[Is the Class Action System Coming?]①"Was There No Class Action?"...Class Actions Confused with Joint Lawsuits

In Korea, Class Actions Are Exceptionally Allowed Only for 'Securities'
Most Consumer Damage Cases Proceed as 'Joint Lawsuits'
Compensation Is Limited to Those Who Participate in the Lawsuit
Weak Incentives for Companies to Compensate in Sm

"Economic sanctions are so weak that violations occur routinely, and it seems that companies are not concerned even after violations take place. Companies must be made to realize that causing harm to the public could lead to their downfall. Currently, every citizen is a victim, yet compensation is only possible if each individual files a lawsuit. The introduction of a class action system should be considered."

This is what President Lee Jaemyung said during the Personal Information Protection Commission's work briefing on December 12. Recently, large-scale personal information leaks have occurred at companies such as SK Telecom and Coupang, but it is difficult to find cases in Korea where victims have received compensation through lawsuits. This is because the class action system is permitted in Korea only in a very limited way, and only in securities-related cases.

A class action is a system in which, if some victims file a lawsuit and win, the effect of the ruling is extended to all other victims who did not participate in the lawsuit, allowing for collective compensation. In Korea, most of the large-scale lawsuits that have taken place in the wake of consumer damage incidents are 'joint lawsuits,' in which only those who actually file the lawsuit receive compensation.

Differences Between Joint Lawsuits, Class Actions, and Representative Actions

According to the government and legal community on December 23, the large-scale lawsuits underway following Coupang's personal information leak are joint lawsuits under the Civil Procedure Act, which are different from class actions. One must be named as a plaintiff in the lawsuit to benefit from the court's ruling. The problem is that in cases where the amount of damage is small, there is little practical benefit compared to the cost, so few people actively participate in lawsuits. Even if plaintiffs win in court, the benefit they receive is relatively small, making it difficult to justify paying high attorney fees and engaging in a lawsuit that could last several years. This is why the need for class actions is raised whenever incidents involving damage to large numbers of consumers occur.

There is a type of representative action in Korea that allows people who have not filed a lawsuit to benefit from the court's decision. However, victims cannot be direct parties to the lawsuit, nor can they receive monetary compensation. The Framework Act on Consumers and the Personal Information Protection Act stipulate that only third-party organizations representing the interests of victims can be parties to such lawsuits on their behalf. Additionally, claims for damages are not permitted, and these lawsuits are limited to seeking the prohibition or cessation of rights violations. This means that the system has clear limitations as a practical means of remedying damages.

In Class Actions, If the Lead Plaintiff Wins, 'All Victims' Receive Compensation

Following Coupang's large-scale personal information leak, calls to introduce a class action system in the area of personal information infringement are growing. The class action system allows a portion of victims to file a lawsuit, and if they win, the effect of the ruling applies to all victims, ensuring full compensation. Countries such as the United States and the United Kingdom have adopted class action systems. In Korea, the class action system has been implemented only in the securities sector since 2005. The 'Securities-Related Class Action Act' was enacted in 2005 to efficiently provide remedies for those harmed by events such as false disclosures and market manipulation.

Under the class action system, unless individual victims file a separate exclusion notice (opt-out), the effect of the lead plaintiff's lawsuit applies to all members of the group. There is no need to recruit every participant in the lawsuit, and a single ruling can provide broad relief. The United States is a country where this opt-out type of class action is actively practiced. The United States does not limit class actions to specific sectors, so companies that lose class actions may face massive compensation or settlement payments, which can weaken their management or even lead to bankruptcy. Nevertheless, class actions are recognized as necessary because they have a significant preventive effect by encouraging companies to strengthen product safety standards and improve information disclosure, and they reduce the waste of judicial resources by consolidating numerous related claims into a single lawsuit.

Harold Rogers, the new CEO of Coupang, appeared at the hearing on Coupang's breach incident held on December 17 at the National Assembly's Science, ICT, Broadcasting and Communications Committee, responding to lawmakers' questions. 2025.12.17 Photo by Kim Hyunmin

Attempts to Expand Class Actions Beyond Securities Have Failed Repeatedly

In Korea, there have been repeated calls to expand the scope of class actions, but these efforts have not produced results due to opposition from the business community. After former President Moon Jaein, who pledged to introduce a class action system during the 2017 presidential election, was elected, then-Fair Trade Commission Chairman Kim Sangjo announced plans to pursue its introduction. The Fair Trade Commission released a work plan stating the need to introduce class actions in areas such as the Act on Fair Labeling and Advertising and the Product Liability Act. In 2020, the Ministry of Justice also pre-announced legislation for an act to introduce class actions in all sectors. In the 22nd National Assembly, bills such as the 'Class Action Act' (sponsored by Assemblywoman Baek Hyeryeon), the 'Consumer Class Action Act' (Assemblyman Park Jumin), and the 'Personal Information Class Action Act' (Assemblyman Jeon Yonggi) were proposed and are currently pending, all aiming to introduce class actions for all types of consumer damage, including personal information breaches.

Of course, even if the class action system is fully introduced, it is not necessarily the case that relief for victims will be efficient and widespread. If the conditions for filing a lawsuit are too strict, the practical benefits may be limited, and class actions may not be actively pursued. In fact, after the securities class action system was introduced in Korea in 2005, the first lawsuit was not filed until 2009. Since then, as of July this year, only about 12 class action cases have been filed, with only 2 resulting in substantive rulings and 4 ending in settlements. Even accounting for population differences, this is much lower than the 211 securities class actions filed in U.S. federal courts in 2021 alone.

Securities Class Actions: Effectively a 'Six-Tier Trial System'

In Korea, the requirements for class actions are extremely strict. Eligible cases are limited to: ▲inadequate disclosure in securities registration statements and other primary market documents; ▲inadequate disclosure in business reports and other secondary market documents; ▲insider trading and market manipulation; and ▲illegal acts by auditors. The requirements to be recognized as a class eligible to file a lawsuit are also demanding. At least 50 people must participate, and at the time of the act, the total securities held by the group must be at least one ten-thousandth of the total issued shares of the defendant company. In addition, the key legal and factual issues must be common to all members, and it must be proven that a class action is a more efficient remedy than individual lawsuits.

Even if these requirements are met, the case does not proceed directly to the merits. Before hearing the case, the court first determines whether to grant permission for the lawsuit, and both the permission decision and the ruling on the merits can be appealed up to three times each. Since companies can immediately appeal and re-appeal the court's decision to grant permission, it can take several years just to determine whether the lawsuit can proceed. In reality, this means the system operates as a 'six-tier trial system.'