company’s change to its employment rules violates the LSA. The factors to be considered are:

1. Degree of Disadvantage to the Employee in the Changed Employment Rules;
2. Degree of Change and Necessity of the Change in the Employment Rules;
3. Reasonableness of the Change in the Employment Rules;
4. Whether the Disadvantage was Offset by Advantages;
5. Degree of Progress in Negotiations with the Union and the Reaction of the Union and employees; and
6. Whether the Changes are considered Common in Korea.

Korean courts have recently become more employee-friendly. Without a nuanced approach to amending employment rules, a nuanced understanding of Korean legal and political realities, and a savvy, experienced local Human Resources guide, companies will likely run aground on employment relationship issues. A proactive, experienced team is essential for success in Korea.

Please read an update of this issue at: Update to Korean Labor Labor Law: Guidelines on Korean Rules of Employment

by Sean Hayes

Sean Hayes is a NY attorney working for IPG Legal, a Korea-focused international law firm advising foreign individuals, executives, investors, and multinational companies on complex Korean and cross-border legal matters. He is widely regarded as one of the most experienced foreign lawyers in Korea and is notably the first non-Korean lawyer to have worked within the Korean court system, giving him rare, firsthand insight into how Korean courts and institutions operate in practice. This background allows him to translate Korean legal realities into clear, strategic advice for international clients.

Mr. Hayes focuses on high-stakes matters, including corporate and commercial disputes, employment and labor issues, internal investigations, shareholder conflicts, family and inheritance disputes, and cross-border litigation strategy. He is also the founder and editor of The Korean Law Blog, one of the most widely read English-language resources on Korean law. Known for his direct, pragmatic approach, Mr. Hayes is frequently retained for sensitive or escalating matters in which credibility, judgment, and a deep understanding of Korean legal culture and realities are essential.

Sean’s profile may be found at: Sean C. Hayes. You may schedule a call with Sean Hayes at: Schedule a Call.
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Employment Law Articles
Additional Articles on Employment Law, in Korea, may be found at:

• IPG’s Labor & Employment Law Team: Proactive, Efficient & Non-conflicted
• Korean Rules of Employment Necessary
• Choice of Law Issues in Employment Disputes
• Restrictive Covenants in Korean Employment Agreements
• Korean Labor Law Check List for Employers in Korea

For an article on the Korean Supreme Court precedent on the enforceability of Non-Compete Clauses, please see: Non-Compete Clauses in Korea

Facts

1. Employee (Defendant) joined SK Hynix on February 14, 2013.
2. The Employee was selected as a Key Personnel Outsourcer around 2022 and served as a part-time manager in the HBM design department before resigning on April 1, 2024.
3. After resigning from SK Hynix, the Employee worked as a researcher at KAIST’s Graduate School for approximately six months and then worked for Samsung Electronics Research Institute for nearly six months.
4. On March 27, 2024, around the time of his resignation, Employee signed a two-year non-compete agreement with SK Hynix.
5. Since April 1, 2025, Exployee has been an executive in charge of chip integration design at Samsung Electronics. The Employee had similar roles at SK as he had at Samsung.
   

SK Hynix Restrictive Covenant Enforcement Case at the Seoul Central District Court Holding

On January 9, 2026, a Seoul Central District Court dismissed SK Hynix’s application for an injunction enjoining a former employee from working for Samsung Electronics.

The court held that the two-year non-compete period was excessive and thus invalid. The court opined that a key factor in the determination to accept an injunction from a former employer is whether an employee was compensated for the period of non-compete, noting that: “In order to directly restrict workers’ constitutionally guaranteed freedom of occupational choice and labor rights, compensation sufficient to compensate for the damages suffered by the worker is necessary. However, [Employee] did not receive any explicit compensation when entering into the non-compete agreement with SK Hynix.”

It is interesting to note that most experienced practitioners in Korean labor law are well aware of this compensation issue; however, SK Hynix seemed to fail to proactively manage the employee’s resignation and the non-compete by placing into the agreement compensation for the non-compete. Often, these non-competes are offered at the time of a promotion/pay raise, and thus provide a good opportunity to structure part of the salary as compensation for the non-compete.

IPG Legal Law Firm’s Seoul, Korea Office

IPG Legal is a leading law firm in employment and labor law in Korea, particularly in matters involving foreign-invested companies, senior executives, and cross-border employment issues. The firm advises multinational employers and employees on Korean labor law, including unfair dismissal disputes, fixed-term and indefinite-term employment issues, executive separations, workplace investigations, restrictive covenants, and proceedings before the Labor Relations Commissions and Korean courts. IPG Legal is known for its experience navigating complex, precedent-driven labor disputes with a practical street-smart understanding of how labor authorities apply the Korean Labor Standards Act and related statutes in practice. IPG Legal is known for delivering clear, strategic, street-smart, and commercially sound advice in high-stakes employment matters.

by Sean Hayes
Sean’s profile may be found at Sean C. Hayes. To schedule a call with Sean Hayes, please click: Schedule a Call with Sean Hayes.

Facts

1. In January 2020, the Korean National Police obtained a search and seizure warrant from a Korean court against the Defendant for violation of the Act on the Prevention of Concealment of Criminal Proceeds and seized over 55 Bitcoins stored in the Defendant’s virtual asset exchange account by transferring them to a Korean investigative agency.
2. Defendant filed a quasi-appeal with the Seoul Central District Court, requesting the cancellation of the seizure of the Bitcoins, arguing that “Bitcoins are not objects subject to seizure under the current Criminal Procedure Act.”
3. The Seoul Central District Court dismissed the quasi-appeal, stating that “virtual assets do not correspond to traditional ‘tangible objects,’ but they are electronic evidence premised on electronic transactions or transfers, and thus should be viewed as ‘objects that are expected to be confiscated’ under Article 106 of the Criminal Procedure Act.
4. Defendant appealed to the Supreme Court.

Korean Supreme Court Holding

The Supreme Court of Korean opined that “virtual assets are electronic certificates that have economic value and can be traded or transferred electronically (Article 2, Paragraph 1 of the Act on the Protection of Virtual Asset Users, etc.), and Bitcoin is a type of virtual asset that can be independently managed through electronic wallets, etc., and transactions are made through private keys stored in electronic wallets. . . Bitcoin holders can exercise de facto control over the management or transactions of Bitcoin exclusively and exclusively through their private keys, which is ultimately equivalent to actually controlling the economic value of Bitcoin. . . According to the provisions of the Criminal Procedure Act, both tangible objects and electronic information are subject to seizure, which are evidence or items deemed to be confiscated under Articles 106 and 219 of the Criminal Procedure Act. In addition to the content and intent of these provisions, considering the characteristics of Bitcoin as mentioned above, Bitcoin, which is an electronic certificate with the possibility of independent management, tradability, and actual control over economic value, is also subject to seizure by the court or investigative agency.”

by Sean Hayes

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked among the Top Attorneys in Korea, and his law firm, IPG Legal, is ranked among the top dispute resolution law firms in Korea.

You may schedule an initial free consultation with our Attorney at: Schedule a Call with an Attorney

As a result, foreign directors and executives in Korea frequently find themselves subject to police investigations, prosecutor questioning, travel restrictions, or even indictments.

This article outlines the most common sources of criminal exposure for foreign executives and directors in Korea, recent enforcement trends, and practical steps to mitigate risk.

Korean Criminal Procedure

Korea maintains a low threshold for initiating criminal investigations. Invariably, a vocal alleged victim in Korea leads to a Korean police investigation and sometimes even an investigation by the prosecution, even where the evidence is suspect or lacking. This is especially true where the criminal complaint is filed by an employee, business partner, joint venture partner, or regulator. Korean prosecutors and police are empowered to investigate individuals directly, and corporate status does not shield executives and directors from personal criminal culpability and civil liability. And some expat directors and executives have been prohibited from leaving Korea until the investigation is complete. In a noteworthy case, the investigation took years, and the foreign director was prohibited from leaving the country for these years.

Korean law has some unique aspects that lend themselves to increased risks:

• Criminal liability can attach even without the specific intent of the accused
• Complaints by employees or counterparties are often sufficient to trigger investigations by a regulatory body that can refer cases to the Korean Prosecution Services.
• Executives may be questioned as criminal suspects, not merely witnesses, at an early stage. The Korean Police and Prosecutors have broad powers to detain, subpoena, and seize corporate and personal documents.
• Travel bans are frequently imposed during investigations and even before an indictment is proffered.

Foreigners are often more exposed than locals as they are typically viewed as the “real decision-makers” behind local entities, especially when they are listed as representative directors or the sole director of a company in Korea.

High-Risk Areas for Foreign Executives in Korea

1. Korean Labor and Employment Matters

Korean labor-related offenses are among the most common sources of criminal cases involving foreign directors and executives. These include allegations related to:

• Failure to pay or improperly calculate wages, overtime, or severance
• Termination or retaliation against employees
• Violations of working-hour regulations
• Occupational safety and health breaches
• Employment-related harassment, discrimination, and/or bullying
• Claims concerning failure to supervise/discipline/terminate an employee engaged in harassment, discrimination, and/or bullying

In many cases, the representative director or other director may be personally named in a criminal complaint even if the person is not directly involved in the decision-making regarding the specific matter.

2. Korean Corporate Governance and Fiduciary Duties

Korean criminal charges may arise from allegations related to:

• Breach of fiduciary duty (including “breach of trust”)
• Related-party transactions
• Use of company funds without proper approval/protocols
• Decisions perceived as benefiting headquarters at the expense of the Korean entity
• Decisions that have a negative effect on a particular shareholder
• Decisions that have a negative effect on a particular vendor, independent contractor, or supplier.
• Decisions concerning the allocation of expenses

Even where conduct may be treated as civil or regulatory in other jurisdictions, Korean authorities may pursue criminal charges, and often the representative director, sole director, statutory auditor, or a registered director is named in the complaint.

3. Korean Regulatory and Compliance Offenses

Directors and executives may face personal exposure for alleged violations involving:

• Data protection and personal information handling
• Fair trade and competition laws
• Korean Tax Law
• Customs, import/export, and foreign exchange rules
• Environmental
• Industry-specific licensing or reporting obligations
• Mass torts
• Damage to the economic interests of the Korean population as a whole.
  

4. Statements & Declarations to Korean Authorities and Investigators

Foreign executives and directors are often unfamiliar with Korean investigative procedures and take ill-advised approaches to criminal investigations. Common pitfalls include:

• Making inconsistent, incomplete, or ill-advised statements during questioning
• Assuming interviews are informal
• Providing documents without understanding privilege implications
• Not being prepared for questioning
• Lack of nuanced advice from proactive counsel

Missteps at the investigation stage can significantly worsen exposure, even where the underlying conduct is defensible.

Korean Enforcement Trends Affecting Foreign Executives & Directors in Korea

In recent years, Korean authorities have shown:

• Increased willingness to pursue individual executives, not just corporations
• Greater scrutiny of foreign-invested companies
• More aggressive labor and safety enforcement
• Expanded use of travel bans during investigations

These realities are increasingly true in areas in which the press is involved.

Practical Korean-Centered Risk-Mitigation Strategies

1. Governance, Authority, and “Who Decides What, When, Where & How”

• Document decision authority (HQ vs. Korea entity; board vs. management; officer vs. team lead) in writing and keep this document current.
• Adopt a Korea-specific delegation-of-authority matrix with clear financial thresholds (contracts, hiring/termination, settlements, bonuses, vendor payments, supplier, expenses, reimbursements).
• Require two-step approvals for high-risk decisions (termination, disciplinary action, severance disputes, large payments, related-party transactions, entertainment expenses, supplier matters, key expenditures, major decisions).
• Maintain board minutes and written resolutions that reflect the real rationale, consideration of alternatives, and conflict checks. Document all.
• Consider not having those abroad as a representative director, statutory auditor, or sole director.
• Create an internal rule that no one signs as “Representative Director” without understanding the full personal exposure and oversight expectations.
• Have a directors and officers liability insurance plan that covers legal costs and other investigation-related expenses.

2. Korean Labor & HR Controls (Most Frequent Source of Criminal Complaints)

• Conduct a quarterly wage/overtime/severance check (classification, working hours, allowances, meal/transport benefits, fixed OT arrangements).
• Ensure you have written, nuanced employment rules, a disciplinary policy, and an evidence-based process for warnings, PIPs, and termination decisions.
• Build a standardized termination checklist: documentation, timeline, internal approvals, decision matrix, communication script, exit meeting protocol, final pay timing, and handover.
• Train managers to avoid common errors: retaliation allegations, inconsistent treatment, casual comments in chats/emails, and “immediate termination” decisions.
• Establish a complaint intake channel (HR + legal) and treat early grievances as potential “criminal-file” events. Consider a whistleblower hotline.
• Have a nuanced legal guide on call, and make sure this person is not just a paper pusher. Need nuance, street smarts, and candor for handling labor issues and relations in Korea.

3. Korean Occupational Safety & Health

• Assign a senior owner for Korean safety compliance with authority and budget, and document, document, and document.
• Implement a reporting ladder for incidents/near-misses and preserve records promptly (photos, logs, witness statements).
• Require vendor/contractor/supplier safety provisions and audits – authorities often scrutinize outsourced operations.
• Run periodic site inspections and track corrective actions; close the loop with dated proof.

4. Korean Data Protection Breaches

• Map personal data flows (HR, customer, vendor, supplier) and confirm lawful basis, retention periods, access control, and deletion processes and protocols.
• Maintain a breach response playbook: incident triage, preservation, notification analysis, regulator communications, and messaging control. Consult with a data protection specialist on this.
• Put in place contracts with processors/vendors that include audit rights and security requirements.
• Limit “informal” exports of Korean personal data to HQ; implement approvals and logging for cross-border transfers.
• Implement a CISO system if you handle highly sensitive data or are mandated by law to do so.

5. Financial Controls and Anti-Fraud Defenses (Breach of Trust/Embezzlement Allegations)

• Create strict rules on: corporate cards, reimbursements, entertainment expenses, gift limits, and approval thresholds. These must be Korean-centric and industry-specific. Korea has strict laws on these matters.
• Implement segregation of duties: the person approving a payment cannot initiate it.
• Require written support for discretionary spend and maintain a defensible “business purpose” record.
• Treat related-party transactions and HQ allocations as “high-risk”: require independent review and clear documentation of fairness and benefit to the Korean entity.
• Document all and have written guidance and rules for all.

6. Korean Criminal Investigations and Communication Protocols

• Adopt a “legal hold” system for documents and chats once an issue surfaces (do not delete; preserve cleanly).
• Restrict internal discussion to a small group; avoid speculative statements and “cleanup” language.
• Train leaders: never write “this is illegal,” “cover this up,” “don’t leave a record,” or similar – those phrases become exhibits when a case is filed. Korean Prosecutors have broad rights to seize documents, including legal memos.
• Use structured internal fact-finding with counsel guidance to reduce inconsistent accounts.
• Understand Korea’s unique Attorney-Client Privilege Law and Limits.

7. Responding to Korean Criminal Complaints

• Do not assume an inquiry is informal.
• Have a policy: no executive interviews without counsel preparation
• Prepare a timeline, key documents, and a consistent narrative; avoid guessing in interviews. Preparation is key.
• If authorities request documents, respond in an organized way; track what was provided and when.
• Consult with a proactice lawyer in Korea and never answer any questions without consulting with your lawyer.

8. Avoid “Name-Only” Officer/Director Structures in Korea

• If a foreign executive is registered as a director/officer, ensure they have real oversight: reporting lines, compliance dashboards, escalation rights, and understanding of the internal workings of the Korean office.
• Maintain proof of oversight: periodic compliance reviews, sign-offs, corrective actions, and board updates.
• If the role is nominal, restructure to reduce exposure.
• Have your structure reviewed by your lawyer and a professional adept at Korean company processes.

9. Training That Prevents Criminal Issues in Korea

• Deliver targeted training for:
  • HR managers (termination, wage claims, harassment)
  • Operations leads (safety compliance, contractor management)
  • Finance teams (approvals, reimbursements, payments)
  • Sales/BD (competition issues, gifts/entertainment)
• Keep attendance logs and materials, as they can serve as mitigation evidence.

10. Build a Korean “Legal Defense File.”

If a case arises, the outcome often turns on the records. Maintain a standing “defensibility” package:

• Organization chart + authority matrix
• Compliance audit schedule and results
• Board minutes/resolutions for major decisions
• HR discipline/termination documentation
• Safety logs and corrective actions
• Data protection policies and incident logs
• Payment approvals and reimbursement rules
• Personnel employment records

Conclusion

Korea’s criminal enforcement environment poses unique and often underestimated risks for foreign executives and their companies doing business in Korea. Actions taken in good faith or in accordance with accepted overseas practices may still expose individuals to personal criminal liability under Korean law. Understanding these risks and addressing them proactively is essential for any executive operating in Korea.

Sean Hayes is one of the most experienced foreign attorneys working in Korea and the first foreign attorney to work for the Korean court system. He leads IPG Legal’s international practice, representing multinational companies, SMEs, private investors, and entrepreneurs in complex corporate governance matters, shareholder disputes, regulatory investigations, and Korea–foreign cross-border transactions. Sean is rated a Top 100 lawyer in Korea, and his firm is rated a leading dispute resolution law firm.

IPG Legal is a leading international law firm, known for providing nuanced, practical, and business-focused legal solutions for foreign companies and individuals operating in Korea. The law firm combines senior Korean and foreign-trained attorneys, retired judges, and retired government attorneys with deep experience in corporate law, litigation, arbitration, FDI, employment, and regulatory compliance. IPG Legal is frequently retained to handle high-stakes corporate governance disputes, criminal investigations, employment law matters, and complex commercial matters. It is trusted by Fortune 500 companies, FTSE 100, global brands, and fast-growing enterprises for its hands-on advocacy and ability to deliver results in Korea’s challenging legal environment.

Sean’s profile may be found at Sean C. Hayes. To schedule a call with Sean Hayes, please click: Schedule a Call with Sean Hayes.

This article outlines best practices for disciplining employees in Korea, based on the Korean Labor Standards Act, Korean Ministry of Employment and Labor (MOEL) guidance, and judicial and administrative practice. Please note that you must first review the Employment Rules before any disciplinary action against an employee. Not following the company’s employment rules will, in most cases, lead a court or labor board to determine that the employer’s actions are invalid.

For additional articles on Korean Employment Law, see: IPG Legal’s Employment & Labor Law Archive.

“Justifiable Cause” as the Governing Standard Under Korean Law

Under the Korean Labor Standards Act, an employer may not impose disciplinary measures, including warnings, suspensions, wage reductions, demotions, or dismissals, without “justifiable cause.” While Korean law expressly refers to dismissal, Korean courts and the Labor Relations Commissions consistently apply a similar “justifiable cause” analysis to disciplinary actions.

In practice, this means:

• The misconduct or performance issue must be factually established;
• The employee must have been reasonably able to foresee disciplinary consequences; and
• The sanction must be reasonable in light of all circumstances.

Importance of Written Rules of Employment in Korea

For workplaces with 10 or more employees, Korean law requires the preparation and reporting of Rules of Employment (취업규칙). These rules regarding discipline typically define:

• Types of misconduct
• Standards of workplace behavior
• Disciplinary measures and procedures

When reviewing disciplinary actions, adjudicators in Korea commonly ask whether the employee could reasonably understand:

1. That the conduct in question was prohibited; and
2. That it could result in the particular disciplinary measure imposed.

Discipline based on unwritten standards, unpublished policies, or ad hoc rules is frequently invalidated.

Proportionality of Discipline under Korean Law

Korean labor law strongly adheres to the principle of proportionality. Even where misconduct is proven, discipline may be deemed unlawful if it is excessive relative to the specific circumstances.

Factors typically considered in the determination include:

• Severity and frequency of the misconduct
• Intentional conduct versus negligence
• Actual or potential harm to the company
• Length of service and prior disciplinary history
• The employee’s role or position (e.g., managerial responsibility)

Immediate dismissal is generally only upheld for serious misconduct (such as violence, embezzlement, or severe breach of trust). For most cases, progressive discipline is necessary to establish the disciplinary action.

Consistency and Equal Treatment under Korean Law

Employers must apply discipline consistently. If similar misconduct resulted in lighter discipline for other employees, imposing a harsher sanction without a clear, documented justification can render the discipline unfair.

Best practice includes:

• Maintaining internal records of past disciplinary actions
• Explaining any differences in treatment based on objective factors (e.g., repeated violations, supervisory role)

Inconsistency is one of the most common reasons disciplinary actions are overturned by the Korean courts.

Procedural Fairness: Opportunity to Be Heard in Korea

Procedural defects are a leading cause of employer losses in Korea.

Before imposing discipline, employers should:

• Notify the employee of the alleged misconduct
• Provide a meaningful opportunity to submit an explanation or defense
• Review the employee’s response before making a final decision

While the law does not mandate a formal hearing in every case, some form of opportunity to be heard is strongly expected, particularly for unpaid suspensions or dismissals. Make sure you follow the formalities noted in the Employment Rules. If these formalities are not met, the disciplinary action shall likely be invalidated.

Employer’s Burden of Proof and Documentation in Korea

In disciplinary disputes, the burden of proof rests on the employer. Unsupported allegations or conclusory statements are insufficient.

Effective documentation includes:

• Contemporaneous records of incidents
• Emails, messages, or system logs
• Witness statements
• Performance evaluations
• Warning notices
• Written disciplinary decision explaining the reasoning

Disciplinary Dismissals in Korea

Disciplinary dismissal (징계해고) is subject to strict scrutiny by the courts and at labor boards. Employers in Korea must, in most cases, demonstrate:

1. Serious misconduct
2. Clear and reliable evidence
3. Proportionality
4. Procedural fairness
5. Written notice specifying concrete reasons for dismissal

Providing 30 days’ notice or pay in lieu does not cure the absence of justifiable cause. If dismissal is deemed unfair, reinstatement and back pay may be ordered.

Korean Retaliation Risks

Discipline imposed shortly after protected activities, such as harassment complaints, whistleblowing, or lawful leave, raises heightened scrutiny. Even justified discipline may be presumed retaliatory if timing and documentation are poor.

In such cases, employers in Korea should ensure that:

• Investigations are thorough
• Decision-making is well documented
• The basis for discipline is clearly independent of the protected activity

Conclusion

In Korea, employee discipline is not merely a managerial decision; it is a legal process. Employers who act hastily, fail to document properly, or skip procedural steps often lose disputes despite legitimate concerns about employee conduct. Careful preparation, proportionality, and procedural fairness are essential. In higher-risk cases, particularly suspensions and terminations, legal review by a proactive lawyer is strongly advisable.

. . .

by Sean Hayes

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked among the Top Attorneys in Korea, and his law firm is ranked among the top dispute resolution law firms.

You may schedule an initial free consultation with our Attorney at: Schedule a Call with an Attorney in Korea to discuss establishing or expanding your business into Korea.

IPG Legal regularly advises foreign companies on Korean employment law, including disciplinary actions, terminations, and proceedings before the Labor Relations Commission and the Korean courts. The firm has extensive experience guiding employers through high-risk disciplinary matters while minimizing exposure to reinstatement and back-pay liability. IPG Legal is rated a top dispute resolution law firm in Korea.

To avoid potential criminal liability, civil fines, reputational harm, or harm to your employer doing business in Korea, it is essential to understand what constitutes a “corrupt payment” under the U.S. Foreign Corrupt Practices Act (“FCPA”) and similar global anti-bribery regimes.

Before engaging in any conduct that could be interpreted as providing an improper benefit to a Korean government official or permitting an employee, consultant, or agent to do so, you should consult legal counsel in Korea that retains international attorneys with global trade law experience.

What Is a “Corrupt Payment” Under the U.S. FCPA?

The term “corrupt payment” under the U.S. FCPA includes giving, offering, or promising anything of value to a foreign government official with the intent to:

1. Influence an act or decision of the official in their official capacity;
2. Induce an official to act or refrain from acting in violation of their lawful duty;
3. Secure improper influence over an official’s discretionary authority or the functioning of their office; or
4. Obtain any improper business advantage, including permits, approvals, non-enforcement, tax benefits, or regulatory leniency.

Importantly, liability may be triggered even if no payment is made if the offer, promise, or agreement itself is deemed corrupt.

Common Activities in Korea That May Trigger U.S. FCPA or Korean Anti-Corruption Law Concerns

The following activities often lead to investigations or violations for foreign companies doing business in Korea:

1. Paying for Travel, Lodging, or Related Hospitality

A violation may exist where:

• Travel or accommodation is paid without strict compliance with internal protocols and law;
• Family members of the official are included in travel benefits;
• The trip’s primary purpose is entertainment or leisure rather than business; or
• The itinerary or documentation is insufficient to prove legitimate business justification.

2. Giving Gifts Over Minimal Value Limits

Under many corporate compliance policies and U.S. enforcement guidelines, problematic gifts include:

• Gifts exceeding certain defined thresholds;
• Repeated small gifts to the same individual; and
• Items that could appear to influence discretionary acts (luxury items, electronics, etc.).

Korea’s local statute, the Improper Solicitation and Graft Act (Kim Young‑ran Act), also restricts gift values for domestic officials and public-sector employees.

3. Meals and Entertainment

Risky scenarios include:

• Meals exceeding certain defined thresholds;
• Recurring meals with the same official; and
• Entertainment that cannot be justified as directly related to business discussions.

4. Hiring or Compensating Relatives of Government Officials

Employment, internships, or consulting arrangements with family members of Korean government officials, even if qualified, can be deemed an improper attempt to influence the official.

5. Actions Taken by Agents, Intermediaries, or Third Parties

The U.S. FCPA holds companies liable for indirect corrupt payments made by:

• Consultants, brokers, attorneys, customs agents, fixers, or subcontractors;
• Joint-venture partners; and
• Distributors or resellers.

A company cannot simply “hide behind” a local partner; knowledge, willful blindness, or ignoring red flags may still result in liability.

Final Takeaway

Foreign companies operating in Korea face a complex mix of U.S. anti-corruption laws, Korean statutes, and internal compliance obligations. Because many Korean institutions are considered governmental or quasi-governmental, even routine interactions can trigger scrutiny. When in doubt, consult counsel before offering anything of value to a Korean official or allowing employees, agents, or partners to do so.
 

by Sean Hayes

Sean Hayes is a leading international lawyer and the founding partner of IPG Legal, one of Korea’s most recognized law firms for international business and dispute resolution. A former professor of law and the first non-Korean to serve the Korean court system, Hayes has built a distinguished career advising multinational corporations, governments, and entrepreneurs on complex legal and regulatory matters in Korea and abroad. His practice focuses on cross-border litigation, corporate law, antitrust, and international arbitration, with particular expertise in navigating Korea’s legal and business environment. Known for his pragmatic, strategic approach, and deep understanding of both Western and Korean legal cultures, Sean Hayes is frequently cited by major international media and legal publications.

For additional blog posts on Korean Labor & Employment Law, see: IPG Legal’s Labor & Employment Law Archive.

Probationary Periods in Korean Employment Agreements

Korean Probationary Employment Case Overview

1. On September 5, 2025, the Seoul Administrative Court, Administrative Division 1 (Presiding Judge Yang Sang-yoon) dismissed a lawsuit filed by a company seeking to overturn a retrial decision by the Central Labor Relations Commission regarding unfair dismissal of a probationary employee (2024guhap82817).
2. The Employee worked and received training at the Company’s branch in Ulsan University Hospital from October 23 to October 30, 2023. Despite receiving training and performing work for four days, the Company verbally via phone refused to sign an employment contract with the Employee.
3. The Employee filed for relief from the alleged unfair dismissal with the Ulsan Regional Labor Relations Commission. The Commission ruled in the Employee’s favor, stating that the Company failed to provide a justifiable reason for dismissal and did not follow proper termination procedures, including giving a written notification.
4. The Company appealed to the Central Labor Relations Commission of Korea, which upheld the ruling. The Company appealed to the Seoul Administrative Court, arguing, in part, that:
   • The branch had fewer than five regular employees, so the Korean Labor Standards Act did not apply.
   • The Employee was not a contract employee under an employment relationship with the Company.
   • There was no justifiable reason to refuse full-time regular or term employment.

Seoul Administrative Court Holding

The Seoul Administrative Court ruled in favor of the Employee, noting, in part, that the workplace has five or more workers, a probationary period is the commencement of the employment relationship, and justifiable grounds were not provided in the decision not to continue the probationary period.

1. Integrated/De Facto 5+-Person Workplace and Applicability of Korean Labor Law

The Company argued that the branch was too small for labor protections to apply (fewer than five workers). The Court rejected this argument, noting that the head office and branch were operated as a de facto single corporate entity since:

• Both entities shared the same CEO and corporate governance.
• Decisions affecting the branch were made at the HQ.
• The Employee was personally interviewed by a corporate representative from the HQ.

The Court concluded that the branch and the HQ functioned as one workplace, making labor protections applicable. For an article on this issue, see: Defacto Single Workplaces for Korean LSA Determinations

2. Probationary Period Equals Employment

The Company claimed the Employee was merely a “trial worker.” The Court found that an implicit employment contract existed and thus the Korean employee was not a mere trial worker since:

• The Employee underwent four hours of training each day for four days, covering the tasks listed in the job posting.
• The Employee was paid for his labor for the four days.
• Training was not simply evaluative, but part of a paid employment period intended to teach him to perform the job.

The Court emphasized that probationary periods are periods of employment, not arbitrary evaluation periods.

3. Lack of Justifiable Reasons for Dismissal

The Company argued that the Employee lacked job competency. The Court found this unpersuasive:

• The total work period was only 16 hours over four days, which the Court notes was insufficient to fully evaluate skills.
• The dismissal violated “trust” and could not be reasonably assessed based on the worker’s qualifications.

Key Takeaways for Employers in Korea

1. Probationary periods are not “free trials.” Employees on probation are protected under the Korean labor laws. Care and nuance are necessary to terminate within or after termination of the probationary period.
2. Termination during or after probation requires clear justification. Arbitrary dismissal in Korea, without proper documentation or evidence of performance evaluations, is likely to be deemed unfair by Korean courts. Documentation is essential.
3. Training and initial work constitute employment. Paid training is considered labor under the Korean LSA, and employees immediately gain legal protections.
4. Document evaluations carefully. Employers should provide written performance feedback and follow best practices if considering dismissal. Documentation, nuance, and understanding of Korean Termination Formalities are essential.

This ruling underscores the importance of understanding Korean labor law for all employers operating in Korea. Probationary periods in Korea are legally recognized as employment periods, and dismissals must be justified based on objective evidence and proper procedures. Employers who fail to comply risk unfair dismissal claims, back pay compensation, reinstatement, monetary fines, MOEL audits, and reputational damage.

by Sean Hayes

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only a few non-Korean lawyers as a Top Attorney by AsiaLaw. Sean is regularly quoted by leading international media outlets, including The Wall Street Journal, The New York Times, France 24, and Bloomberg.

IPG Legal is consistently ranked a Top Dispute Resolution Law Firm for our litigation, arbitration, and mediation services, and IPG Legal is consistently rated a top-tier law firm in corporate law, litigation, arbitration, franchise law, distribution law, estate law, family law, employment & labor law, and criminal defense.

To schedule a call with Sean Hayes, please Schedule a Call Here. 

When a family member passes, the combination of Korean statutory succession laws, foreign wills, offshore trusts, and cross-border assets can give rise to complex legal conflicts, international tax complexities, and unexpected disputes. Proactive estate planning is therefore essential to prevent litigation, ensure wishes are met, avoid unnecessary taxes, and expedite asset transfers. For additional articles on Korean Inheritance Law please see: IPG Legal’s Estate & Inheritance Law Archive.

Korean Cross-Border Estate & Trust Planning

Korea’s Inheritance Law Framework

Korea follows a civil-law, forced-heirship system under the Korean Civil Act. This means that statutory heirs, including spouses, children, parents, and other lineal relatives, are entitled to a mandatory statutory share (yuhun bun) in all but the most exceptional cases. Regardless of a will, a spouse and children cannot be disinherited entirely in most cases. Importantly, Korean law applies to the estate of a decedent who was domiciled in Korea at death unless a valid foreign choice-of-law clause applies and to Korean nationals (with exceptions in certain situations). Carefully structuring wills and trusts is essential to avoid disputes and minimize tax obligations.

For additional information on the basics of Korea’s Inheritance Law, please see: Korean Inheritance Law Guide and Inheritance Asset Scrubs for Heirs of a Korean Estate.

Recognition of Foreign Wills and Trusts in Korea

Korea lacks a domestic trust tradition comparable to Anglo-American trust law. While Korea enacted a Trust Act in 1961, its scope and use remain limited to certain commercial and financial arrangements. Traditional private or family trusts such as those established in the U.S., UK, or offshore jurisdictions (e.g., Singapore, Bermuda, BVI, Jersey) are not automatically recognized under Korean inheritance law and procedures.

Korean courts may recognize foreign trusts when they meet the requirements of Korea’s Private International Law. The Act on Private International Law of Korea (2022 Amendment) permits the application of foreign law when a trust or will is properly governed by a foreign jurisdiction. However, in most cases, Korean real estate and domestic financial assets remain subject to local Korean law, even if the decedent had a foreign trust.

Trust and Inheritance-Related Disputes in Korea

IPG Legal has observed an increase in litigation in Korea and abroad involving cross-border estate structures with a Korean nexus. Typical scenarios include:

• Trustee Control Disputes: Korean heirs challenge the validity of offshore trustees managing Korean assets.
• Asset-Transfer Challenges: Korean courts scrutinize transfers of property to offshore trusts as potential “fraudulent conveyances.”
• Dual-Probate/Inheritance Conflicts: Executors appointed in Australia, the U.S., the UK, etc., face parallel probate/inheritance procedures in Korea for assets located in Korea.
• Recognition of Foreign Judgments: Beneficiaries attempt to enforce foreign trust or probate orders in Korean courts, often facing public policy objections.
• Korean Mandatory Statutory Shares: A foreign will or trust is partially negated due to Korea’s statutory share mandates.
• Scrutiny by Korean Courts of Pre-Death Transfers: Courts in Korea and the Korean National Tax Service are auditing pre-death transfers that may run in conflict with Korea’s Mandatory Statutory Share Law and Korean Tax Law.

Therefore, cross-border estate planning for foreigners in Korea and multi-national families should consider:

• Choice of Law Clauses under Korea’s Private International Law Act specifying which country’s law governs succession.
• Tax Coordination: Korean inheritance tax applies in many cases to the global assets of Korean residents and nationals, with rates of up to 50%. Double taxation may arise unless a treaty (e.g., Korea-U.S. or Korea-UK tax treaty) provides relief.
• Dual Wills: foreign residents, in some cases, should prepare a local Korean will (for domestic assets) and a foreign will (for overseas assets) that complement each other rather than conflict.
• Trust Disclosure and Compliance: where applicable, ensure trustees and beneficiaries meet Korean reporting and foreign-asset declaration obligations.
• Comprehensive Estate Audit: identify Korean-situs and foreign-situs assets, applicable laws, and potential heir claims.
• Maintain transparent documentation to help avoid later invalidation claims by Korean heirs.
• Forced-heirship challenges: proactively structure gifts and trust distributions, etc., consistent with Korean Law.
• Hire a Korean Law Firm with Experience in Trust, Overseas Assets, Inheritance Tax, and Inheritance Disputes

How IPG Legal Assists International Families in Inheritance and Estate Matters in Korea and Abroad

IPG Legal advises foreign residents, multinational families, and high-net-worth individuals on cross-border inheritance, trust structuring, probate/inheritance administration, and estate litigation in Korea and abroad. Our team coordinates with offshore counsel in jurisdictions such as Australia, China, Hong Kong, Germany, Singapore, the United Kingdom, and the United States. With decades of combined experience in Korean private-client, commercial, and tax law, IPG Legal is one of the few English-speaking firms in Korea equipped to assist clients in these often complex matters.

by Sean Hayes

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as a Top Attorney by AsiaLaw, and IPG Legal is consistently ranked Top Dispute Resolution Law Firm for our litigation and arbitration services.

If you would like a consultation with Sean Hayes from IPG Legal, please schedule a call at:  Schedule a Call with Attorney Sean Hayes. 

Vaccine Damage Lawsuits in Korea at the Seoul Administrative Court

Background to the COVID-19 Vaccination Damages Cases at Seoul Administrative Court

1. The Plaintiff, a 25-year-old healthy male, received his first dose of the AstraZeneca COVID-19 vaccine on March 4, 2021. Approximately ten hours later, he developed severe symptoms including a fever, headaches, nausea, vomiting, dizziness, muscle pain, and weakness in his left arm and leg.
2. The Plaintiff was diagnosed with unspecified encephalitis, myelitis, acute transverse myelitis, and Guillain-Barré syndrome.
3. In March 2021, the Plaintiff applied to the Korea Disease Control and Prevention Agency (KDCA) for compensation under the Infectious Disease Prevention Act of Korea. The application was denied on the grounds that “causality is difficult to establish.”
4. The KDCA characterized his symptoms as Miller-Fisher syndrome and concluded that insufficient data existed to establish causality (Category 4-1). The Agency provided only partial medical expense support under a temporary program for “diseases with suspected relevance.”
5. After multiple objections, the KDCA reaffirmed its denial on February 14, 2024. The Plaintiff brought an administrative lawsuit challenging the Agency’s decision.

The Seoul Administrative Court’s Decision on COVID-19 Vaccination Damages Cases

In August of 2025, the Seoul Administrative Court reversed the KDCA’s determination and ordered compensation, emphasizing that the causal connection for vaccine injury claims need not be medically or scientifically proven with specific certainty. Instead, it is sufficient if causality may be reasonably inferred based on indirect facts and the totality of circumstances.

The Korean court emphatically criticized the KDCA’s reliance on its internal “Category 4-1” classification, which refers to cases where evidence of causality is deemed insufficient. The ruling noted that the Agency had misapplied a Supreme Court of Korea precedent, which allows causation to be inferred where the cause of disability is unknown or not attributable to other factors.

This Korean administrative court clarified that if credible domestic or international data, such as case reports or statistical correlations, support the possibility of causality, then a causal inference should generally be accepted under Korean administrative law principles.

Key Elements to Determine Causality in Korea

1. Temporal Proximity

The Court found clear temporal proximity, noting that adverse reactions manifested approximately ten hours after vaccination and persisted, leading to long-term hospitalization and neurological complications.

2. Medical Possibility

The Court cited the AstraZeneca product information, which lists GBS and transverse myelitis as very rare but reported adverse events. It also referenced domestic and international medical literature confirming similar cases, concluding that it is not “impossible in medical theory or empirical principles” to infer a causal link.

3. Exclusion of Other Causes

The Court observed that the plaintiff was previously healthy, had no neurological history, and underwent a routine health check immediately before vaccination. No alternative condition was identified during hospitalization. It rejected the KDCA’s claim of a genetic predisposition to Behcet’s disease, stating that a positive HLA-B51 test result alone cannot support such a diagnosis.

Accordingly, the Korean court determined that the disability’s cause was “at least unknown” and that there were “no circumstances to believe it was caused by another factor.”

Rejection of KDCA’s Defense

The KDCA argued that the plaintiff had already received benefits under the Suspected Related Disease Support Program, which covers medical expenses up to 50 million KRW, rendering the lawsuit moot. The Court dismissed this claim, emphasizing that the support program is temporary and lacks a statutory basis, and therefore does not substitute for compensation under the Infectious Disease Prevention Act of Korea.

Legal Significance of the Ruling

This ruling underscores a broader judicial shift toward a more claimant-friendly interpretation of causality in vaccine injury cases. By recognizing inferential causation based on circumstantial evidence rather than requiring definitive medical proof, the decision may expand access to compensation for individuals suffering severe adverse reactions following vaccination.

About IPG Legal

IPG Legal is a leading full-service law firm with extensive experience in administrative litigation, medical law, and complex disputes involving government agencies in Korea. IPG Legal is rated a leading dispute resolution law firm. The firm is composed of seasoned foreign and Korean attorneys with decades of experience handling complex litigation, corporate, and regulatory matters. IPG Legal regularly advises multinational corporations, SMEs, and individuals on a range of issues, including commercial disputes, criminal defense, administrative litigation, foreign investment, intellectual property, and family law. Its lawyers are recognized for delivering practical, strategic, and results-driven legal solutions grounded in a clear understanding of both Korean and international legal systems.

by Sean Hayes
Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers, by AsiaLaw, as a Top Attorney, and IPG Legal is consistently ranked as the top dispute resolution law firm for our litigation and arbitration services.

If you would like a consultation with an English-speaking lawyer in Korea, please schedule a call at: Schedule a Call with an Attorney.

Case Background

This landmark Korean DUI decision is referred to in the local Korean press as the “Gwangju Maserati hit-and-run.” The case underscores that aggressive proactive counsel can lead to a not guilty verdict in DUI cases in Korea.

1. On September 24, 2024, at approximately 3:10 A.M., the Defendant drove a Maserati at approximately 128 km/hr. – more than double the posted 50 km/hr. speed limit. The vehicle collided with a motorcycle, causing severe permanent injuries.
2. The Defendant fled the scene of the accident and contacted an acquaintance to assist him in evading the authorities and securing a new mobile phone.
3. The Defendant was indicted under the Korea’s Act on the Aggravated Punishment, etc. of Specific Crimes (Hit-and-Run Resulting in Death) and related Korean statutes.

Korean Trial and High Court Holdings

The Korean trial court found the Defendant guilty on all counts, including drunk driving and aiding and abetting the escape of a criminal. The court sentenced the Defendant to ten years in prison. On appeal, the Gwangju High Court partially reversed the lower court’s holding. The Korean court determined that the prosecution had failed to strictly prove the elements necessary to apply the Widmark formula for BAC estimation.

The Widmark formula estimates blood alcohol concentration (BAC) and is calculated as:

BAC=(A/(W*r))−(β*H)cap B cap A cap C equals open paren A / open paren W * r close paren close paren minus open paren beta * H close paren𝐵𝐴𝐶=(A/(W*𝑟))−(𝛽*H). The basics for calculation require the total grams of alcohol consumed (A), the person’s body weight in kilograms (W), the Widmark factor ‘r’ (approximately 0.680.680.68 for men and 0.550.550.55 for women), the elimination constant βbeta𝛽 (typically 0.150.150.15 g/L/hour), and the hours over which alcohol was consumed (H). 

Investigators had relied heavily on CCTV footage to estimate the Defendant’s BAC before the accident. The High Court held that such footage could not accurately establish either the quantity of alcohol consumed or the time of consumption, which, as can be seen above, are essential inputs for the Widmark calculation.

The High Court opined that:

“Determining the amount of alcohol consumed based on CCTV footage alone is speculative and cannot be considered strict proof. Even if the estimate is accepted, the Widmark formula must be applied under conditions most favorable to the defendant, including the lowest absorption rate and earliest possible commencement of alcohol metabolism. On this basis, it cannot be concluded that [Defendant’s] BAC exceeded the statutory threshold of 0.03%.”

This appellate court found Defendant not guilty of drunk driving and of aiding and abetting a criminal’s escape, reducing his sentence to seven years and six months in prison for the hit-and-run offense.

Korean Supreme Court Decision (2025Do9963)

On October 16, 2025, the Korean Supreme Court’s Second Criminal Division (Presiding Justice Eom Sang-pil) affirmed the appellate court’s judgment and dismissed both the prosecution’s and defendant’s appeals.

The Korean Supreme Court held:

“The lower court’s findings do not deviate from the rules of logic and experience nor exceed the boundaries of the principle of free evaluation of evidence. The appellate judgment correctly applied the legal principles governing the establishment of drunk driving under the Road Traffic Act and aiding and abetting the escape of a criminal.”

The Supreme Court of Korea thus confirmed the acquittal on the disputed charges and upheld the seven-year and six-month prison sentence imposed for the remaining hit-and-run offenses.

Legal Significance for DUI Cases in Korea

This ruling carries significant implications for future Korean criminal cases involving indirect BAC estimation. The Korean Supreme Court reaffirmed that the Widmark formula cannot substitute for empirical testing absent substantial evidence of the Widmark formula parameter inputs.

In the majority of criminal defense cases that will go to trial, it is essential to have criminal defense lawyers on your team who have worked as Korean court judges, have significant experience defending foreigners in Korean courts, and have also defended foreigners before the Korean Immigration Services and the Korean Administrative Court.

Charged with a crime in Korea? Schedule a call with a Korean Criminal Defense Lawyer at: Schedule a Call with an Attorney. For more articles on Korean Criminal Law, please see our Korean Defense Law Archives.

by Sean Hayes

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as a Top Attorney by AsiaLaw, and IPG Legal is consistently ranked Top Dispute Resolution Law Firm for our litigation and arbitration services.

If you would like a consultation with Sean Hayes from IPG Legal, please schedule a call at:  Schedule a Call with Attorney Sean Hayes. 

Korea’s Top Law Firms

• IPG Legal
• Lee & Ko
• Bae, Kim & Lee
• Kim & Chang
• Yulchon
• SEUM
• Tek & Law
• Hwang, Mok & Park
• Jipyung

The website notes on its list of Top Korean Law Firms that:

IPG Legal professionals are consistently ranked in legal and business publications as top lawyers and business professionals with global experience and local connections. The firm focuses on business laws, cross-border issues, civil litigation, franchise law, and criminal defense. The company has enough English-speaking client experience handling matters for companies and individuals in North America, most of Asia and the Middle East. 

IPG Legal professionals contribute to The Korean Law Blog, The New York Law Blog, and The China Business Law Blog. Primary news sources quote them regularly and publish articles and treatises in legal and business journals.  

Korea Tech Desk, Top Korean Law Firms

by Sean Hayes

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as a Top Attorney by AsiaLaw, and IPG Legal is consistently ranked Top Dispute Resolution Law Firm for our litigation and arbitration services.

If you would like a consultation with Sean Hayes from IPG Legal, please schedule a call at:  Schedule a Call with Attorney Sean Hayes. 

When drafting or updating employment rules in Korea, the following core categories and items should be addressed. Some are legally mandatory; others are recommended for clarity, compliance, and sound human-resources management.

If you are revising or implementing employment rules, it is also advisable to update employment agreements, your HR Compliance System, and related forms. We advise retaining a proactive attorney in Korea to assist with this matter. In most cases, the basic form template sold by some Korean law firms is not adequate for most companies.

Practical Guidance

• The rules must meet or exceed statutory minimums; any provision less favorable to employees than the Korean Labor Standards Act is void.
• Once established, the rules should be filed with the local Labor Office and made accessible to all employees, typically by posting them on a company intranet or bulletin board.
• Any amendment that disadvantages employees requires, in most cases, consultation and a written opinion from the employee representative before filing.
• Employers should review and update the rules periodically, especially when laws change (e.g., recent reforms to working-hour flexibility or union protections).

by Sean Hayes

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only a few non-Korean lawyers as a Top Attorney by AsiaLaw. Sean is regularly quoted by leading international media sources, including the Wall Street Journal, New York Times, France 24, and Bloomberg.

IPG Legal is consistently ranked a Top Dispute Resolution Law Firm for our litigation, arbitration, and mediation services, and IPG Legal is consistently rated a top-tier law firm in corporate law, litigation, arbitration, franchise law, distribution law, estate law, family law, employment & labor law, and criminal defense.

To schedule a call with Sean Hayes, please Schedule a Call Here. 

In September of 2025, the First Family Division of the Supreme Court of Korea affirmed the lower court’s judgment that the back child support amount of 70 million won for the period when the child was a minor is awarded to the child.

For articles on Child Support in Korea, please see: Korean Child Support Basics and Father Jailed for not Paying Child Support in Korea.

FACTS

1. The Father and Mother had a Child out of wedlock. The Father was married at the time of the birth of the Child to another woman.
2. The Mother and Father entered into an Agreement waiving the Mother’s full right to obtain child support from the Father in exchange for the Father’s agreement not to claim custody of the Child.
3. In a subsequent Korean family court case, the Father was found not to owe any child support obligations to the Mother, and the Mother was the sole legal guardian of the Child.
4. The Mother raised the Child as a single mother until the Child reached the age of majority.
5. When the Child reached the age of majority, the Child sued the Father for back child support.

Korean Supreme Court Holding

The Supreme Court of Korea, confirming the holding of the Korean lower courts, ruled that the Father should pay the back child support to the Child noting that: “Even if there is an agreement to waive future child support claims before a specific claim is confirmed through an agreement between the parties or a family court decision, or even after the claim is confirmed but before the due date has arrived, unless there are other special circumstances, the waiver cannot be deemed to have the effect of affecting the child’s welfare. . . Parents have a joint responsibility to raise their children, and, in principle, they must jointly bear the cost of child support. . . This is an obligation that arises from the nature of the parent-child relationship, regardless of who has custody.”

The Supreme Court of Korea, thus, concluded that “unless there are special circumstances, such as the child receiving sufficient support from only one parent, a child born out of wedlock may claim past child support from the non-custodial parent during the period where the child is a minor.”

This landmark ruling by the Supreme Court of Korea underscores the fundamental principle that a child’s right to financial support from both parents cannot be waived by private agreements between parents (exceptions exist, and it is essential to have an experienced, proactive attorney who understands the nuance and agreements necessary to enter into a settlement agreement concerning child support). The Supreme Court of Korea, in this case, affirmed that a child born out of wedlock in Korea can claim back child support, even when the custodial parent agreed not to seek it. The Court reinforced the idea that parental responsibility is rooted in the parent-child relationship, not in marital or legal agreements between the parents.

by Jiwon MIN

Jiwon Min is a distinguished partner at IPG Legal, one of South Korea’s premier law firms. Jiwon has earned a reputation as one of Korea’s foremost experts in divorce, custody disputes, inheritance, child abduction, and other complex family and criminal litigation matters.

On December 27, 2024, Korea’s National Assembly passed a major amendment to the Act on the Prevention of Divulgence and Protection of Industrial Technology (the “Amended Industrial Technology Protection Act” or “Amended ITA”). The revised framework significantly tightens restrictions on industrial technology transfers, particularly National Core Technologies (“NCTs”). The major impetus for the amendment is to protect Korean technology from misappropriation by foreign nations and companies; however, the amendment will affect any company doing business in Korea or seeking to collateralize, license, or acquire the technology of a Korean company.

On the same day as this amendment, the Korean Ministry of Trade, Industry and Energy (MOTIE) introduced the Fifth Comprehensive Plan for the Prevention of Divulgence and Protection of Industrial Technology (the “Fifth Comprehensive Plan”). The amended ITA takes effect on July 22, 2025.

IPG Legal is seeing the new law affect technology holders in three different ways:

• Collateral on technology in overseas build-outs. For example, a Korean manufacturer planning an overseas manufacturing plant may be asked by a foreign lender to pledge its technology/IP as collateral. This is a common situation. Even without immediate transfer, foreclosure can expose trade secrets, invite third-party access, and, if the tech is a National Core Technology, may trigger export approval issues.
• M&As. M&A transactions with National Core Technology require disclosure and potential approval from the MOTIE and other Korean government agencies.
• Foreign Capital-Invested Company with R&D in Korea. Foreign Companies may develop National Core Technologies through a Korean subsidiary, which may be subject to obligations under the amended Korean Industrial Technology Protection Act.

Amended Korean Industrial Technology Protection Act

A. Reinforced Oversight and Registration of Korean NCTs

1. Under the previous ITA, holders of technology were required to self-initiate applications for NCT designation. MOTIE may now direct holders of NCTs, it deems likely to possess NCTs, to apply for designation.
2. The Amended ITA introduces a mandatory registration system. When a holder of technology is recognized as holding an NCT, it must register the details with MOTIE. Noncompliance may trigger administrative fines and, in some cases, even criminal sanctions.

B. Expanded Authority for the Korean Government to Prevent Overseas Technology Leakage

Prior to the amendment, the MOTIE could issue remedial orders only after an investigation by intelligence agencies and a review by a committee. The Amended ITA allows MOTIE to act immediately and independently to block or reverse unapproved exports and overseas transactions, including M&As and technology transfers.

C. Expanded Definition of Infringement and Higher Penalties

1. The scope of “industrial technology infringement” under the amended ITA is expanded to include:

• Unauthorized use or removal of technologies from restricted areas;
• Solicitation or inducement of technology leaks; and
• False or omitted filings concerning NCT exports.

2. The amended ITA also clarifies extraterritorial application of Korean law by confirming that infringements committed outside Korea may still fall under the ITA’s jurisdiction.

3. Penalties under the amended ITA significantly increased:

• Punitive damages for willful infringement: raised from three times to five times actual damages;
• Maximum criminal fines for overseas NCT leakage: increased from KRW 1.5 billion to KRW 6.5 billion;
• Maximum fines for general industrial technology leakage abroad: raised to KRW 3 billion.

The Fifth Comprehensive Plan: Policy Direction Through 2028

The Fifth Comprehensive Plan, announced concurrently by MOTIE with the passage of the amended ITA, provides a strategic roadmap for implementing the amended Industrial Technology Protection Act. The Plan emphasizes stronger government management and control and sector-specific oversight.

Key initiatives under the Fifth Comprehensive Plan include:

1. Designation of New NCTs in strategically vital Korean industries such as battery, semiconductor, military, and aerospace sectors;
2. Creation of an M&A division within the Industrial Technology Protection Expert Committee to assess foreign transactions involving NCT holders;
3. Enhanced security support for small and medium-sized enterprises (SMEs), research institutes, and universities with potentially weaker compliance frameworks;
4. Use of “big data” to track and manage key personnel with access to sensitive technologies; and
5. Development of cloud-based protection protocols for holders of NCTs.

Implications for Businesses in Korea

The amended Act and the Fifth Comprehensive Plan together represent a systemic overhaul of Korea’s industrial technology protection regime. Companies operating in advanced sectors, especially those involved in R&D, export, or foreign investment, should:

• Review and classify their technologies to assess whether they could be deemed NCTs;
• Ensure compliance with registration and reporting obligations;
• Implement internal security protocols for managing sensitive information and personnel; and
• Seek legal and regulatory advice before pursuing foreign transactions or technology transfers.

Violations can now lead to substantial fines, reputational damage, and criminal liability.

FAQs that IPG Legal Law Firm is Regularly Answering

Q1. Does pledging tech as collateral require export approval?
Not per se. But enforcement may create a functional disclosure/export when a receiver, court officer, or buyer gains access. If the technology is (or becomes) an NCT, approval/reporting and security measures can be triggered. Build the enforcement pathway now, not after default. Get a proactive lawyer in Korea to assist with building a reporting and compliance system and conduct a full IP Audit.

Q2. Can regulators unwind my cross-border deal?
Yes, where NCT rules were ignored or misrepresented. Tools include suspension, prohibition, and restoration to the status quo post merger or tranfer.

Q3. How do we know if we’re an “NCT holder”?
Start with the statutory definition, then the current MOTIE NCT lists/notifications (they change often; 2024–2025 saw notable updates). If in doubt, seek an official determination.

About IPG Legal

IPG Legal is a leading full-service international law firm. The firm represents multinational corporations, SMEs, and individuals in complex litigation, arbitration, and cross-border matters.

by Sean Hayes

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as a Top Attorney by AsiaLaw, and IPG Legal is consistently ranked Top Dispute Resolution Law Firm for our litigation and arbitration services.

If you would like a consultation with Sean Hayes from IPG Legal, please schedule a call at:  Schedule a Call with Attorney Sean Hayes. 

Facts

• In December 2018, the Gangwon Development Corporation issued a Request for Bid to purchase fill material for the development of an industrial complex in Gangneung.
• Prior to the bidding, five Korean civil engineering companies reached an agreement with the predetermined successful bidder. They coordinated the bid amount, distribution of profits, and other related terms, effectively eliminating price competition.
• In September 2023, the Korean Fair Trade Commission concluded that the firms had engaged in unfair collusion, violating the Monopoly Regulation and Fair Trade Act (MRFTA). It issued a corrective order and imposed fines totaling KRW 255 million.
• The Gangwon Development Corporation subsequently filed suit (Case No. 2024gahap30345) against the five companies, seeking damages for the financial harm caused by the collusion.
• On August 20, 2025, the Chuncheon District Court, Civil Division 2 (Presiding Judge Kim Hyeon-gon), ruled that the companies were jointly and severally liable for damages. However, it reduced the defendants’ liability to 70% of the calculated harm.

Court Holding

The court found that the defendants violated Article 19(1)(8) of the former MRFTA, which prohibits collusion that interferes with fair competition in public bidding.

The court opined that:

“The defendants should have independently determined the bidding price by comprehensively considering their sales capabilities, technological prowess, management status, and possibility of winning the bid. Instead, they agreed in advance on the prospective successful bidder, bidding amount, and distribution of profits, thereby avoiding competition. This act nullifies the purpose of the competitive bidding system and excludes the possibility of a fair determination of the successful bidder.”

Calculation of Damages

• The court applied Korean Supreme Court precedent (2019da278228, January 12, 2023), which defines damages from bid rigging as the difference between the collusive bid price and the hypothetical competitive price.
• Based on this method, the court determined that the plaintiff’s losses amounted to KRW 499,742,072, using a successful bid rate of 81.623% of the estimated price as a benchmark.
• Recognizing practical limitations (sample size, difficulty isolating other pricing factors), the court adjusted the liability. The court limited the defendants’ liability to 70% (approximately KRW 349 million ), citing two key reasons: (1) Difficulty in exact damage quantification, and (2) Administrative fines already imposed.

Legal Significance of the Ruling

1. Reinforcement of FTC and Civil Remedies: The case demonstrates how administrative sanctions by the Fair Trade Commission of Korea do not preclude, but rather complement, civil claims for damages.
2. Methodology for Damages: The court reaffirmed that damages from bid rigging are calculated by comparing the collusive price with the hypothetical competitive price, ensuring that recovery targets only the harm caused by anticompetitive conduct.
3. Consideration of Administrative Penalties in Civil Damages: The Court reduced liability to 70%, thus, offsetting the administrative penalty.
4. Policy Message: The judgment sends a strong warning to contractors engaged in public procurement that collusion not only leads to fines but also exposes them to civil liability.

Practical Implications for Businesses in Korea

• Strengthen Korean-based Compliance Programs: Companies bidding for public projects in Korea should adopt robust compliance policies to ensure strict adherence to the MRFTA. Regular internal training on antitrust and fair competition law should be conducted, and a comprehensive compliance audit should be conducted at least every three years.
• Conduct Internal Audits: Businesses in Korea should proactively audit bidding practices and communication channels among employees to detect and prevent potential collusion risks.
• Review Procurement Practices: Participation in public tenders should be carefully documented, with clear internal approval processes to demonstrate independent decision-making in pricing and bidding.
• Coordinate with Counsel: In the event of an investigation by the FTC, engaging experienced and proactive counsel early can mitigate exposure, including through leniency applications or settlement discussions.
• Expect Dual Liability: Even after administrative fines, civil damages can be significant. Businesses should plan for the possibility of parallel enforcement and assess their exposure accordingly.

by Sean Hayes

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as a Top Attorney by AsiaLaw, and IPG Legal is consistently ranked Top Dispute Resolution Law Firm for our litigation and arbitration services.

If you would like a consultation with Sean Hayes from IPG Legal, please schedule a call at:  Schedule a Call with Attorney Sean Hayes. 

The Korean Commercial Act (KCA), supplemented by the Capital Markets Act of Korea for listed entities, provides a range of rights intended to protect minority shareholders from abuse, cash burns, self-dealing, and tunneling. However, success depends on strict compliance with thresholds, timelines, proactive strategy, aggressive and unconflicted counsel, and sometimes onerous documentary requirements. In some cases, criminal filings are required. The following article only concerns civil remedies available. In many cases that we handle, along with derivative actions, IPG Legal files a criminal action against company directors, shareholders, and other parties.

Minority Shareholder Rights in Korea:
A Legal Guide by IPG Legal

Minority Shareholder Rights Under the Korean Commercial Act

1. Document Disclosure under the Korean KCA

Typically, before filing a derivative lawsuit or criminal complaint, it is advisable to obtain as much information as you can find on the company via discovery requests.

• Books and Records Inspection (KCA Art. 466):
  Shareholders (collectively) holding 3% or more (for non-listed companies) of the outstanding shares of a Korean company (lower thresholds exist for listed companies) may obtain from the Korean company access to accounting books and corporate records. If a Korean company refuses to produce the documents, an injunction may be filed in a Korean court. Korean courts, in most cases, require a “proper purpose,” such as investigating self-dealing, to order a company to disclose its records. If the request is denied by the Korean company, and it is, thus, necessary to file a lawsuit, it is advisable to narrowly tailor the request and detail specifically the need, since courts in Korea are more likely to grant access via a tailored request. Fishing expeditions by shareholders may be denied by courts in Korea. (Supreme Court, 2019Da270163 (May 13, 2022).
• Share Register Access (KCA Art. 396):
  Shareholders may inspect the share register, articles of incorporation, minutes of general meetings of shareholders, and the bond register during the company’s business hours. If the request is denied, a Korean court may grant a provisional injunction.
• Minutes of Board Meetings (KCA Article 391-3).
  Shareholders may request that the company provide access to or a copy of the minutes of the Board of Directors meetings during business hours. If the request is denied, a Korean court may grant a provisional injunction.

2. Shareholder Proposal Rights and Right to Convene an EGM under the Korean Commercial Code

• Shareholder Proposal Right (KCA Art. 363-2):
  Holders of 3% or more of the shares of a Korean company may demand inclusion of resolutions at a general meeting and have the right to explain the resolution if the resolution is not a resolution for the general meeting because of allegations that the contents of the resolution violate Korean law.
• Right to Convene an Extraordinary General Meeting (KCA Art. 366):
  Shareholders with at least 3% of shares for at least six months may demand that directors convene an EGM. If refused, a Korean court may grant an injunction.

3. Korean Appraisal Rights under the Korean Commercial Code

• Appraisal Rights (KCA Art. 374):
  Dissenting shareholders may demand a buy-out at a “fair price” in major transactions such as mergers, takeovers of whole or part of the business or asset sales that significantly impact the business of the company.

4. Minority Shareholder Litigation Rights under the Korean Commercial Code

• Derivative Actions (KCA Art. 403):
  Shareholders with 1% of the shares of the company for six months or more can sue directors on behalf of the company. For listed companies, the threshold is 0.01%.
• Parent–Subsidiary Liability:
  In listed structures, shareholders can sue the directors of subsidiaries if misconduct harms the parent company.

Practical Strategies for Minority Shareholders

1. Before a Dispute/Before Investment

• Negotiate shareholder agreements with tag-along, veto, and buy-sell provisions.
• Secure board seats or observer rights to access information.
• Consider implementing a dividend policy to prevent cash hoarding.
• Read IPG Legal’s article on: Minority Shareholders’ Rights in Korea.

2. During a Korean Shareholder Dispute

• Use inspection/disclosure rights to gather evidence.
• Leverage proposal rights to push governance reforms.
• Consider derivative suits where directors breach fiduciary duties.
• Perfect appraisal rights in restructuring contexts with valuation experts.
• Consider a Criminal Complaint.
• Consider Filing an Injunction/Protective Order to:
  • Suspend the effect of a shareholder resolution: Use when an AGM/EGM pushed through a conflicted deal or cash burn.
  • Enjoin new share issuance: Prevent dilution.
  • Block exercise of voting rights: Target specific conflicted holders (e.g., a controller on both sides of a related-party deal).
  • Prohibit convening or require postponement of a meeting: Forces proper notice and agenda integrity.
  • Asset-disposition injunctions: Enjoin extraordinary transfers or pledges of assets.
• Hire a Proactive and Experienced Lawyer in Korea.

Frequently Asked Questions (Q&A) on Minority Shareholder Rights in Korea

Q1: What is the minimum shareholding required to sue directors in Korea?

• For unlisted companies: 1% for at least six months.
• For listed companies: 0.01%, with no six-month requirement.

Q2: Can minority shareholders in Korea force a dividend?
Not directly. However, through proposal rights, minorities can push resolutions to declare dividends. Courts may intervene if directors unreasonably withhold profits while the company continues to maintain strong earnings.

Q3: Can I inspect the books of a Korean company if I hold less than 3%?
Generally, no. The threshold is 3% for closed corporations, but lower thresholds are available for listed companies.

Q4: What happens if a controlling shareholder in Korea forces a merger I oppose?
You may exercise appraisal rights by dissenting in writing and demanding payment at a fair price. Courts rely on expert valuation methods, such as the Discounted Cash Flow (DCF) and comparables, to determine compensation.

Q5: Are shareholder agreements enforceable in Korea?
Yes, provided they do not conflict with mandatory KCA provisions. Typical clauses include tag-along rights, veto powers, and buy-sell arrangements.

Q6: How do minority shareholders in Korean companies influence audit oversight?
The 3% cap on voting rights in auditor elections levels the playing field. Minority blocs can coordinate to elect auditors aligned with shareholder interests.

Q7: Can minority shareholders in Korea challenge tunneling between group affiliates?
Yes, by exercising inspection rights and filing derivative suits. Korean courts increasingly scrutinize related-party transactions for fairness.

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as a Top Attorney by AsiaLaw, and IPG Legal is consistently ranked Top Dispute Resolution Law Firm for our litigation and arbitration services.

If you would like a consultation with Sean Hayes from IPG Legal, please schedule a call at:  Schedule a Call with Attorney Sean Hayes. 

For this reason, retaining an experienced Korean inheritance lawyer and a proactive tax professional is crucial to avoid disputes, minimize tax burdens, and safeguard family wealth.

With over seven million Koreans living abroad, including nearly three million in North America, inheritance cases involving Korea increasingly involve cross-border estates. Despite this global reality, many families remain without an estate plan, leaving their heirs exposed to unnecessary risk, taxation, and litigation.

This article, prepared by IPG Legal, addresses some of the most frequently asked questions by our clients regarding Korean inheritance law and inheritance tax.

Cross-Border Estate Planning for Korean Estates

1. Which Law Governs Wills and Inheritance in Korea?

Determining the governing law of succession depends on the nationality and residence of the decedent:

• Non-Korean Nationals:
  Generally, the law of the decedent’s nationality (or U.S. state of domicile, where applicable) governs succession, even if assets are located in Korea. However, Korean taxation may still apply.
  • If the decedent’s permanent residence was in Korea, worldwide assets may be subject to Korean inheritance tax.
  • If the decedent was a non-resident, only Korean-situs assets are taxable.
  • Foreign residents in Korea may elect to have Korean law apply to their estate.
• Korean Nationals Residing in Korea:
  Korean inheritance law applies, even if the will specifies otherwise.
• Korean Nationals Residing Abroad:
  • Without a will: Korean law will generally apply.
  • With a valid will: Korean courts usually recognize the law of the decedent’s residence.

Practice Tip: All individuals—Korean and non-Korean—should prepare a will and estate plan to minimize disputes and taxes. Proper planning ensures efficient inheritance procedures in Korea and abroad. We advise, in some cases, a trust and a living will.

2. Can a Decedent Disinherit a Spouse or Child Under Korean Law?

No. Under Korean law, heirs are entitled to a mandatory reserved portion of the estate (유류분 / 遺留分).

Even if a will expressly disinherits a spouse or child, Korean inheritance law requires that these heirs receive a minimum share.This rule applies when Korean law governs the estate.

Recent amendments and a Constitutional Court case have provided narrow exceptions for heirs who have clearly abandoned their legal or moral duties to their family. IPG Legal will provide a detailed analysis of these developments in a forthcoming update.

The Constitutional Court of Korea declared, in part, the mandatory legal reserve unconstitutional. However, the system was deemed, in of itself, constitutional. More information on this can be found at: Korea’s Statutory Inheritance Reserve Deemed Partially Unconstitutional.

3. How Is the Legal Reserve Calculated Under Korean Law?

Article 1112 of the Korean Civil Act governs the inheritance reserve:

• Lineal descendants (children/grandchildren): 50% of the statutory share
• Spouse: 50% of the statutory share
• Lineal ascendants (parents/grandparents): 33% of the statutory share
• Siblings: 33% of the statutory share

Only these categories of heirs are entitled to reserved shares. Others (such as more distant relatives) may inherit under intestacy but do not benefit from the reserve.

4. How Does Intestate Succession Work in Korea?

When a decedent dies without a valid will, the Korean intestate succession law applies. The order of priority is:

1. First priority: Lineal descendants (children and grandchildren)
2. Second priority: Lineal ascendants (parents and grandparents)
3. Third priority: Siblings
4. Fourth priority: Relatives within the fourth degree (e.g., uncles, aunts, nephews, nieces)

A surviving spouse inherits jointly with first or second priority heirs but receives an additional 50% share compared to other heirs of the same rank. If no such heirs exist, the spouse inherits the entire estate.

Caveat: Even when a will exists, Korean inheritance law mandates that heirs receive at least their reserved portion. Please see Section 3 above.

5. Are Holographic Wills Valid in Korea?

Yes. Korean law recognizes five forms of wills:

1. Notarial will
2. Holographic will
3. Secret/sealed document will
4. Recorded will
5. Dictated will

Strict compliance with statutory formalities is required. Defective wills may be declared invalid, leading to costly litigation and delays in transferring assets. Professional legal assistance is strongly recommended when drafting wills involving Korean assets. For more information on Holographic Wills, see: Korean Wills and Korean Holographic Wills.

6. Do Heirs Inherit the Debts of the Deceased?

Yes. Heirs inherit both assets and liabilities. Failure to renounce an estate with liabilities exceeding assets may result in heirs being legally bound by the debts. Korean judgments, including those concerning estate debts, are widely enforceable in foreign jurisdictions such as the United States, Canada, and the European Union. For more information on renouncing an estate in Korea and the inheritance of family debt, please see: Renouncing an Estate under Korean Law.

7. Can Heirs Renounce a Korean Inheritance?

Yes. Under Article 1041 of the Korean Civil Act, heirs may file a declaration of renunciation with the Korean family court within three months of notification of inheritance.

If this deadline passes, the estate is deemed accepted in full, including debts. Limited exceptions exist, and IPG Legal has successfully secured such relief for clients.

8. Does Korea Impose Inheritance Tax on Domestic and Global Estates?

Yes. Korean inheritance tax law distinguishes between residents and non-residents:

• Residents (more than 183 days in Korea or a permanent residence): Worldwide assets are taxable.
• Non-residents: Only Korean-situs assets are taxable.

For more information on the Korean Inheritance Tax, please see: Korean Inheritance Tax.

Key Deductions and Exemptions (2022)

• Resident deduction: KRW 500 million
• Basic deduction: KRW 200 million
• Child deduction: KRW 50 million per child
• Spousal deduction: KRW 500 million or the amount inherited (whichever is greater, subject to caps)
• Additional deductions for minors, seniors, and disabled heirs

Tax Rates (2022)

• Up to KRW 100 million: 10%
• KRW 100–500 million: 20% (deduction KRW 10 million)
• KRW 500 million–1 billion: 30% (deduction KRW 60 million)
• KRW 1–3 billion: 40% (deduction KRW 160 million)
• Above KRW 3 billion: 50% (deduction KRW 460 million)

Because inheritance tax law in Korea is highly complex—particularly with respect to residency determinations and cross-border estates—professional advice is indispensable.

Why Engage IPG Legal?

Korean inheritance law is one of the most complex areas of Korean civil law, particularly in cases involving cross-border elements. Issues of choice of law, forced heirship rules, and inheritance tax require careful advance planning.

At IPG Legal, we regularly assist clients—both Korean nationals and foreign residents—with:

• Drafting and reviewing wills under Korean law
• Cross-border inheritance planning
• Inheritance tax compliance and mitigation
• Renunciation of debt-laden estates
• Probate and intestate succession proceedings

With our in-house tax professionals and extensive litigation experience, we are uniquely positioned to help clients navigate Korea’s evolving inheritance and inheritance tax system.

For more information, please contact IPG Legal or explore our Korean Inheritance Law Archive for further resources.

by Sean Hayes
Sean Hayes is a senior foreign attorney at IPG Legal, one of Korea’s leading international law firms. With over two decades of experience in Korea, he is recognized as the first non-Korean attorney to work for the Korean court system and one of the first to be appointed a regular member of a Korean law faculty. He is known for his aggressive advocacy and proactive street-smart advice. Sean is recognized as a top attorney for his work in Asia, and his firm is ranked as a top dispute resolution law firm, with a tier ranking in the leading legal rating services.