[Class Action Introduction?]②Japan, UK, and Germany Impose Scope and Procedural Limits...US Model Is the Most Powerful

US: Comprehensive Class Action Compensation Without Limits
UK: American-Style System Only for Competition Law Cases Like Cartels
Japan and Germany: Liability Determined Through Group Litigation,
Then Individual Claims by Victims
Korea's Securi

The Volkswagen Dieselgate scandal in 2015 (emissions manipulation) is often cited as a clear example of the power of class action lawsuits. At the time, American consumers received compensation ranging from 14.7 billion to 20 billion dollars through class actions. It is known that individual vehicle owners received cash compensation of up to 10,000 dollars (about 12 million won at the time). American investors also filed a class action against Volkswagen and were awarded 48 million dollars (about 6.5 billion won) in damages. This was partly due to the fact that, after the emissions manipulation was revealed, the price of American Depositary Receipts (ADRs) listed on the US stock market plummeted, resulting in investor losses.

Dieselgate erupted when Volkswagen admitted in September 2015 that it had manipulated emissions software in 10.7 million diesel vehicles worldwide. The emissions control device was designed to function properly only when the car detected it was undergoing an emissions test, but not during regular driving, leading to excessive emissions of nitrogen oxides and other harmful substances beyond regulatory limits in real-world conditions.

Following the scandal, Volkswagen faced class action lawsuits in major countries and was forced to pay substantial compensation. In Germany, about 260,000 people participated in the action, resulting in a total payout of 830 million euros (about 1.1 trillion won). In contrast, because Korea does not have a class action system, only some affected car owners pursued individual lawsuits. Although Volkswagen sold 120,000 related vehicles in Korea, only about 2,000 victims filed lawsuits. Even now, more than a decade later, legal battles are still ongoing, and the compensation process is reportedly proceeding slowly.

The Most Powerful Is the American-Style Class Action... Responsibility to Compensate All Victims

According to the legal community on December 24, compared to major advanced economies such as the United States, Europe, and Japan, compensation for domestic consumers in the Korean market is still insufficient. Even in cases involving significant consumer harm relating to life and health, such as the humidifier disinfectant incident in Korea in 2011, recovery for victims has been delayed. According to the 2020 report by the Special Investigation Committee on Social Disasters, 6,817 people reported damage to the Ministry of Environment, of whom 1,553 died. The number of unreported deaths is estimated at 14,000, and the number of people who have experienced health damage is said to reach 670,000.

The United States is the country where the most powerful form of class action lawsuit is actively in operation. Class actions are allowed for any case with a common interest, regardless of the field, and unless individuals file a separate opt-out, the judgment in a class action applies to all members of the class. If the plaintiff wins, it is customary for a relief fund to be created from the defendant company's resources and distributed collectively to all members. Companies facing class actions sometimes file for bankruptcy in court and undergo restructuring to reorganize their business.

Johns-Manville, an asbestos product manufacturer in the United States, is a representative example of a company that went bankrupt due to class action lawsuits. Johnson-Manville, a building materials producer, continued to sell products even after the carcinogenicity of asbestos became known, leading to class action lawsuits. As a result, annual compensation owed to victims reached hundreds of millions of dollars, and the company filed for bankruptcy in 1982. It established a 2.5 billion dollar trust exclusively for asbestos victims, handled compensation separately, and restructured the company to discontinue its asbestos business.

Beyond the US: Europe, Japan, and Other Varied Class Action Systems

In addition to the United States, major countries have opened various avenues for collective consumer lawsuits. However, unlike the American system-where the court's ruling binds "all victims" unless they opt out-these systems are generally less forceful, though they still allow for monetary compensation claims.

In the United Kingdom, the default is that only victims who explicitly participate in the lawsuit are bound by the judgment. However, through the Consumer Rights Act of 2015, the US-style class action was introduced specifically for competition law (antitrust) cases. In cases of collusion or abuse of market dominance, unless victims individually opt out, the court's ruling applies to all victims, just as in the US. The UK is currently considering expanding this opt-out class action system to other areas following public consultation.

Germany, instead of the US-style class action, recognizes collective relief for victims through a "model declaratory action" system. In this system, consumer organizations file lawsuits against companies to determine only the existence of illegal acts and liability, and individual victims need only register, not participate directly. If the court recognizes the company's liability, victims can then choose to file individual lawsuits for damages. This system reduces the burden on consumers to prove illegality and causality against companies, and only those who choose to participate receive compensation, thereby also reducing the burden on companies.

Japan operates a class action system similar to Germany's. Japan introduced its class action system for collective consumer relief in 2013, with implementation beginning in 2016. In the first stage, a consumer organization sues a business operator to establish liability for compensation; in the second stage, victims participate to determine the amount of individual claims.

Only Korea Fights Individually... Humidifier Disinfectant Victims Still Uncompensated

Among the 38 member countries of the Organisation for Economic Co-operation and Development (OECD), only Korea, Switzerland, and T?rkiye lack a system for collective monetary damage claims by consumers against companies. However, Switzerland has a special system that effectively provides results similar to class actions.

Switzerland does not allow traditional class actions, but it recognizes the free transfer of claims for damages, enabling consumers to receive collective compensation. During the Volkswagen Dieselgate scandal, Swiss consumers transferred their compensation claims to an investment fund, which then aggregated and negotiated a large-scale settlement on their behalf.

In contrast, Korea lacks any such collective monetary compensation system. Even in large-scale consumer harm cases, each victim must file an individual lawsuit to receive compensation, resulting in a structure where only Korean consumers are excluded from compensation for global corporate misconduct.

The delay in compensation for the 2011 humidifier disinfectant incident is a prime example. Although a special law enacted in 2017 provided some support for hospital and funeral expenses, corporate liability for damages has still not been determined even 17 years later. The Mediation Committee for Humidifier Disinfectant Victim Relief proposed a final settlement in 2022 (with a maximum compensation amount of 924 billion won for 7,027 victims), but Oxy and Aekyung, the companies responsible for the largest share of compensation, did not agree.

As a result, victims are now proceeding with individual civil lawsuits, and since each victim must file separately, it is difficult to determine the exact scale of the harm. Even if a court recognizes corporate liability in an individual case, it only applies to the plaintiff who filed the lawsuit. Observers note that if Korea had a class action system, tens of thousands of victims could have been covered in a single lawsuit, and liability could have been determined quickly. The longer individual lawsuits drag on, the harder it becomes to prove scientific causality, and companies gain an advantage by responding to dispersed lawsuits over time.

Yonhap News Agency