Korea: International Litigation Of Product Liability Claims
PRODUCT LIABILITYInternationalLitigation of ProductLiability ClaimsKoreaBy Paul V. Majkowskiand Lawrence S. HanAs the prevalence ofinternational productliability litigation is likelyto expand, practitionersshould be aware ofthe substantive andprocedural differencesin the laws of the U.S.and the foreign venue.With the ever- increasing global economy and the development of more vigorous tort systems (and plaintiffs’ bars)in foreign jurisdictions, the opportunity for Americancompanies to be litigating product liability claims inthose jurisdictions seems apt to increase,as well as for foreign manufacturers to litigate in the United States courts. These scenarios might also become more prevalentas a result of recent case law restricting theU.S. courts’ exercise of personal jurisdiction, such that foreign plaintiffs might onlyhave recourse in their home venue. Suchlitigations raise a number of issues for thedefense of such claims, including substantive differences in product liability law, divergent approaches to discovery, motionpractice, the acceptance and reliance onexpert testimony, and contrasts in the trialconducted in a civil law jurisdiction from ajury trial. A U.S. litigator and client shouldbe wary of the distinctions and procedurallimitations in the foreign proceedings, andvice versa—that a foreign entity being represented in U.S. proceedings might be unfamiliar with the breadth of proceedings,particularly in terms of discovery and motion practice. Finally, in litigating in a foreign venue, strategic consideration willneed to be given to balancing adherence tolocal practice and nevertheless making anappropriate record for the possible recognition and enforcement of a foreign judgmentin the party’s home jurisdiction in the eventof a result in favor of the plaintiff.In this article, we use the legal systemof South Korea as an exemplar for examining these comparative product liability litigation issues. First, we provide backgroundon the South Korean economy and circumstances conducive to an expansion of suchcross- border product liability litigation, andon the South Korean legal system. Second,we explore some of the basics of substantiveproduct liability law in South Korea. Third,we examine some of the key procedural differences to be encountered in a product liability litigation. Fourth, we comment on thepotential recognition scenarios and strategythat arise out of litigation in a foreign venue.South Korea Economy andTrade with the United StatesSouth Korea is now one of the world’s leading economies and a significant tradingPaul V. Majkowski is a partner and Lawrence S. Han is an associate in the Product Liability and Toxic TortGroup of Rivkin Radler LLP in New York City, and they have experience litigating product liability issues inthe Korean courts. Mr. Majkowski is a member of DRI’s Product Liability and Toxic Tort and EnvironmentalLaw Committees. 74 For The Defense November 2014 2014 DRI. All rights reserved.
partner of the United States. While SouthKorean had a GDP similar to poorer countries of Africa and Asia at the aftermathof the Korean War, by 2004, South Koreajoined the trillion- dollar club of worldeconomies, and today, it is the world’s 12thlargest economy. -factbook/geos/ks.html.South Korea’s largest product sectorsinclude: semiconductors, telecommunication equipment, motor vehicles and autoparts, computers, displays, home appliances, steel, ships, and petrochemicals.In March of 2012, the long- negotiatedFree Trade Agreement between the UnitedStates and South Korea (KORUS FTA) became effective. The KORUS FTA eliminated tariffs on 95 percent of goods betweenthe countries within five years, and became the largest U.S. trade pact since theNorth American Free Trade Agreementwith Canada and Mexico in 1994. http://seoul.usembassy.gov/p rok fta 100311a.html. Inthe past two years, South Korea became thesixth largest trading partner of the UnitedStates with 104 billion in total (two ways)goods traded. http://seoul.usembassy.gov/prok fta 031514.html. According to the U.S.Census Bureau, in 2013, U.S. exports to Korea totaled 42 billion, while U.S. importsfrom Korea totaled 62 billion. .html.With further eliminations of tariffs, thetwo countries’ economic synergy will onlybecome stronger. As U.S. businesses sellgoods and services to South Korea and viceversa, both American and Korean businesses will expand into each other’s countries. Inevitably, with this integration ofeconomies, both countries’ businesses willbe subject to the laws of the respective hostcountry, and thus, businesses and theirlawyers should be familiar with the different legal restrictions and liabilities.Korean Judicial Historyand Court SystemIn contrast to the United States, SouthKorea follows a civil law system. Following 35 years of Japanese occupation, during which Japanese law governed, and theensuing Korean War, South Korea neededto establish and bolster its own judicialsystem. In developing its legal system,South Korea drew from the experiencesof other nations and reformed such les-sons in its own context. In July 1, 1960, theKorean Civil Procedure Act (KCPA) wasenacted, and since its enactment, it hasbeen amended 14 times. The KCPA primarily governs civil procedure in Korean judicial cases. However, as supplemental rulesto the KCPA, the Supreme Court of Koreaalso promulgated the Rules of Civil Procedure (RCP).The Korean judiciary is structured intothree tiers: (1) the district courts, which arethe courts with general jurisdiction; (2) theintermediate appellate high courts; and(3) the Supreme Court, which is the highest court in the country with final appellate jurisdiction.The district courts are courts of thefirst instance that retain general originaljurisdiction over most matters. There are13 district courts throughout the country, each of which adjudicates their respective geographical area. While in principle,a single judge is supposed to preside over acase, cases where claims exceed 100 million Won (approximately 100,000 USD)requires that a panel of three judges adjudicate the matter.There are five high courts nationwide,located in major cities of Korea—Seoul,Busan, Daegu, Gwangju, and Daejun. Thehigh courts only adjudicate appeals fromjudgments rendered by a panel of threejudges, and the appeals from judgmentsrendered by a single judge if the disputedamount is over 50 million Won (approximately 50,000 USD). In appeals fromjudgments rendered by a single judge belowthe 50 million Won/ 50,000 threshold,such appeals are heard by the district courtwith an appellate panel.The Supreme Court of Korea is the courtof last resort. It is composed of 13 justices, led by a Chief Justice. Unlike U.S.Supreme Court procedure with respect tocertiorari, appeals to the Korean SupremeCourt are as of right, although the KoreanSupreme Court will generally rule only onlegal issues and may provide a summarydisposition of an appeal. Under the CourtOrganization Act, cases are generally adjudicated by a panel of four Supreme CourtJustices except for cases involving the following situations, which are heard beforethe en banc court: (i) the order appealedfrom violates the Constitution; (ii) the newdecision would modify a prior SupremeCourt’s ruling, order, or interpretation; or(iii) the matter of substantial importanceto warrant en banc determination. CourtOrganization Act, Act No. 9940.While the Korean judiciary system doesnot follow the common law theory of staredecisis, Supreme Court decisions do tendto strongly influence decisions by lowercourts facing similar cases.In contrast t o the UnitedStates, South Korea followsa civil law system.Korean Product Liability ActProduct liability law in Korean is generally governed by the Product Liability Act(PLA), which by its terms applies to products manufactured after the effective dateof July 1, 2002. The translated text of thePLA is provided in the sidebar. Claimsfor latent injuries arising out of allegedlydefective products manufactured prior tothe PLA’s effective date generally wouldfall under a tort action under Article 750of the Korean Civil Act (KCA), which provides that any person who causes damage or injury on another by an unlawfulact, intentionally or negligently, would beliable for the damages caused onto suchperson. The KCA typically imposes the burden of proof on the plaintiff as to the existence of a product defective and causation,although certain Korean court precedentshave suggested or provided for the shiftingof the burden of proof to the product manufacturer. Legislation to amend the PLA toshift the burden of proof to the manufacturer has been introduced in the KoreanNational Assembly, but such amendmenthas not yet been passed.Burden of Proof and CausationAlthough the KCA generally places theburden of proof on the plaintiff asserting atort claim, that burden has been relaxed orshifted to the manufacturer in cases involving products in some court decisions. Therationale for this relaxation of the burdenof proof is that such burdens are inherentlydifficult to prove based on the technical naFor The Defense November 2014 75
PRODUCT LIABILITYKorean Product Liability ActArticle 1 (Purpose)The purpose of this Act is to prescribe the responsibility of manufacturers of products for compensation for injury caused by defects intheir products in order to protect the interests of the injured, therebycontributing to the enhancement of the quality of people’s lives andsound development of the national economy.Article 2 (Definitions)The definitions of terms used in this Act shall be as follows.1. “Product” means a manufactured or processed movable property, including cases in which it is part of another movable orimmovable property.2. “Defect” means a flaw or a lack of reasonably expected safetyin the manufacture, design, or labeling of a product as specifiedin the following subparagraphsa. “Defect in Manufacture” means a flaw in the manufacture ofa Product, which makes the Product different from the way itis designed, thereby making it unsafe, regardless of the carethe manufacturer has taken in the process of manufacture.b. “Defect in Design” means a flaw in the design of a Product,which the manufacturer could have avoided by adopting asafer design, thereby preventing or reducing harm or injurythe Product has caused.c. “Defect in Labeling” means a failure on the manufacturer’spart to provide adequate descriptions, directions, or warnings that could have prevented or reduced the harm or injurythe Product has caused.3. “Manufacturer” means either of the following.a. a person who receives income from manufacturing, processing, or importing Productsb. a person who has listed himself/herself on the Product byway of a name, business title, or trademark as a persondefined by item (a) or who has used such indications to misrepresent himself/herself as a person defined by item (a)Article 3 (Product Liability)(1) A Manufacturer shall be liable to compensate for any injury thathis/her Product has caused to the lives, bodies, or property ofits users.(2) In case the manufacturer of a Product is unable to be located,the person who has supplied the Product to a person injuredby the Product either by selling or renting it shall be liable forcompensation for injury under paragraph (1) if the supplier hasfailed to provide the injured party or his/her legal representativewith information that he/she has about the manufacturer of theProduct or a person who supplied the Product to him/her for aconsiderable period of time.Article 4 (Liability Exemption)(1) A Manufacturer who is liable for compensation for injury underArticle 3 shall be exempted from the liability if he/she provesone of the following facts.76 For The Defense November 20141. that the Manufacturer has not supplied the Product inquestion2. that the Manufacturer could not have discovered the Defectin question with the scientific and technological knowledgeavailable at the time of the supply of the Product3. that the Defect in question is attributable to the statutory criteria the Manufacturer complied with at the time of the supply of the Product4. that, in case the Product in question is a raw material or apart, the Defect in the Product is attributable to a flaw in themanufacture or design of another Product that has used theraw material or part(2) A Manufacturer liable for compensation for injury under Article3 shall not be able to claim exemption from the liability underparagraph (1)-2 or -4, if the Manufacturer has discovered theDefect in the Product after supply but has failed to take appropriate measures that could have prevented injuries caused bythe Defect.Article 5 (Collective Liability)If 2 or more parties are liable for compensation for the same injurycaused by a Product, all parties shall be collectively liable for thecompensation.Article 6 (Limitations on Escape Clauses)Any contract that excludes or limits a Manufacturer’s liability forcompensation for injury prescribed by this Act shall be null and void;provided that this provision shall not apply when such a contract concerns a Product that is supplied to a person who intends to use theProduct for commercial purposes.Article 7 (Statute of Limitations, etc.)(1) The statute of limitations for an injury claim under this Act shallend 3 years after the day on which the injured party or his/herlegal representative discovered the person liable for compensation for the injury.(2) The statute of limitations for an injury claim under this Act shallend 10 years after the day on which the Product responsible forthe injury was supplied; provided that, in the case of an injurywhich results from an accumulation of a harmful substance inthe human body or symptoms appearing after a certain dormantperiod, the statute of limitations time period shall begin on theday the injury is discovered.Article 8 (Application of Civil Act)The Civil Act shall apply to matters concerning liability for compensation for injury caused by Defects in Products other than those prescribed in this Act.Act No. 6109.
ture and, given the respective posture of theparties, i.e., a single consumer on one sideand a large manufacturer on the other, theplaying field should be leveled in favor ofthe plaintiff consumer so that they mighthave their day in court. A factor likely playing into this rationale is that, in contrastwith the extensive use of party experts inU.S. tort litigation, the Korean system traditionally has not focused on party experts,and, thus, a plaintiff would be presumed notto be so equipped to make complex, technical proofs. As the Korean bar and courtsgain greater experience with complex product defect and toxic torts, we might see thedevelopment of greater emphasis or allowance of party experts (as opposed to court- appointed experts, as discussed below).Korean Litigation Practiceand DevicesIn this section, we try to highlight some ofthe practical issues associated with Koreanlitigation and the significant distinctionswith U.S. practice.Multiple ClaimantsWith respect to multiple claimants alleginginjuries from the same product, note thatKorean procedure does not allow for classactions. Class actions are available for certain claims related to securities and otherconsumer protection matters, but not forproduct liability or any other tort claims.Thus, a multiple claimant product liabilitycase would simply be a consolidation ofplaintiffs. Although the district courts havebroad discretion as to the management oflitigation, the use of devices such as casemanagement orders, bellwether plaintiffs,Lone Pine orders, and the like, have notbeen developed and utilized by the Koreancourts. As discussed below, a U.S. manufacturer defending a claim in Korea mightseek to introduce and implement suchdevices (as well as, for example, seekingbroad discovery), and essentially turn thelitigation into a U.S.-style litigation, bothto present its case most effectively and tomake a due process record for a later recognition scenario. How and how much aU.S.-based defendant might press is a matter of strategic balance, with the foregoingnotions weighing against possibly offending the court by the suggestion that its procedures are inadequate.TrialThe “trial” in Korea is quite dissimilar to aU.S. trial. There are no juries in civil matters, and the Korean trial does not involvethe presentation of live witnesses and evidence over the course of consecutive daysor weeks. Rather, in the typical proceedings, the parties will make a number ofexchanges of briefs, after which the presiding judge will schedule a preparatoryhearing. This process of briefing and preparatory hearings, during which the courtwill determine the issues in dispute andperhaps explore settlement, will continueuntil the presiding judge sets a date for amain hearing.The main hearing will ordinarily consistof a series of short hearings during whichthe court receives further written submissions, arguments, and potentially somelive testimony. The trial court will closethe hearing once it determines that it hasreceived and reviewed sufficient information to render its judgment.While the Korean court system and procedures are designed to be more inquisitorial in nature than adversarial, judges areencouraged to play a passive role. However,as there are no jury trials in civil actions,the judges’ act as triers of facts and law.Judges are also provided with discretionary authority to order a case be settled in aconciliation proceeding before a committee. In the event that the case cannot beconciliated, the judge may render a rulingthat he or she deems reasonable after considering the merits of both sides. The roleof lawyers is to represent the parties in thejudicial proceedings of a case. The lawyersplay a primary role, determining the beginning, subject- matter, and the terminationof proceedings, as well as presenting factsand evidences to the court.DiscoveryIn contrast to U.S. procedure, Korean procedure does not provide for extensive, pretrial discovery. Discovery is conducted ona limited basis, and requires a court order.The parties do not have a general obligationto submit documents adverse to their interests. Rather, a party needs to apply to thecourt to compel the person or entity possessing documentary evidence to producethe document or record to the court. Suchapplication for the document may be madewhen (i) the opposing party referenced thedocument during trial and is in possession,(ii) the applicant has a legal right to inspectthe document, or (iii) when the requesteddocument was prepared for the benefit ofthe applicant. If the holder of the document refuses to comply with the court’sdocument production order, the court mayadmit the claims of the other party in theWhile the Korean courtsystem and proceduresare designed to be moreinquisitorial in naturethan adversarial, judgesare encouraged toplay a passive role.document to be true under Article 349. Theholder may also be subject to fines (Article351, 318, 311(1)).Discovery is an area of concern whenrepresenting a Korean entity in a U.S. proceeding because, based on the lack of discovery under the Korean law, the entitymight be reticent in providing documents,or having effectively retained documentsor evidence in the first instance. Spoliationissues might arise in this context.Motion PracticeWhile there is interaction with the Koreancourts via the preparatory hearingsdescribed above, there is not U.S.-stylemotion practice in Korea to receive interimrulings and relief, e.g., motions to dismisscertain causes of action, motions for summary judgment, etc. Instead, the courtwill ordinarily address all of the issues inits judgment at the conclusion of the case.ExpertsThe use and reliance on party experts ispermitted in Korean proceedings, althoughthe practice is not as evolved as in the U.S.system and party experts might tend t
Group of Rivkin Radler LLP in New York City, and they have experience litigating product liability issues in the Korean courts. Mr. Majkowski is a member of DRI’s Product Liability and Toxic Tort and Environmental Law Committees. Korea International Litigation of Product Liability Claims those jurisdictions seems apt to increase,
·Hyun Chang Lee, Wonkwang University, Korea ·Chul Hong Kim, Chonnam National University, Korea ·Seong Kwan Lee, Kyunghee University, Korea ·Jung Man Seo, Korea National University of Welfare, Korea ·Jun Hyeog Choi, Kimpo College, Korea ·Young Tae, Back, Kimpo College, Korea ·Kwang Hyuk Im, PaiChai University, Korea
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