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A blog referred to me by the China Law Blog has a wonderful post on Developing Trust in China by Building Trustworthy Systems/Processes.  The same advice given in this blog post is relevant to work done in Korea, Southeast Asia, China and even the West.  We believe that the verification of the developing and implementation of these system is, often, necessary before building a joint venture relationship with a Korean company.

The value of building systems is not to be underestimated in Korea.  Koreans, in most respects, are wonderful at performing tasks that are well dictated and explained. While in the West, we often appreciate more autonomy and, often, don’t strive when systems are too rigid. In the East, many strive on ordered guidance.

My law firm often works with business consultants to assist client in implementing systems that reward following these systems/processes.

These “systems” are, often, incorporated by reference into our joint venture, OEM and other agreements in Korea.

Don’t jump into a Joint venture relationship or other relationship, in Korea, before considering the development of verification, quality assurance, logistic and like systems.

The article from the All Roads Lead to China Blog notes emphatically that:

Systems that can, regardless of human ignorance, greed, inaction, confusion or incompetence, remove the downside risks that comes with the human element of any process. Systems that at the heart of it, are established to minimize human impact, alert system operators (buyers/ clients) of a failure, and provide the data necessary to make changes to the system (human or mechanical). For me this is a system, as basic as it is, that allows for the most protection for a firm who is engaging with any external party, and in a way where “trust” isn’t an issue.

The post Building Systems Before JVs in Korea to Build Trust between Partners appeared first on The Korean Law Blog.

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The following post considers some of the basics of contract drafting in South Korea. The following post is meant to be, only, a basic explanation of the basics of a good Korean contract based on a few observations. This post is not meant to be an exhaustive explanation of this issue, books have been written on contract drafting and we will not be drafting a book with this post.

The main purpose of drafting a contract is to avoid a dispute. This article and a great Korean-experienced lawyer with an understanding of business in Korea and your industry should assist you in avoiding a legal dispute in Korea.

Basics Considerations Before Signing a Contract in Korea

  1. Contract Clarity.  We see all too often, Korean contracts that lend themselves to unnecessary ambiguity. In some cases, ambiguity may be a benefit to our clients doing business in Korea, but in other cases, ambiguity may lead a Korean court to balance its way out of the enforcement of a contractual obligation by the Korean counter party. Thus, keep contracts clear and consistent.
  2. Defining the Parties. Many Korean companies have capitalized and cash-flush subsidiaries abroad. In many cases, it is easier to enforce a contract in a non-Korean court against a Korean company. Please note, even if the choice of law and jurisdiction is a jurisdiction other than Korea, if the company named in a dispute is a Korean company, the enforcement of the foreign judgment shall require enforcement via a Korean court, since the company’s assets, likely, shall be solely in Korea. Make the signing party a party that you have the highest likelihood of enforcing a judgment against – this may not, necessarily, be the Korean HQ.
  3. Definitions Increase Clarity. To increase contract clarity and, often, consistency, in Korean contracts, while allowing the production of clean, clear and concise Korean contracts – definitions are, often, a key and integral aspect of the document. Never overlook any term of art, ambiguous expression or “obvious” expression or you may have an interpretation battle in a Korean court. Save money and avoid courts.
  4. Korean Language. Make sure your counter party fully understands the contract. Korean courts may invalidate a contract if, among other things, the counter party is considered a less than savvy party that did not fully understand the contract. Thus, in most cases we suggest that a contract is drafted in English and Korean. Normally, we advise that the English language governs the contract.
  5. Contract Dispute Resolution Clauses (Choice of Law/Jurisdiction). In all but the most exceptional of cases, we believe arbitration clauses are advisable – these clauses should be carefully tailored to the specific agreement. Don’t just use a boiler clause and don’t willy nilly choose a jurisdiction. The choice of law is, also, a complex issue and requires the balancing of many issues, including where the contract shall be performed, where it may be breached and if Korean law shall govern, at least, part of the relationship.
  6. Don’t Steal the Work of Others. All lawyers have utilized templates for, at least, some clauses. However, great lawyers know the purpose of these “template” clauses and understand the need to revise many template clauses to fit the specific need. If you do not have significant experience drafting contracts in Korea, do not try to just tweak a contract to save a little money. Trust me, litigation shall cost you much more than a professional drafting a contract for you.

The post Contract Drafting in South Korea appeared first on The Korean Law Blog.

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I have advised, on many occasions, clients to look to Korea for their Asian expansion prior to entering more expensive and difficult Asian markets.  Hey Facebook seems to agree in an article entitled: Facebook uses Korea as Test Bed.

This is a repost of article from nearly five years ago.  China is becoming even more difficult and much of SE Asia is not becoming anymore transparent – Korea is an excellent place to test the Asian waters.

The Korea Herald has an interesting article that quotes the president of Facebook Korea as noting that:

 “Facebook sees Korea as an important country due to its high mobile usage and the presence of global companies like Samsung and Hyundai,” he said. “This makes Korea an important test bed to Facebook (insofar as it is) wishing to be a mobile-first company.”

We, strongly, recommend that all companies consider Korea as a useful “test bed” in determining if Asia shall be a success for your brand, franchise, technology etc.

This advise is, also, the advise of the former head of the European Chamber in Korea that noted in the EU Chamber Infomag in 2011 that: “While the world focuses on the Chinese market, company executives should also try to include Korea in their itinerary whenever they visit this part of the world, because a presence in South Korea is indispensable for truly global brands and could in fact constitute an excellent launching pad to reach the Chinese and Japanese markets.

The post Using Korea as a Test Bed for Asian Expansion: Look to Facebook appeared first on The Korean Law Blog.

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IPG is proud to announce that Sean Hayes is awarded the honor of being one of the Top 100 lawyers working in South Korea by the Asia Business Law Journal. Sean is, also, ranked a top attorney in numerous other leading rankings.

A client noted to the journal that Attorney Sean Hayes is: “proactive, kind and focused on our industry and really got to know our business.” Thanks to the clients that recognize our hard work and thanks to our lawyer and paralegal team at IPG for making me look better than I really am. I am nothing without you.

The Asia Business Law Journal is a leading legal journal dedicated to legal practitioners working in Asia.


Sean Hayes

IPG Legal
Tel: 82 70 7847 9050
Email: SeanHayes@ipglegal.com
Key practice areas: Franchisors; defence companies;
chemical companies; industrials; and startups
Experience
Con. Court of Korea, Research Officer
Kookmin Univ., Law Professor
Seoul National University, Adj. professor
Korea Times, Columnist / Ombudsmen
Seoul National University Law, Ph.D. Cand.
Member, Chartered Institute of Arbitrators
Gerson Lehrman Group, Counsel Member

Sean Hayes is the first non-Korean employed as an attorney by the
Korean courts and one of the first non-Koreans to be a full-time regular
member of a Korean law faculty. Sean is known, over his 16+ years in
Korea, for his aggressive advocacy and candid NY-style street-smart
advice. His firm is renowned for taking on some of the most contentiousmatters in Korea in a non-conflicted and proactive manner. Sean is also
one of the few attorneys in Asia that has experience managing
non-consulting companies. He worked as an interim general manager/HRmanager for oil & gas, newtech, pharmaceutical, franchise and
manufacturing companies. He regularly appears in and is quoted by international media organizations including the NY Times, Wall Street Journal and international law journals. IPG Legal, Sean’s firm, is often chosen
over the ubiquitous Korean law firms when unconflicted and aggressive
representation is essential for success. IPG has been recognized by
numerous legal publications and rating agencies as a leading firm
practicing in Asia.Sean and IPG have successfully assisted in bringing intoAsia numerous brands, oil & gas, manufacturers, defence companies,
real estate, franchises, entertainment and new-tech companies. IPG has,
also, been involved in some of the most noteworthy contentious matters
via arbitration and litigation in Asia.Sean is a regular contributor to the
Korean Law Blog (www.thekoreanlawblog.com).

The post Sean Hayes ranked a Top 100 Lawyer for his work in South Korea by Asia Business Law Journal. appeared first on The Korean Law Blog.

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The amended Korea Commercial Code of 2012 allows majority shareholders with 95% of the shares of a company in Korea, to purchase the shares of the minority for “fair value.”  Thus, allowing a statutory means under Korean Law to squeeze-out a minority shareholder.

Fair value may be determined by the court if the parties are unable to reach an agreement within 30 days of a request by the majority shareholder to purchase the shares of the minority.

We advise that you place a mechanism within your shareholder agreement (if possible) noting the manner of determining fair market value.
___
Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.

The post Minority Squeeze-outs in Companies in Korea appeared first on The Korean Law Blog.

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Korean companies should consider negotiating stipulations to create “probationary periods” at the start of employment to train and assess newly-hired Korean workers.

Often companies wish to evaluate workers over a set period of time after concluding a labor contract to assess the worker’s abilities and intelligence, and to allow the worker time to gain familiarity with the work.  This period of employment is called a “probationary period.”

The practice is relatively unregulated by the government. The Labor Standards Act of Korea provides, among other things, minimum standards for conditions of employment, prohibits discrimination and the use of force or violence against workers.  But, it provides little guidance on regulating “probationary periods.”  The only guidance the Labor Standards Act provides can be found within Article 35, which states that employers do not need to provide 30 day notice of dismissal to workers under a “probationary period” and within Article 77, which protects “workers in training, workers on probation or any other apprentice” from abuse.

Prior versions of the Labor Standards Act once referenced “probationary periods” of three months or less in duration, which led many companies in Korea to conform their internal regulation of worker’s employed to include 3-month “probationary periods.”

However, there is no express prohibition or limitation in Korean Labor Law to this time period.  In fact, the Ministry of Labor stated that “probationary period” are not restricted by time period, and can be adjusted based upon the nature of jobs and within reason.  Thus, “probationary periods” can be longer or shorter than 3 months, or even extended or shortened, depending upon the needs of the company.  However, still the, typical, and most accepted by the Ministry of Labor is a three-month probationary period.

If your company may benefit from instituting a “probationary period” for proper assessment and training, we recommend adding stipulations within your Korean labor contracts setting reasonable time frames that fit your business’s need.  We also recommend specifically setting parameters within your company’s internal rules and regulation so that company and worker clearly understand each other’s expectations within this “probationary period.”

___
Sean Hayes may be contacted at: SeanHayes@ipglegal.com.  Sean is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.  Sean is known for his proactive New York-style street-market advice and his aggressive and non-conflicted advocacy.  Sean works with some of the leading retired judges, prosecutors and former government officials working in Korea.

Sean’s profile may be found at: Sean C. Hayes

The post “Probationary Periods” in Korean Employment Contracts for Newly-Hired Workers appeared first on The Korean Law Blog.

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So you want to sue your Korean doctor in a Korean court?  IPG has handled numerous medical malpractice matters for plaintiffs and defendants of medical malpractice cases in Korea in Korean courts and we were, prior, to having knowledge of the composition of the new Korean Medical Dispute Mediation and Arbitration Agency – were very pessimistic about its usefulness for plaintiffs.

When we first heard about the enactment of the new Korean Medical Malpractice Law we were skeptical if the system would be useful for plaintiffs, since, often, the court and prosecutors are able to assert more pressure on doctors than this type commission and we were worried that this agency would be dominated by doctors.

However, after a discussion with one of the standing commissioners of the Korean Medical Dispute Mediation and Arbitration Agency, who we know well and who we worked with in the past, we have come to realize that the composition of the panel lends itself to providing a fair forum for both doctors and patient plaintiffs.  The Commission is not, adequate for all cases.  Please consult with a Korean medical practice lawyer prior to filing any medical malpractice cases in Korea.

We will be writing more articles on medical malpractice in Korea over the next few weeks.

The post Korean Medical Malpractice Law and the Medical Malpractice Arbitration System: Suing a doctor in Korea appeared first on The Korean Law Blog.

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We wish you a safe and happy holiday season and a healthy and prosperous New Year.

In this time of giving, IPG’s Korean Team has chosen, this year, to assist one orphanage and a foreign migrant woman’s group along with our regular Pro Bono and Bar Association initiatives.   Our attorneys regularly give, also, to a variety of charities of their individual choice.

In this time of need for so many, we encourage researching charities via Charity Navigator and choosing an appropriate charity.

Merry Christmas and a Happy Holidays season.

The post Merry Christmas, Happy Holidays & a Happy New Year from IPG appeared first on The Korean Law Blog.

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Korean companies should consider negotiating stipulations to create “probationary periods” at the start of employment to train and assess newly-hired workers.

Often companies wish to evaluate workers over a set period of time after concluding a labor contract to assess the worker’s abilities and intelligence, and to allow the worker time to gain familiarity with the work.  This period of employment is called a “probationary period.”

The practice is relatively unregulated by the government. The Labor Standards Act of Korea provides, among other things, minimum standards for conditions of employment, prohibits discrimination and the use of force or violence against workers.  But, it provides little guidance on regulating “probationary periods.”  The only guidance the Labor Standards Act provides can be found within Article 35, which states that employers do not need to provide 30 day notice of dismissal to workers under a “probationary period” and within Article 77, which protects “workers in training, workers on probation or any other apprentice” from abuse.

Prior versions of the Labor Standards Act once referenced “probationary periods” of three months or less in duration, which led many companies in Korea to conform their internal regulation of worker’s employed to include 3-month “probationary periods.”

However, there is no express prohibition or limitation in Korean Labor Law to this time period.  In fact, the Ministry of Labor stated that “probationary period” are not restricted by time period, and can be adjusted based upon the nature of jobs and within reason.  Thus, “probationary periods” can be longer or shorter than 3 months, or even extended or shortened, depending upon the needs of the company.  However, still the, typical, and most accepted by the Ministry of Labor is a three-month probationary period.

If your company may benefit from instituting a “probationary period” for proper assessment and training, we recommend adding stipulations within your Korean labor contracts setting reasonable time frames that fit your business’s need.  We also recommend specifically setting parameters within your company’s internal rules and regulation so that company and worker clearly understand each other’s expectations within this “probationary period.”

___
Sean Hayes may be contacted at: SeanHayes@ipglegal.com.  Sean is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.  Sean is known for his proactive New York-style street-market advice and his aggressive and non-conflicted advocacy.  Sean works with some of the leading retired judges, prosecutors and former government officials working in Korea.

Sean’s profile may be found at: Sean C. Hayes

The post “Probationary Periods” in Korean Employment Contracts for Newly-Hired Workers appeared first on The Korean Law Blog.

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My recent essay, “Denuclearization – Korea’s Red Herring,” stirred much discussion. Most reaction was favorable, but there was also some heated controversy. I had a chance to engage at depth with two ambassadors to Korea. Both diplomats were quite familiar, of course, with North and South Korea.

This article is a reposting of an article from 2012, but seems pertinent for, also, today.

I will try to fairly represent both ambassadors’ perspectives since one man was skeptical and the other was encouraging of my ideas. Readers may draw their own conclusions.

The first ambassador is from Eastern Europe. He began his career under a socialist government and is therefore in a privileged position of viewing North Korea both from the perspective of a once sympathetic ally and from what may now be assumed to be a more balanced vantage point. This ambassador’s argument was that my recommended shift in diplomacy attacks the political ideology of North Korea. In any country, he maintained, “that is the last to go.” In other words, my approach would have to be a nonstarter.

And, in general terms, I’m sure he is right. But negotiators have been tiptoeing around Pyongyang’s refusal to accept the legitimacy of South Korea for some 60 years – roughly the time covered by two complete generations. The obvious question is: given the glacial pace of change in the North, shall we allow for three or four generations to pass before the matter is properly addressed? Meanwhile, be it a red herring or not, the North Korean nuclear program will continue to develop “defensive” weapons capable of wrecking global mayhem should matters get desperately out of hand.

Today’s enlightened perspective, held by many, is to recognize that North Korea is changing. The theory goes that constant exposures to the outside reality are needed to eventually cause internal reform. That approach comes across as entirely sensible. But, this same strategy has been tried for multiple decades, and the results have been and continue to be remarkably uninspiring. It is like different nations and organizations have been building bonfires in front, around and on top of a glacier. These fire builders are quick to point out the minor indentations that have melted away. Yet, when these efforts are viewed in their totality, one is likely to ask, “So what?”

Back in the 1960s, ’70s and ’80s, there was merit to the current approach. But, the current strategy, to put it kindly, is getting rather long in the tooth. At the same time, there has been little creativity other than to do the same strategy over and over again.

And, I would guess by now, the North Koreans may have caught on to what the West is really up to. The Germans recently closed their Pyongyang branch of the Goethe-Institut upon realizing that the North Korean authorities were intimidating its citizens from entering those facilities.

Some diplomats may declare: “Small sparks of light are better than none in the darkness!” Perhaps so, but I can’t help wondering who is actually fooling who when one party is controlling the entire game.

Before I move on to the second ambassador, I need to relate that other readers noted that the South has never made any public move to formally recognize the North. But, since the end of the military governments, particularly from the time of Kim Dae-jung, there has been open discussion in South Korea about a federation of two governments on the peninsula, which I assume would require mutual recognition. In earlier times, such discussion would have landed advocates in jail. Today, such ideas are openly aired. All of this suggests much greater flexibility on the part of the South Korea’s government.

I had a long discussion over lunch with another EU ambassador. It turns out he spent several years contributing to the successful Northern Ireland peace accord. While I was aware that the accord took several years of negotiations, I was surprised at how long it took to be fully implemented – almost a decade in fact. In other words, peace building is obviously a very difficult and tedious process, but only when an agreement is signed does the real work begin.

The diplomat cautioned about applying lessons from one conflict to another, but said that there were clear lessons learned from the Northern Ireland peace process. In essence, the Northern Ireland peace process was based on multiple, related negotiation tracks done in full concert with each other. All issues were put on the table and addressed. There were negotiations between Catholics and Protestants; Northern Ireland and the Republic of Ireland; and the U.K. and the Republic of Ireland. The U.S. played a critical broker role as a friend to all parties. In any event, no one negotiation tracks could have ever been truly successful without the successful conclusions of the other two.

In all three tracks, the cornerstones were mutual respect and prolonged meetings leading to personal friendships and empathy, all of which led to mutual acceptance and understanding. But, without achieving these qualities, ancillary issues could not be effectively addressed.

If we may learn from the Irish example, what could be possible?

First, there needs to be an open discussion, such as in forums jointly sponsored by South Korea, the EU and the U.S. to discuss whether a similar approach may work with the North. Rather than focus on resulting issues such as human rights and nuclear proliferation at six-party talks, perhaps multitrack negotiations could be more effective. Confidence building measures would be needed, not least a verifiable freeze on the North Korean nuclear weapons program.

Specifically, there may be the following negotiations: South-North cooperation, which would include humanitarian and commercial matters, bilateral relations, which would address diplomatic and military matters, and Korean foreign relations, which would result in a comprehensive peace treaty involving all parties, including the U.S., the UN, the South and the North. But, it would need to be clear that all three negotiations would have to show substantial progress.

Upon the development and agreement among South Korea and its allies to something similar to the above, this approach would be brought to the UN for further discussion and introduction to North Korea.

To conclude with the obvious, we know what has not been working. Perhaps the powers that be could do better by emulating something that has proven to be successful.

The article appeared in the Korean Joonang Daily and can be found at:  What Can Korea Learn From Ireland?

The post What can Korea Learn From Ireland? by Senior Advisor Tom Coyner appeared first on The Korean Law Blog.

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