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Dec 30, 2013

China Issues New Guidelines for Behavior of Chinese Tourists

By 2015, there will be 100 million Chinese tourists traveling throughout the world, according to a UN estimate.  That means that Chinese have surpassed Americans and Germans as the world's biggest tourism spenders.  Partly in response to this, and the somewhat embarrassing issue a few months ago where a Chinese tourist in Egypt had scribbled his name onto a priceless historical relic, the Chinese government has put out some new guidelines that will apply to Chinese tourists.

Here are some of the more interesting ones from a CNN article:
  • Photography: "When taking photos in tourist spots, do not fight and be patient. Do not force the others to take a picture with you, nor obstruct the others when they are photographing. If you would like the others' to take a picture for you, say thank you."
  • Toilet use: "Do not occupy the public toilet for a very long time. Do not leave footprints on the toilet seats and flush after use."
  • Queue jumping: "Respect order in public. Jumping the line is not acceptable anywhere."
  • On tipping: "Service industries in a lot of countries honor tipping. If you think the service is good, please tip accordingly." At the buffet table: "When you're at a buffet dinner, only take what you can consume. Do not waste food."
  • Taking in a show: "Respect the performers. Clap after the show to show your gratitude to the performers. During curtain call, join the crowd for a standing ovation. If a performer slips up on stage, be understanding but do not cheer, whistle and jeer."
Some of these laws also apply specifically to Chinese domestic behavior during Golden Week, a special holiday in China where most citizens take vacations within China.  In June of 2013, photos surfaced of Chinese tourists taking mocking photos and posing with a dying dolphin in Hainan province.  The proliferation of these photos, and a general perception that Chinese tourists are often difficult to deal with, is probably the main reasoning behind these new domestic rules.

You can read the original article by CNN here:China's First Tourism Law Comes into Effect, Tourists Issued Manners Guides

You can also check out some other relevant articles by IPG Legal here:

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Dec 27, 2013

Sean Hayes and IPG Legal Wish You a Happy New Year



Sean Hayes and all of us at IPG Legal wish you a safe, happy and prosperous New Year. _____
SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Weekly Asian Legal News from International Law Firm - IPG Legal

This Week's Asian Legal News Reported by Media
Most Recent Posts from The Asian Law Blog
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Dec 23, 2013

"Ordinary Wages" Under Korean Labor & Employment Law: Korean Supreme Court

The definition of "ordinary wage" has been clarified by the Korean Supreme Court in two decisions handed down this week.  The calculation for an Ordinary Wage is utilized to calculate statutory entitlements, thus, has an impact on the aggregate amount of contributions necessary to be paid to an employee.  The issue is one of the most significant issues, this year, for domestic and foreign employers.  

The basic test has  been that an Ordinary Wage is a "regular, uniform and flat" payment.   Obviously, this "test" leaves much unanswered.

With this vague definition, the Korean courts have inconsistently interpreted the definition, thus, leading to much confusion.  I have written many memos on this issue with few opportunities to give a definitive answer, because of the lack of a consistent interpretation of the definition by the lower courts and, seemingly, even the Supreme Court.

This week, the Supreme Court, in a case that I will call the Regular Interval Bonus Case, has delivered  a couple of more clear examples, than in the past, of cases that will be considered Ordinary Wages.   In the case, the employer was providing a "regular bonus" every two months.

The Court in the Regular Interval Bonus Case opined, in part, that:
  1. Any collective bargaining agreement (labor-management agreement or like agreement) that deems a certain type of payment as not an Ordinary Wage is void and, thus, unenforceable.  An exception is available for certain specific companies that have implemented this practice in particular limited situations based on the vague principle of "good faith and trust."  I will elaborate on this more in a followup post after the holidays; and
  2. Payments paid at regular intervals (e.g. every other month) are an Ordinary Wage.
The Supreme Court remanded the case to the High Court to determine if the exception is applicable.

In the second case, that I will call the Allowances Case, utilized the Ordinary Wage definition and rationale in the Regular Interval Bonus Case to opine that these allowances when paid just for being employed at a certain period of time will not be considered "flat" under the Ordinary Wage "regular, uniform, and flat" definition.

The Allowances Case was remanded, also, to the High Court to determine if the payments were, only, payments made for being employed during a certain period of time.

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Dec 22, 2013

Happy Holidays from IPG Legal



SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Dec 17, 2013

Possible Successful Business Opportunities in Korea

I just read a blog post by my friends over at the China Law Blog that motivated me to write the following post.  Korea is an excellent testing ground to determine the feasibility of your business for other Asian markets such as China.  The country has, also, proven more profitable, for many businesses, than the often too hard to catch "Chinese Middle Class."

The following is a list of some industries that are succeeded in Korea.

1.  Franchises.  The franchise market in Korea is booming.  All major players are in Korea and, most,  are doing very well.  Many of the less known franchises have, also, succeeded.

2.  Education.  Koreans have a thirst for education that seems insatiable.  Much of the market, however, is closed to foreign competition.

3. Military Technology.  Korea is one of world's largest purchasers of military technology.  All major players have a solid footing in Korea with many of the second-tier players playing a vital role in Korea's blossoming native military technology industry.

4.  Food & Beverage.  Foreign products are now seen, everyday, on Korean dinner tables.

5.  Health & Pharmaceuticals.  As an aged society, Korea has struggled with many of the same diseases as seen in the West.

6.  Fashion & Textile.  The middle and upper class in Korea have an aptitude for luxury goods that is beginning to rival even the Japanese.

7.  Green Tech.  As the world changes so does Korea.  The World has a thirst for sustainable solutions and Korea is, slowing, following suit.

8.  Suppliers to Chaebols.  The major companies in Korea are purchasers of everything from automobile supplies to crude oil.

9.  Software.  The top foreign players dominate the market with a few Korean companies that have made a substantial niche in the market.  Many foreign players have successfully licensed software to major conglomerates with success.

10.  Industrial Machinery.  Surprisingly enough, Korea is an importer of high-tech industrial machinery.  A great deal of the machinery is imported from Japan.

11.  Entertainment Business.  With a shrinking workweek and more disposable income Korea consumers are increasingly spending on entertainment and leisure.  I am looking forward to Metallica in Seoul at the end of this month.

12.  Tourism.  Tourism spending has increased over the past decade, leading to low hotel vacancy rates and a boost in retail spending on fashion, entertainment and electronics.  The largest tourist population visiting Korea is the Chinese.  The Chinese find, in many cases, shopping in Korea more economical than shopping in Hong Kong.
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Dec 15, 2013

Garnishing Pay in Korea: Collections in Korea

Garnishing Wages in Korea

I received a call from a friend asking about information concerning collecting on a large debt. He loaned money to a “friend” and the friend never made a payment on the loan. Word to the wise, don't make large loans to friends----cry poverty instead.

In Korea, after a judgment or order to pay by a court, a plaintiff can collect on an unpaid debt through garnishing of wages. Garnishing of wages is normally the best way to guarantee the collection of debt when a debtor doesn’t have real or personal property. Most law firms can perform the service for a modest fee.
  • Less than W1.2mil (No wages can be garnished)
  • W1.2mil - W2.4mil (Monthly Wage – W1.2mil)
  • W2.4mil –W6mil (1/2 Monthly Wage)
  • Over W6mil (Half monthly Wage minus W3mil divided by two plus W3million minus monthly wage)
Examples:
1. W2,000,000 Monthly Pay (Can garnish monthly W800,000)
2. W3,000,000 Monthly (Can garnish monthly W1,500,000)
3. W5,000,000 Monthly Pay (Can garnish W2,500,000)
4. W6,000,000 Monthly Pay(Can garnish W3,000,000)
5. W12,000,000 Monthly Pay (Can garnish W7.500,000)
6. W20,000,000 Monthly Pay (Can garnish W13,500,000)

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Dec 13, 2013

Asian Legal News for the Week of December 8, 2013

This Week's Asian Legal News Reported by Media


Most Recent Posts from The Asian Law Blog


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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Dispute Resolution Clauses in Franchise, Joint Venture, Partnership Agreements in Korea

It is essential for all joint venture, franchise, shareholder and like agreements, in Korea, to include dispute resolution clauses.

These clauses are fundamental to establish, amongst other things, the:
  1. prevailing language of the agreement;
  2. forum to resolve the dispute;
  3. process of resolving the dispute;
  4. damages and costs for breaching the agreement;
  5. enforceability of a judgment against a party to the agreement; and
  6. flexibility of mediation and arbitration rules.
To often I see shareholder, joint venture, franchise and partnership disputes going badly because of poorly drafted agreements.  Some of these agreements are drafted by lawyers with, seemingly, little experience in litigation and arbitration in Korea and, thus, little sense of the manner in which these business relationships go awry.  

One of these critical flaws in these Korean agreements is the lack of consideration of dispute resolution and the simple plugging into agreements standard dispute resolution clauses.

Please see our other posts on joint venture agreements:
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

How Sustainable is the Korea-Pop Music Phenomenon?

Among the many topics that have surfaced during the past two months as I traveled about Ireland and the US West Coast, I settled on the below, current report as I have been thinking for months of writing a column on just what the Korea Wave or Hallyu may actually be or not be.

Samsung Economic Research Institute (SERI) does a decent job in describing what are the results of Hallyu around the world.  The analyst provides a decent account of how these boy and girl acts succeed, but there is no real attempt to explain why Korean pop (K-Pop) has been so popular or at least appear to be so successful.  My initial impressions from many observations and discussions have provided me with some very tentative conclusions.

The most obvious and least surprising success factor for any kind of adolescent or young adult phenomenon is sex appeal or the thinly veiled offering of being seductively attractive to the other young people.  As I have stated in prior KER messages, Hallyu is a thinly disguised rip off in many cases of Japanese boy and girl bands but with upgraded versions of being what we once called “prick tease” sexy rather than simply cute, as in the case of the shy Japanese.

Of course, this does not address why Korean cinema have done so well, but there are some major common denominators.   Both the music groups and the cinema feature remarkably beautiful women and handsome men – many cosmetically enhanced by some of the world’s finest (i.e., Korean) cosmetic surgeons.  These entertainers literally embody what many other Asians wish all East Asians to appear like.  On top of that, many of the movies are well made. But even if the songs are not quite up there or the films less than what one may wish to see, the actors and signers look fabulous.  But what is not so clear is how genuinely popular is Hallyu in sustainable ways.

There have been some big flashes in the pan concerts and television appearances abroad, but I have yet to see major trends outside of the Korean diaspora centers.  Many first, second and third generation Koreans regularly check out Hallyu YouTube videos – and so do their non-Korean ethnic friends. There used to be a saying in Hawaii that one would never see a group of Koreans, but always a Korean in every group.  As Koreans move out of their first generation overseas ghettos, they have become remarkably integrated.

According to my observations in LA’s Korea Town and my conversation with a son who lives there, many non-Koreans who are into Hallyu have or have had an ethnic Korean partner.  All of which brings me to the SERI analysis’ conclusion that implies one should not try to over leverage Hallyu in unnatural promotions, such as promotion of relatively stodgy traditional Korean culture, etc.  Hallyu is essentially about young people and older people reminiscing of what is was like to having once been young.

The challenge is where does Hallyu go from here? According to a long-term Japanese pop cultural observer who will soon be retiring as a university lecturer at a women’s university in Tokyo, when Hallyu first appeared, it really caught the Japanese young people off guard in a very positive way.  But after a couple of years, enthusiasm has begun to wane as both early and newest Hallyu groups stick to the tried-and-true success formulas with little, genuine innovation.   Meanwhile, Korean private and public sector marketers are feverishly promoting Hallyu – often without adequate appreciations of just why the trend has been successful and what challenges Hallyu faces in order for its industry to achieve lasting success.

For Hallyu to have real legs that can promote not only itself as well as other aspects of Korea into the future, Korean artists will need to be more creative than what they have so far exhibited.  While we may debate if that may be possible in corporate controlled entertainment anywhere, ultimately it will be up to Korean artists to act more like the Beatles and less like the Monkees if they are to make a lasting contribution to global pop culture.

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Lessons from K-pop’s Global Success
K-pop has entrenched itself as a bona fide phenomenon in Asia and is rapidly extending its reach to new markets. Companies in other industries can benefit from its success by deploying K-pop based products and tourism packages, using K-pop stars as spokesmen, and piggybacking on K-pop’s transnational appeal. Companies can also learn from K-pop’s system of rigorous training and long-term planning.  Report may be found at: Samsung Economic Research Institute (SEO Min-Soo).
You will need to login to SERI Quarterly to see the report.

Post by Tom Coyner.  Senior Commercial Adviser for IPG.

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Dec 10, 2013

Executive Compensation Necessary to be Publicly Disclosed in Korea: Korean Commercial Law

Until a recent amendment to the Korean Commercial Code, the compensation of executives in listed companies was not required to be disclosed to shareholders.   Most developed economies require this disclosure.

The prior law, only, required the total compensation for all directors to be disclosed to shareholders. The new rule, which comes into effect on November 29, 2013, requires that all registered directors of companies annual compensation be disclosed if the amount of the individual's annual compensation exceeds KRW 500 million Korean won.

The amended Korean Commercial Code, also, requires that companies disclose the criteria for choosing the compensation.  We suspect to see cases filed related to the payment criteria and differentials in payment between certain directors.

Some family-controlled companies will, likely, drop some family members from boards. These family members will, likely, be paid as mere company employees and, not, as board members. Thus, circumventing the purpose of the law.

We will update the reader on developments with regard to this issues.

Other articles that may be of interest:
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Korean Home Prices Too Low? A big NO WAY by Tom Coyner

It will soon be that dreaded time again for me – the renegotiation of my apartment lease. Thankfully, it happens just once every two years, but it is a real pain. The silver lining to this biannual cloud is that it forces me to look more closely at the Korean housing market, an important factor in most economic considerations.

At first brush, Korean real estate is as loopy as any foreigner may surmise about anything in the Korean economy.

First of all, there is a glut of slow-moving, unoccupied apartments – and yet prices remain artificially high. This is partially due to the universal axiom that real estate prices rise much faster than they fall. People naturally welcome seeing investment values inflate and resist recognizing shrinking values.
Second, housing costs are kept high, in spite of the vast supply of housing, due to a practice called jeonse, the non-interest-bearing, fully refundable deposit paid to the landlord in lieu of rent. Conventional rental properties can also be found, but most Korean tenants prefer jeonse as part of their strategy to eventually save enough money to buy.

During times of higher interest rates, jeonse was roughly 50 percent of the market value of the property. The landlord would then use the deposit for investment, or at least put the money in the bank, and enjoy the return. But thanks to very low interest rates, traditional jeonse levels have become increasingly unpopular among landlords. As a result, there have been two important developments.

The first development has been the rise in jeonse significantly above normal levels. In some extreme cases, deposits approach actual market values of properties. One can also now find combinations of jeonse plus monthly rental payments. These schemes compete in the market, keeping housing costs high, despite the glut of unoccupied apartments.

The second development has been government intervention. President Park Geun-hye has championed herself a protector of the lower and middle classes. During the past months, her administration has launched programs to help the struggling, first-time home buyer. The thinking has been to find ways to make it easier for first-time buyers to purchase the glut of unsold apartments through low-interest fixed-rate home mortgages and a decrease in real estate acquisition taxes.
At first glance, all of these initiatives seem like overdue relief for the weakened middle class. But are they really? These programs do nothing about the ridiculously high, yet stagnant, real estate prices and their corresponding high jeonse and rental rates. A cynic may suggest that, so far, the conservative government has only looked after the welfare of construction companies by making it easier for them to offload inventory at premium prices. In other words, the government’s policies are simply prolonging the real estate supply priced above natural buyer demand. In fact, some Korean economists have warned against investing in properties at prices artificially maintained by government mortgage programs. Rather, the mortgage rates should follow the prices – not the reverse.
So, given this situation, what should be done?
First, all artificial mechanisms that maintain current pricing should be removed – perhaps gradually, but at least steadily. The Korean construction industry has already become globalized, realizing that it cannot sustain its growth within the domestic market. As it has globalized, competing with other international construction companies, Korean companies’ quality of operations and deliverables have remarkably improved. Meanwhile, domestic-only construction companies have struggled to survive, often lacking the means to upgrade their construction processes. In other words, the Korea-only construction companies have found themselves in the same niche as the buggy whip manufacturers did a century ago. Accordingly, one way or another, they need to die or transform themselves into other businesses.

Second, the Bank of Korea needs to set the Korean prime rate at a higher rate to return the market to more normal conditions, at a rate worthwhile for landlords to accept jeonse at more reasonable, smaller amounts. In so doing, cash-strapped jeonse tenants would then have more money to spend or possibly bank – both of which would be economic positives.

Third, the Korean government should signal that the era of high real estate speculation is over. Government policies, including taxation, need to reflect this reality. Since so much of the government supporters’ wealth is held in speculative real estate, this may be unrealistic. But this mindset remains a requirement for strengthening the long-term economy.

But, even if the above suggestions were implemented, there would not be an immediate effect. Like artificially high real estate prices, speculators would be slow to allow their investments sink to natural supply-and-demand levels. To stimulate such movement, taxation penalties for unoccupied properties held beyond a certain time period may be needed. Such measures would be unpopular among government supporters and, thereby, may be unrealistic.
If the government wants to talk populist, it should act populist – particularly when it comes to housing. Otherwise, the electorate will discover that it has been “had” by the elite yet once again.

The article first appeared in the Korea Joonang Daily at: Korea Home Financing Reform.

by Tom Coyner.  Senior Advisor to IPG Legal and President of Softlanding Korea

info@ipglegal.com
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Severance Payments in Korea: Death to Korea's Competitiveness by Tom Coyner

Getting what you want and doing as you wish offers immediate gratification, but these short-term rewards may lay the foundation for long-term disaster. There are two areas that come to mind regarding Korean business practices.

Recently, a Financial Times article on revised Korean compensation calculations was widely circulated among long-term Western expats here. It generated much discussion as this whole issue could have a major impact on the labor costs of doing business in Korea. I remember when I was hired by the Chase Manhattan Bank in Seoul during the 1970s, I was offered an annual salary divided by 14 payments to allow for 12 monthly payments plus two one-month payments scheduled for June and December.

I uniquely asked for and got the same annual compensation divided by 12 and paid out monthly sums the so-called semi-annual bonuses. So, in a sense, these scheduled bonuses that normally are consistently paid out could be considered part of one’s base pay. But as we have seen during extreme economic depressions, such as in the 1997-98 “IMF Crisis” and in 2008, not paying out the scheduled bonuses without touching the monthly salaries can be one of the first lines of defense of a company’s financial well-being.

The rub is that monthly salaries - not the total annualized base pay - have formed the basis for overtime, unused holiday compensation and severance pay. As such and with this understanding, the salaries have been allowed to rise within this structure. Whereas to suddenly switch the base for various benefit payments could lead to major financial problems for both Korean and foreign companies.

To make matters worse for Western companies operating in Korea, such a compensation reform move could be the last straw that breaks the back for major foreign employers. Unlike the typical, smaller foreign operations of, say 100 employees or fewer that is most commonly managed at the top by a bilingual Korean, the larger organizations with their larger spans of control and greater management complexities tend to still bring in expatriate executives and specialists.

Often these foreigners lack any or adequate Korean language skills. To offset this issue, bilingual staff members interpret much of what is happening, often effectively insulating the expatriates from much of the daily operations. The ongoing irritation and potential major problems come if the organization lacks the internal discipline for internal communications to be consistently communicated - particularly in written form - in English.

For the Koreans, one can empathize with the hassle of writing English e-mail and reports.  But given they have voluntarily joined an international organization, one’s sympathy can only go so far. The Korean staff may as well be writing in relatively indecipherable code for the rest of the global organization whenever they write in Korean.

This local practice is a major hindrance for their foreign senior management to adequately monitor what is happening in the ranks, and in times of crisis, to audit what was the cause of the problem. Korea is hardly alone. I once worked with a major international consumer goods company in Japan that had multiple layers of bilingual Japanese staff buffering foreign executives from the real operations at their Asia-Pacific head office in Kansai. Finally, the situation became so intolerable that once an opportunity presented itself, the company relocated its regional office to Singapore. My point is that there are other Asian countries than Korea, including even China, where the staff may work at cheaper wages and are more willing to communicate and document routinely in English.

Unfortunately for many Korean employees, often all of this is lost upon or not taken seriously enough by union and other local leaders. For all that Korea has to offer as a place for investment, the country hardly holds a monopoly in Asia for foreign companies. Consequently, western companies have relocated from Korea in the past and could well do so again in the future. Getting back to changes in compensation practices, while in the U.S., President Park Geun-hye told American executives that she was aware of the employee compensation issue and U.S. management’s concerns. She said she would look into the matter upon her return to Korea.

 As much as Korea is increasingly becoming integrated into the global economy, it is clear that many of the nation’s leaders are being caught off guard by various forms of globalism. Well, they are hardly alone. But Korea needs, more than most countries, to find ways to better integrate its communication and compensation practices for the nation’s long-term welfare.

Korea long ago stepped away from other Asian countries by offering low-cost labor competition. As the nation has climbed up the food chain, naturally wages have increased. But in doing so, knowledge and other workers’ productivity has become of greater concern - not only domestically, but also internationally. And that now means Korea is facing off with competition from China and India where similar, if not lower, wages are more often complimented with a greater readiness to conduct day-to-day business in English.

Without far-sighted leadership, the Korean market may someday be characterized by small or, at best, medium-sized foreign investors whereas the international big players will be located elsewhere, relegating Korea to remain as a secondary if not tertiary international market.

*The author is president of Soft Landing Korea, a sales performance consulting firm, and senior advisor to IPG Legal.  The article, originally, appeared in the Korea Joonang Daily.

info@ipglegal.com
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Investor-State Disputes/Arbitration in Korea: ABA Dispute Resolution Magazine

The American Bar Association Dispute Resolution Magazine has an interesting article on Investor-State Disputes that is relevant to Korea.  The article appears in the Fall 2013 edition of the magazine.

Some of the "top" law firms in Korea have been notoriously conflicted - thus leading to choices made in agreements that are less than favorable to clients.  This has led, in part, to South Korea being perceived as not a foreign-friendly destination for direct investment.  Additionally, the courts, recently, invalidated an arbitration award against the Korean government - thus frightening more investors from the Korean shores.  Hopefully, Korea has learned from these mistakes.  Korea is a developed market with a vibrant local economy.  Protective measures are no longer needed.  Enforcement of the next arbitration award against the Korean government can be a way to enhance the international reputation of the Korean courts and, thus, increase investor confidence.

The article notes, in part, that:
"The first treaties providing for arbitration to resolve investment disputes appeared in the 1960s, as part of a broader system to encourage international investment.  This system of investment protection was designed to respond to investors' strong distrust of the local courts of developing countries following the decolonization period, when former colonies nationalized and expropriated foreign investments in natural resources and land"
The article goes on to note that these treaties and the "globalized world economy" has led to:
"Not surprisingly,  with the massive increase of investment over the last decade in all countries and regions, a growing number of investor-state disputes have been submitted to international arbitration.  The World Bank International Centre for Settlement of Investment Disputes (ICSID), the main institution supporting investor-state arbitration, has registered more than 300 investment-treaty cases in the last 15 years.  More than 135 cases have been brought under the rules of UNCITRAL, the United Nations Commission on International Trade. 
The article notes, as what occurred with the Lone Star fiasco, " the investor walks away or becomes persona nongrata in the host country, ending the investor's hope for profit and the country's hope for sustained growth."

The Lone Star fiasco has led many investors, some that I have spoken with, as seen as a destination that is not foreign-capital friendly.  Hopefully, in the future, the Korean government will look at issues that arise in a long-term perspective.

Other articles that may be of interest:
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Dec 9, 2013

Enforcement Decrees are Becoming more Common in South Korea

The Park Administration’s usage of enforcement decrees, an executive decision-making process that allows the administration to bypass the National Assembly, has been steadily increasing according to a new article from The Hankyoreh.

The article mentions that appeals filed at the Constitutional Court seeking relief from enforcement decrees have shot up from a low of 46 in 2006 to 87 in 2012.  From the article:
"Enforcement decrees are often used to overpower the law for political ends. Perhaps the most prominent recent case of this was the decision to strip the Korean Teachers’ and Education Workers’ Union (KTU) of its legal status. That Oct. 24 decision by the Ministry of Employment and Labor was based on Article 9, Item 2 of the enforcement decree for the Trade Union and Labor Relations Adjustment Act, which states that an established union 'must be notified that it is not viewed as a labor union according to the law' if grounds for rejecting its application are discovered and it does not respond within 30 days to a request to take corrective action."
The article concludes with a quote by President Park Chung-hee, whereby he uses the term ‘administrative democracy’ to describe many of his actions.

It appears as though his daughter may be following the same course.  Be sure to check out the original article here: Administrations' Expediency Shaking the Rule of Law in S. Korea.

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com