KCCI "Legislative Push for Expansion of Class Action and Punitive Damages Laws Must Be Fully Reconsidered"

[Asia Economy Reporter Kiho Sung] Regarding the government's formal legislative notice on the 28th to expand the introduction of the class action system and punitive damages by amending the Class Action Act and the Commercial Act, the Korea Employers Federation (KEF) argued that "at this stage, the legislative promotion of the proposed bills should be reconsidered entirely."

In a statement released that day, KEF said, "Although the two bills are intended to establish legal measures for the efficient remedy and prevention of damages caused by intentional or grossly negligent commercial acts by companies, from the companies' perspective, if related lawsuits are filed, due to the complex and broadly disputable nature of such cases, they will bear enormous litigation burdens in terms of time and cost, which could lead to irreparable managerial damages. Given the persistent issues of black consumers and malicious legal brokers in Korea's consumer and litigation sectors, lawsuits will be rampant, and even the filing of planned lawsuits will severely damage corporate images beyond what companies can endure," expressing these concerns.

Furthermore, KEF stated, "In Korea, a civil law country, damage cases arising from commercial transactions are based on administrative sanctions such as fines and criminal penalties. Introducing punitive damages through civil class actions from the Anglo-American legal system, as proposed in these bills, will increase conflicts and confusion within Korea's legal system. Especially since companies are currently in a desperate situation trying to survive the management and employment crises caused by the COVID-19 pandemic, it is bewildering and difficult to understand why these bills, which could cause unpredictable litigation and economic burdens on companies, are being pushed forward suddenly in addition to the amendments to the Commercial Act and the Fair Trade Act that strengthen corporate governance regulations," KEF emphasized.

KEF also added, "Currently, consumer and business partner protections against damages from commercial transactions are guaranteed at a high level under about 20 different laws, including the Product Liability Act and the Automobile Management Act. Therefore, the introduction of systems implemented only in some advanced countries such as the United States and the United Kingdom should be reviewed in the mid to long term. It is desirable to conduct in-depth research and national discussions on industrial impacts and legal aspects after our economy and consumer culture have sufficiently developed to handle such systems," they argued.