Korea Update: Recent Amendments to the Act on Private International Law

The National Assembly’s Recent Resolution

On December 9, 2021, the National Assembly voted on a bill for an entire amendment of the Act on Private International Law (“APIL”) of the Republic of Korea (“Korea”). The outcome was a landslide in favor of its passage, as 217 out of 218 seated members (among 295 enrolled National Assembly members in total) voted in favor of the amendment, with 1 abstention. But what exactly, one might wonder, did they vote on? In short, the APIL is a Korean statute providing a set of legal principles which determine (i) the jurisdiction (i.e., which country’s courts are entitled to exercise jurisdiction over a case) and (ii) the governing law (i.e., which country’s laws are applicable to a case) regarding any legal relationships that contain “foreign” elements from a Korean court’s perspective.

Initially called the Conflict of Laws Act, the title of the statute was amended to the “Act on Private International Law” in 2001, along with the introduction of detailed rules for designating the governing law of disputes falling under the statute’s scope. The earlier version of the statute, however, stipulated only a single broad principle with respect to determining international jurisdiction. Accordingly, it was criticized for being somewhat imbalanced and ambiguous.

In order to address that issue and others, this amendment bill revised 7 articles already in place in the APIL and added 35 new articles which provide detailed rules for Korean courts to rely on when deciding whether international jurisdiction exists. Now that it has been approved by the National Assembly, the bill will be transferred to the Korean Government and promulgated once approved by the President. The revised APIL will be enacted six months from the date of promulgation. To minimize confusion, the amendment bill also states that the previous provisions will continue to apply to pending cases as of the effective date of the amended APIL.

Key Changes in the Amendment Bill of the APIL

Among other things, the revised APIL specifies the standard of “substantial relevance,” which is a notion frequently invoked in connection with international jurisdiction. It further includes general provisions related to international jurisdiction such as (i) general jurisdiction, (ii) special jurisdiction based upon the seat of office or business place, (iii) jurisdiction for counterclaims, (iv) jurisdiction by agreement and/or pleadings, and (v) exclusive jurisdiction. In addition, the amendments seek to improve stability and predictability of the system by introducing specific regulations on international jurisdiction for different case types such as claims, intellectual property rights, family/inheritance, and maritime jurisdiction.

(1) Specification of the Principle of International Jurisdiction

The current APIL stipulates that there must be a “substantial relationship” between the subject of the dispute and Korea in order for Korean courts to validly recognize and exercise international jurisdiction over legal relationships with foreign elements. However, the APIL does not define the term “substantial relevance” itself. Naturally, there had been a need to clarify its meaning. To address this issue, the amendments added specific guidelines to the general rule that courts must “promote fairness between the parties, equity of the trial, swiftness and economy,” which Supreme Court precedents have presented as the criteria for judging substantive relevance.

(2) Establishment of Basic Rules for Determining International Jurisdiction

As noted above, the amendment bill contains provisions regarding general jurisdiction, jurisdiction by agreement, and exclusive jurisdiction. These general principles are intended to help courts determine international jurisdiction. The bill also provides that special circumstances (e.g., location of office/ place of business, location of property, existence of a related claims or counterclaim, etc.) can be considered in this decision-making process. To be more specific, the amendments allow Korean courts to exercise international jurisdiction in lawsuits filed against a person, corporation, or organization, if a party’s main office, place of business, the seat specified in the articles of incorporation, or the center of business is located in Korea (general jurisdiction). The amendment bill also allows parties to agree to international jurisdiction (jurisdiction by agreement) and stipulates the requirements for the parties’ agreement on a forum to be held valid. Furthermore, the amendment bill stipulates that where it would be inappropriate for a foreign court to exercise jurisdiction because of a matter’s close nexus to Korea (such as the matter being related to real property located in Korea), only Korean courts may exercise jurisdiction (exclusive jurisdiction). Additionally, the amendments include regulations on parallel proceedings in international litigation, non-exertion of international jurisdiction where necessary to reasonably distribute international jurisdiction, and provisions regarding international jurisdiction over conservatory measures and non-litigation cases, all for the purpose of fully fleshing out the factors courts should take into account when determining international jurisdiction.

(3) Detailed Rules for Determining International Jurisdiction over Specific Types of Lawsuits

The amendments also introduce new provisions regarding international jurisdiction over cases in relation to intellectual property, as well as marriage and family law, in order to reflect real life social changes that have taken place in recent years such as the drastic increase in international transactions and the prevalence of multicultural families.

The amendments especially stipulate detailed rules that courts must consider in determining whether international jurisdiction exists over specific types of lawsuits (e.g., cases related to the declaration of disappearance of a person, employees, contracts and/or infringement of intellectual property rights, contracts and/or torts, family law/inheritance, bills and checks, maritime, etc.).

In this manner, the recent amendments to the APIL, which are expected to be finalized and enacted, have implemented a number of international norms on international jurisdiction as well as specific regulations, both of which had been lacking compared to the corresponding laws of other countries, and significantly augmented several provisions that were originally ambiguous.

In particular, the amendments provide tailored standards for determining international jurisdiction in disputes involving foreign elements based on their specific types, and clarify in which cases Korean courts can validly exercise jurisdiction. If the amendments are implemented as scheduled, litigants will be able to accurately predict whether Korean courts will exercise international jurisdiction over international disputes, while the courts themselves will be better equipped to handle such international disputes more efficiently. Therefore, the amendments should be a sign of good things to come for the future of international dispute resolution in Korea.

By Yulchon, Korea, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact korea@transatlanticlaw.com 

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