Democratic Party to Ease Pre-Regulation on Companies and Strengthen Post-Responsibility Enforcement

Rep. O Gi-hyeong Proposes Punitive Damages and Class Action Bill "Starting Point for Paradigm Shift"

Lee Nak-yeon, leader of the Democratic Party of Korea, is preparing for a meeting at the Untact Lawmakers Workshop held at the National Assembly on the 17th. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Park Cheol-eung] As a prerequisite for easing preemptive regulations on companies, the ruling party is pushing a bill that strongly holds companies accountable after the fact through punitive damages and class-action lawsuits if illegal acts are detected. The aim is to shift to an advanced country-style regulatory paradigm and create an environment conducive to creative corporate activities.

On the 17th, Oh Ki-hyung, a member of the Democratic Party of Korea, announced that he had proposed a punitive damages bill requiring companies to compensate victims of malicious illegal acts with three times the amount of damages or the greater amount between the illegal gains and damages, as well as a class-action lawsuit bill necessary when multiple victims arise from illegal acts.

Oh cited socially controversial cases such as the humidifier disinfectant incident, Volkswagen emissions manipulation, radon mattresses, massive personal information leaks from credit card companies, and fake Baeksuo. He pointed out that companies are passive in identifying causes and compensating damages, while victims face difficulties due to litigation costs and other burdens.

Previously, Park Joo-min of the Democratic Party also proposed a punitive damages bill holding liable for twice the amount of damages in cases of intentional or gross negligence causing harm to others, along with a consumer rights protection class-action lawsuit bill. Additionally, Jeon Hae-cheol of the same party proposed a class-action lawsuit bill related to fair trade, and Lee Hak-young introduced a consumer class-action lawsuit bill.

In June, the Democratic Research Institute, a think tank of the Democratic Party, and the Democratic Judicial Reform Lawmakers' Group hosted a seminar on punitive damages and class-action lawsuits. Professor Kim Je-wan of Korea University Law School, who presented at the seminar, stated, "Despite having these two systems, the United States operates global companies well while also protecting consumer rights."

Oh said, "Calling punitive damages and class-action lawsuits corporate harassment is irresponsible," adding, "If there are many preemptive regulations, creative ideas cannot emerge. To enhance corporate autonomy and competitiveness, preemptive regulations should be eased and post-regulations should be strictly enforced." He further noted, "(These two bills) are not new regulations but essential risk management tools for a paradigm shift in regulation."

This is also explained as a starting point for regulatory easing. Oh stated, "Only by firmly holding companies accountable and alleviating public concerns can discussions on regulatory easing become active," and added, "The passage of these two bills can be an opportunity to persuade those opposing regulatory easing."

These two systems were pledged as campaign promises by former President Park Geun-hye during the 2012 presidential election under the banner of economic democratization but were not implemented after her election. Kim Jong-in, the emergency committee chairman of the People Power Party, recently mentioned in an interview with Asia Economy, "We cooperated during the presidential election because she promised economic democratization, but she erased all those promises." The People Power Party reflected economic democratization in its fully revised platform and policies earlier this month. Regardless of opposition from the business community, the party plans to assess the necessity, drawing attention to what stance it will take on punitive damages and class-action lawsuits.