Archives for July 2007

Product Labelling Law and Product Liability

by Brendon Carr

Check out this week’s Law Talk column of the Korea Herald about product labelling. Our firm’s Mr. Kyung-Ho Park, with whom I’ve recently had the pleasure of collaborating with on an asset-transfer deal, is the author. Apparently there is a new (well, relatively recent and not-yet-enforced) law concerning product safety testing and labelling requirements. Here is the money graf from his article:

When labeling standards were only [Ministry of Commerce, Industry & Energy] guidelines and did not have any legally-binding effect, the breach of labeling standards did not directly mean “defects in [expression]” under the Product Liability Act (PLA). But, under the new [Quality Management and Industrial Safety Act], labeling standards have a legally binding effect and any breach of the labeling standards may be interpreted by courts as a “defect in [expression]” and the manufacturer, importer or seller may be subject to the indemnification of the damages or losses caused by such defect under the PLA.

Anyone in consumer products ought to re-evaluate their current practices in respect of labelling in order to make sure their companies are not exposed to product-liability claims based on a defect in expression.

Biggest Outbound M&A Deal by Korean Company

by Brendon Carr

Today’s big Korea business news is the announcement that Doosan Infracore is making the largest-ever overseas acquisition by a Korean company, purchasing three units of the Ingersoll-Rand conglomerate for US$4.9 billion in an all-cash deal. Notable among the companies acquired is the Bobcat Company, maker of those cute but powerful construction machines for tight spaces.

Bobcat is one of North Dakota’s largest employers, with 2600 employees manufacturing at several locations in the state. I’m sure there is some anxiety at dinner tables in Fargo today. Will the Koreans close US manufacturing and move things off to “low-wage Korea” (ha, ha) or to China?

FinanceAsia’s report on the transaction (which will probably go away in a few weeks) quotes Citigroup’s Shaheryar Chisty making a good observation about why this was a good move for Doosan:

“Recently, Korean companies have faced a dilemma: should they use their cash flows and debt capacity to acquire companies in Korea but outside their core businesses, or acquire outside Korea but within their core business. Unfortunately, the trend has been more often in the former category, but Doosan has set a healthy example of going outside the comfort zone of Korea to build a strong, global business,” comments Shaheryar Chishty, Citi’s co-head of industrials Asia-Pacific markets and banking.

Bobcat in particular is #1 in its market segment. Buying a dominant player with an established distribution network, in a new market, is a very smart play by Doosan.

Doosan is financing the acquisition by anteing up US$700 million in cash on hand, plus US$4.2 billion in debt finance. Presumably, with the won strengthening considerably, and the US Dollar on the edge of the abyss, taking on dollar-denominated debt (especially as it’s reportedly non-recourse financing) looks like a smart move for Doosan. Not only is the deal cheap now, but it will get cheaper over time.

Meanwhile, over at the ever-bumptious Marmot’s Hole, Doosan’s acquisition is being met with some initial derision (which is, after all, the specialty of the house at the Marmot’s Hole) and thoughtful, well-informed discussion (another house specialty over there), with one Korean-American commenter describing “medieval” chaebol practices as making the integration an “interesting” challenge. What’s life without interesting challenges?

It’s true that Korean companies have had a mixed record on their forays into acquisitions outside Korea: Leading Edge computers (Daewoo), AST Research computers (Samsung), and Zenith televisions (LG) stand out as the most spectacular flops I can think of (however, in these cases they were all turnaround plays by the Koreans). The mighty POSCO has been stymied by Indian bureaucracy and is crawling away from its planned US$12 billion investment in India. But there are counterexamples to be found in Hyundai’s Alabama plants and its investments in the Czech Republic.

And there are also a number of smaller Korean companies which have already begun globalizing as well. One example I can think of is Young An Hat Company, which not only has 40% of the worldwide hat market (if not for the popularity of baseball caps for bald guys, I think that Young An’s market position in hats would be like being the dominant zoot-suit maker), but is also a diversified conglomerate with US$750 million in sales. In 2003, Young An bought Clark Material Handling Company of Kentucky out of bankruptcy, after Clark’s fortunes shifted. In 1998, Clark had been the savior of Samsung Heavy Industries’ forklift division and the company was a darling of KOTRA’s Invest Korea campaign, as Clark closed down its Lexington, Kentucky manufacturing in 2000 to consolidate around the Samsung plant in Changwon and a facility Clark established in Germany in 1977. Clark Asia CEO Kevin M. Reardon was quoted by KOTRA as saying Korean workers were “two and a half times as productive as US workers”.

But here’s a tidbit about Clark for Bobcat folks in Fargo: In 2006, under the new Korean management Young An, Clark re-opened US manufacturing in Lexington. That must be a fascinating story. I wonder what could have overcome that fantastic productivity advantage Mr. Reardon described? At any rate, if the topic is raised to move Bobcat production away from North Dakota to Korea, Bobcat’s managers would be well-served by having first had some discussion with Clark about why that decision was taken.

And we should be watching this space carefully. The Doosan investment looks to be a harbinger of things to come.

Pre-Employment Checks as Fraud Preventative

by Brendon Carr

Last week my associate Sun-Hee Kim and I forwarded the International Bar Association and Kluwer Law Publishing our contribution to the forthcoming volume “Recruiting, Screening, Testing, Interviewing and Hiring the Best Qualified and Most Talented Employees” (a title with this many commas has to be the work of lawyers, solicitors, barristers, advocates, and/or other legal professionals...). The book, a survey of something like 50 countries worldwide, will answer in yes-or-no fashion some of the most common questions on pre-employment screening and interview questions. It will be published shortly before the IBA’s Singapore annual conference in October.

(I’ll be speaking on some panels at the IBA. If you read Korea Law Blog, come on up and say hello.)

Preparing this chapter for publication, we were struck by how undeveloped the law in Korea is in respect of pre-employment processes. Employers are generally free to ask, and to require answers to, any questions they want. How much can you drink? Boxers or briefs? Don’t you want to come to church with me?—all of these are common enough that they would not trigger any special legal jeopardy.

But that’s the pre-employment stage. We’d like to offer a tip in respect of the in-processing stage after a hiring decision has been made, and that is for employers to request and require that their new employees provide a copy of family registers connecting their siblings, parents, and cousins, as well as the same relationships on the spouse’s side. The Korean family register records births, deaths, and additions to the family by marriage. It is proof of who is and is not a related party.

We suggest this because in the vast majority of “Inside” fraud cases, a relative is involved but the fact of relationship is often denied by the employee. Because the family register is not a public document, if the employee has not previously provided a copy of the family register the company has no way to confirm relationships. Most multinationals have anti-nepotism policies in place already to avoid actual or potential conflicts of interest, but without gathering data on family relationships how can these policies be enforced?

At the intake stage of the employment relationship, everybody is happy and cooperative. Once an employee is involved in a fraud using his or her relatives, there is no chance to get a copy of the family register then. So ask for it up front, make a database of related parties, and cross-check identities before entering in vendor relationships or hiring additional employees. Dealing with relatives is not itself per se wrong, but you ought to have the ability to do so from an informed position.

We also believe that employers who make it a practice to gather this information probably discourage their employees from getting tricky with them in the first place.

Another GI Gets What’s Coming To Him

by Brendon Carr

...which is not to say the GI got a fair trial.

Unfortunately, the Korean criminal justice system is happy to follow the “Dan Rather” school of evidence—“Fake But Accurate”—when it comes to American soldiers accused of crimes against Koreans. Sure, the accused are usually bad guys, and probably have even committed crimes for which they haven’t been caught, but it would be nice if criminal convictions required proof beyond a reasonable doubt. As it stands now, the patent unfairness of the trials which American soldiers receive in Korean courts is—or should be, if our Congress was worth a crap—an irritant to bilateral relations and probably a good reason to pull out of the so-called “alliance”. And it should be an embarrassment to Koreans as well. (Actually, it is—because the criminal-justice system is unfair to Koreans too, and there is a significant movement of attorneys and judges, as well as ordinary citizens, calling for reform. I haven’t noticed anyone decrying the injustice to our American servicemembers, though.)

The civil-justice system is, as these things go, reasonably good. It’s efficient (perhaps too efficient, since there is no discovery system) and the judges are professional and fair-minded in their peculiar way. In my experience working with foreign companies over the last 10 years, they get a fair trial in Korean court; our clients, in fact, usually win because they won’t charge into litigation they have no business pursuing. That’s what makes the contrast with the criminal screw-job so appalling.

See GI Korea’s ROK Drop for more on the latest installment of the “unfair Status of Forces Agreement (SOFA).”

How to Get a Job at a Korean Law Firm

by Brendon Carr

As one of the longer-serving and more, shall we say, “available” foreign lawyers in town (that is to say, my number is published and I always make time for potential future colleagues), I am contacted from time to time by law students and lawyers interested in working as a foreign legal consultant in a Korean law firm. My server logs here on Korea Law Blog show this is a very popular inquiry as well.

Since your friend Brendon is as helpful as he is handsome, here are some tips on how to get a job in Korean law firm:

Speak, Read, and Write Korean. Law is a language-based profession; it’s all about finding answers and communicating those answers to clients. If you can’t speak, read, and write Korean—at some level of professional capability—you will be a cripple in a Korean law firm, dependent on others to do what is, in all frankness, your work. So if you don’t have some capability with Korean, and a commitment to improve, my advice is forget it. When I was a more junior lawyer I found this type of advice (from Sally Harpole, about working in China, where my DLI Chinese would need a year to get to professional-level) too harsh, but now that I’m in my 11th year doing this I know it’s for the best.

I speak, read, and write Korean. When a colleague drops off a court precedent, or an extract from some regulation or statute, I am able to independently read and understand it. While I’m not completely fluent as a speaker, I am a fluent listener (I used to be a spy); Korean lawyers can discuss matters in their own language. This makes the colleague’s life easier, and makes me more valuable to the colleague, the firm, and the client—and, therefore, ultimately more valuable to my family. There’s a danger to knowing too much Korean, at the junior level especially, and that is it increases the possibility of getting stuck with translation work.

If you don’t know Korean now, there are university-level institutes which promise to make you fluent within 12-18 months of intensive study. Some law students and recent graduates have enrolled at these institutes, and concurrently worked part-time at a law firm. (There was a really, really attractive Japanese-American girl doing that at CJ International, one of the predecessor firms to Barun Law.) The institute classes typically run from 9:00 a.m. to 1:00 p.m. daily; if you eat kimbap every day in the taxi on your way to work, you might be able to talk some firm into a 2:00 p.m. to 8:00 or 10:00 p.m. “part-time” schedule. I don’t know how you’d study on that schedule, but it’s your problem anyway. Good luck.

Be Korean. Let’s face it, Korean law firms and Korean lawyers are as nationalistic as any other aspect of Korean society. They are far more welcoming to ethnic Korean compatriots than to foreigners. There are three law firms which have historically been able to accommodate more than a single, token foreign face: Kim & Chang, Hwang Mok Park, and Kim Shin & Yu. Kim Shin & Yu broke apart and its parts went different ways; if you’re not Korean, your best bet is probably with Tom Pinansky, whose Kim Shin & Yu rump group joined Barun Law. Yulchon these days has four non-Korean attorneys, but that seems to be a late development.

For many of you, it’s too late to arrange to be Korean. You chose the wrong parents. There’s nothing you can do about it now. Just be aware that the Korean law firms would much rather hire an ethnic Korean over you.

Go Large. It pains me to say this, as I have worked in the small-firm environment as well as the large-firm environment. The larger Korean firms get the best work—work more likely to need the services of a foreign lawyer. Additionally, the smaller firms tend to be completely dominated by a single lawyer, who may very well be a sociopath. In a larger firm, you can work around a sociopath. But if the sociopath controls everything (i.e., is “the owner"), look out. In my opinion, because it’s hard for someone new in town to know who’s an insane, abusive S.O.B. and who isn’t (Ted Bundy sure seemed nice to those co-eds he picked up and subsequently murdered), small Korean law firms are to be avoided by any new lawyers. I would define a “small firm” as any place with fewer than 20 lawyers, by the way.

At the very least, do your due diligence carefully before accepting any job. Find out who will be your supervising partner. We all know who the sociopaths are, as well as the useless turkeys. If you ask a Korean, they will damn with faint praise and you’ll have to parse every word to find out if the praise is genuine or a coded warning. If you ask me, I’ll tell you straight up whatever it is that I know about any law firm or a particular lawyer within that firm. Don’t be shy. Ask and I’ll tell you.

Come in Person. You can’t do this by remote control in most cases. Get a plane ticket, come to Seoul, and wear out some shoe leather. Yes, if your Dad used to be the President or something you probably can do this by remote control. But for the rest of us (damn you again, Father!), it’s harder to get rejected if they know you as a person. Plus, circumstances change very rapidly. There are many, many lawyers I know who got their start in Korea because they scheduled an “informational interview” with a law firm after being told “Sorry, we’re not hiring”—and surprisingly received an offer over soup!

Use Your Alumni Networks. Koreans are incredible social networkers, but unlike Westerners their core networks are generally set in stone by affiliation with their university. This makes the alumni network so much more important here. So look for your law school or undergraduate school’s alumni in Seoul. Find their group meetings, and go. The people in that group will be able to open doors for you, and will introduce you to others in the network. When I worked at Shin & Kim, for example, I found that six of the then-58 lawyers in the firm were graduates of the University of Washington School of Law’s LL.M. course. At the very least, they will give you good advice—Sally Harpole is a 1978 graduate of the University of Washington School of Law and I’m glad for her advice.

Be Polite & Persistent. Finding a law job requires a confluence of several factors breaking your way all at the same time. You have to be the right person (you are!), contacting the right law firm, at the exact moment they have a need. Or your Dad needs to have been the President. For most of us, though (damn you, Father!), you need to be polite and persistent. I worked for two years as an associate at Shin & Kim (where I had a great experience). But it took me three tries to get an offer. When I was a law student, they weren’t interested in offering me a summer job (I think I had the wrong expectation about summer-clerk pay). When I graduated U Dub, Shin & Kim didn’t want to make an offer—and this was even before seeing my transcript! But after two years at Lee & Ko, when I asked again Shin & Kim happened to have a need at that very moment. Good thing I didn’t take rejection personally, didn’t give up, and didn’t denounce them for not hiring me those earlier tries.

Wait Some Years. Have you worked at least three years post-admission in your home jurisdiction? If not, my sincere advice is to put off coming to Korea until you have that three years’ experience. The draft Foreign Legal Consultants’ Act requires a would-be foreign legal consultant to have three years’ experience in order to register as an independent professional, with the promised right to eventually (five years after the law is implemented) form lawful, profit-sharing partnerships with Korean attorneys. Waiting some years may put a crimp in your language study, but believe me, you will want the right to independently exist. Especially if you run across one of the sociopath lawyers.

Get Over Your Salary Expecations. Salaries are lower here, and cost of living higher. Get used to it, kid!

I am sure there are more suggestions to be had. Maybe in the comments section we will learn from some of Seoul’s other foreign legal consultants and Korean lawyers. I’m looking forward to some good tips. Who knows—next year I might need a job myself.

UPDATE 6/22/08: Even though my recommendation is to look to larger Korean law firms first, the truth about your legal career is that the first legal job you find is probably not going to be the last legal job you find. While it’s sub-optimal to be working in a smaller law firm (especially one controlled by a sociopath), working in a smaller law firm beats the heck out of not working. Getting your first entry to the market is more important that being at the very best place you can be. You can always move up later, except if you have been sitting out not working.

Mandatory Retirement Age Under Korean Law

by Brendon Carr

Every once in a while we’ll get an inquiry concerning some company with an older, male employee who has basically “retired on the job”. Hired long ago for his supposed industry connections, which have withered away over time, this employee becomes a problem because under the Labor Standards Act, “just cause” is necessary to terminate the guy—and he’s not done anything wrong. He’s just no longer useful (yes, usually he’s a big jerk). Yet because Korean society elevates older people to an unchallenged status, younger employees feel quite burdened by having him around since he doesn’t contribute but they can’t say anything. It’s a managerial challenge: How to get this uncool older guy to leave? Do we need to start playing techno music all day?

This problem could be avoided by specifying a mandatory retirement age. I know, I know—it’s unfair and possibly age discrimination to turf out people who are still in the prime of their lives! I’m 38 and therefore not completely useless yet. So I can afford to be callous. But the surprise is, I may only have a few good working years left. Read on for the reason why…

Neither the Labor Standards Act nor related subject-specific employment laws, including the Act on Promotion of Employment Opportunities for the Aged (the “Employment Opportunities Act"), currently states any specific age for mandatory retirement. Therefore, under Korean law an employer is free to designate and enforce a mandatory retirement age. The Employment Opportunities Act, at its Art. 19, does state a normative standard—of 60—as the recommended lowest mandatory retirement age. But this provision is a recommendation, and not binding on any company. Supreme Court precedents uphold an employer’s right to set a lower mandatory retirement age as low as 52.

This retirement age would be effective once stated in the company’s collective agreement (usually the Work Rules, which are mandatory for workplaces with 10 or more employees) and in an employee’s individual employment agreement.

In our practice, which includes a significant M&A component which gives us opportunities to compare many employers’ standards, we most commonly see 60 as the mandatory retirement age in company Work Rules—but when consulted about what’s a best practice, we usually recommend a lower ago of 55, 57 or 58 “just because you can”. Since we’ve seen 52 is allowed, we’ve amended our recommendation. But once that mandatory retirement age is set, you’re pretty much stuck with it.

Under LSA Art. 97, most changes to existing Work Rules require collective approval from your workforce. However, when introducing Work Rules for the first time, the company is only required to “consult” the workforce and consider employees’ opinions; they do not have the veto power to reject some changes. This means that where your company does not currently have Work Rules, you have considerable freedom to establish standards to your liking, including the retirement age.

We reviewed scholarly discussion of the idea that changes to Work Rules made to target one employee, or a certain class of employees, constitute an unfair labor practice even though the change has received collective approval from the workforce. And we found a case on this point (Supreme Court 96 da 2507; decision of June 16, 1997)—this seems both reasonable and fair. If you change your Work Rules just to get one guy, that would not be upheld in court.

We did not find any case that held as unfair an employer’s initial adoption of Work Rules with provisions targeting or falling upon one employee or certain class of employees. However, it is not unreasonable to presume that the same principle may be held to apply to the adoption by your company of new Work Rules which just happen to have a retirement age of 60 or below, at the very same time you have this guy you want to leave.

That does not necessarily mean that a complaint will necessarily follow if you adopt a mandatory retirement age by amendment of existing Work Rules. Only you can read the character of your staff. We have direct experience working with a foreign company which dealt with an unwanted employee by adopting Work Rules containing a retirement age below the employee’s then-current age—and no complaint ensued. The employee quite peacefully departed the company at that point.

What happens in the case an employer has no Work Rules, and the individual employment agreement also has no statement of retirement age? Should the employee then get to stay forever? In this regard, we note again the normative standard age of “not less than 60” in the Employment Opportunities Act. It is our opinion that because of this recommendation, an employer shall have a reasonable argument to be able to enforce retirement starting at age 60 even in the absence of a clear statement in the employment documents. But we have not done a comprehensive case search on this point. Hey, answers on a blog can’t be a substitute for real legal advice anyway.

In today’s Korea Times it’s reported that Korean banks currently have their mandatory retirement ages below 60 but are considering a raise to 60. This is a harbinger of official government action, as the banks are still under strong (albeit informal) government control. If you want your retirement age to be less than 60, better get on it!

In February 2007, the government announced its intent to ”raise the retirement age from 57 to 62”. The “retirement age” being discussed in the article is the average retirement age in the marketplace based on ages enforced by a variety of businesses under their Work Rules, and not a statutory requirement. In May, the idea was floated that from 2010, companies should be barred from setting a mandatory retirement age. It should be noted, however, that these policy intent announcements are not the equivalent of law. There may be a statute passed in the future, but there is none now; probably there is not even a draft available.

What’s Good for General Motors is Good for Korea

by Brendon Carr

General Motors earlier this week announced a bold plan to invest US$6 billion in its GM-Daewoo Automotive & Technology (GMDAT) unit between 2008 and 2011. This is definitely a coup for the Roh government, which has heretofore been engaged in chasing away as many foreign investors as possible. And it’s a vote of confidence in Korea as a “hub” of something, as GM is upgrading its engineering center to employ 2500 automotive engineers, and will designate Korea as its design and engineering center for small cars.

Daewoo has significant expertise in small cars, with models like the Matiz being an all-star sales performer since its introduction in 1998 (yes, that means it’s time to introduce something new, which Daewoo is doing this year). The Matiz, in fact, is so popular it’s been ripped off right down to the bolt-heads by Chinese automaker Chery.

Why is GM making additional investment in Korea, while the other Korean auto group Hyundai-Kia seems to be racing for the exits? GMDAT has tamed its relationship with the union, while Hyundai’s union still barges into shareholder meetings wielding lead pipes. A poisonous relationship with the union is the surest way to kill a company, and “un-poisoning” the relationship the best way to save the company. GM deserves plaudits for rescuing GMDAT and turning it into an exemplar for Korea’s hub ambition.

GMDAT is a massive enterprise (10,000 workers), but the lessons of its turnaround apply to any foreign-invested business in Korea. Maybe your company doesn’t have a labor union. (You surely don’t want one.) In my experience, the foreign companies who find themselves with a disaffected workforce, and an angry labor union, share one thing in common: They don’t have a functioning Labor-Management Committee.

What’s that, you ask? As it happens, Korean law requires any workplace with 30 or more employees to establish a Labor-Management Committee, which is essentially a panel where management dispatches some representatives, the employees dispatch some representatives, and they sit down together on a regular basis to discuss matters of common concern in a collaborative environment. Do you have one? If not, consider establishing one—it’s the first step to good labor relations.

UPDATE 7/29: The Korea Times has a good piece on this very topic by our friend Mr. Tom Coyner, principal of Soft Landing Korea. 

Reason #32,767 Why I’m Awesome

by Brendon Carr

A nice surprise turned up in the mail yesterday, after having been bounced around from place to place (I left Aurora Law Offices at the end of December 2005, joined my friend Mr. Doil Son’s SEOUL Law Group that same month, and we were acquired by Hwang Mok Park P.C. in February 2007) looking for me.

The 2007 edition of Practical Law Company’s Which Lawyer? guidebook, which purports to find the best lawyers worldwide, names me (so they really do find the best lawyers!)—together with Kim & Chang’s Mr. Chun Wook Hyun, who is by far the dominant employment lawyer in Seoul—as a “Highly Recommended” professional in respect of the practice area “labour & employee benefits”. The other “Recommended” professionals were Mr. Sang Hoon Lee of Lee & Ko, and Mr. Jong Han Oh of Shin & Kim.

You’ll note that these recommendations, other than the recommendation of yours truly, happen to fall into the category of traditionally-dominant firms in Seoul—Kim & Chang, Lee & Ko, Shin & Kim. And then, the alternative, your friend Brendon. This is in fact why Doil thought it a good idea for us to accept the invitation to join Hwang Mok Park, because we would be more credible from within the embrace and supporting framework of a larger firm.

It just so happens that I used to work at both Lee & Ko and Shin & Kim (which is where Doil and I became acquainted), and know and respect both Mr. Lee and Mr. Oh. In fact, these two gentlemen are both alumni of the University of Washington School of Law’s LL.M. program, and I graduated (by the skin of my teeth) that school’s J.D. in 1997. Poor old Harvard Law School, where Mr. Hyun obtained his LL.M. in 1987, did not place so well in this sweepstakes as U Dub. But they’ll get there, I’m sure.

As a foreign legal consultant not admitted to the bar in Korea, I am of course dependent on collaboration with talented colleagues like Doil Son. However, as this survey is based on responses from clients and colleagues world-wide as well as in Korea, it is a nice honor to be so recognized for having solved some problems and provided good service.

Korea Herald on Fake Degrees

by Brendon Carr

I’m quoted today in the Korea Herald on the topic of fake degrees for English teachers and possible punishments under Korean law (in your print edition, page 18). The Herald seems to have hired some former English teachers as reporters, as the slant of coverage in that paper has veered perilously toward being the crusader for English teachers’ rights (which are often abused fairly outrageously, but still...).

The article repeats the usual canards about how harsh the Korean system is on English teachers, while perfidious hagwon owners are coddled. Dark racist consipracy is implied by a quote from a disgruntled English teacher who says we hear about foreigners getting punished all the time, but we never hear about hagwon owners being punished.

This may not be fair. Criminal and civil proceedings are, in general, secret. The courtroom is open to the public, but judgments and sentences are generally not published. When an appellate or Supreme Court precedent is noteworthy enough to be published, the names of the parties are sanitized. It’s therefore not possible to (lawfully) do a criminal background investigation on an individual, nor is it possible to find out if a given person has a string of judgments against her. Except in the case that a newspaper reporter decides to attend the trial and report on the proceedings, we will never know about anything that happens in court.

Is the media biased against foreigners? Perhaps. But the judiciary (by this I mean the court, not including the prosecution), while not perfect, is probably the straightest institution in Korea.

UPDATE 11/28: Eagle-eyed reader Sean Hayes of the Korean Law Blog has pointed out on his blog today that Brendon is wrong when he says “The US Constitution does not recognize a right to privacy.” And he cites Roe v. Wade as a leading example of a Constitutional case built around an inferred right to privacy. Doh!—he’s right. (My own favorite is Loving v. Virginia.)

There is no express mention of “privacy” in the United States Constitution. The Constitutional “right to privacy” is an inferred right, constructed by interpretations of the limits on government powers in the Constitution—notably, its First, Third, Fourth, Fifth, Ninth and Tenth Amendments. But where I would differ from Sean (he’s the Constitutional scholar, though, and I’m merely a working commercial lawyer) is that these amendments to the Constitution do not create the kind of atmosphere in our American society where the workings of the government are kept secret from the people on privacy grounds.

Re-Examining Cyber-Squatting

by Brendon Carr

Our associate Sun-Hee Kim, a very strongly bilingual Korean attorney (yes, although she attended elementary and middle schools in the US and UK, Sun-Hee came back to Korea and powered through high school and college, and passed the Korean bar examination) at our firm Hwang Mok Park P.C.  I work closely with Sun-Hee and am positively gobsmacked at how much better prepared she is for international practice than even many of the partners were at the larger Korean firms I worked at earlier in my career. These days one may find a number of Korean attorneys (still a limited number, but many more than in the past) who are strongly bilingual. I’m afraid of them. (We all are, actually.)

In tomorrow (July 25)’s Korea Herald she has a piece in the long-running “Law Talk” series to which HMP contributes. The Herald limits contributions to 550 words, which as you know means that no legal topic can be covered in any depth at all. At 550 words, we’re just getting started. Last Friday I spent some time editing Sun-Hee’s piece, which started off around 850 words, shaking and baking it until it got closer to the newspaper’s target. But to be frank, 550 is a straitjacket which prevents conveying anything of any value. On the Internet, however, there is no word limit. Since this topic is of wide interest, I asked Sun-Hee for permission to reproduce her original text. She kindly spent some time over the weekend to add a little more explanation. We hope you find it interesting.

Read More...

Novel Sexual Harassment Claim #1

by Brendon Carr

I don’t think I could ask for a better reference from an employer. Strangely, he didn’t like it.

Ominous Search Terms: Lawyers Professional Indemnity

by Brendon Carr

It’s really interesting what one can find via the server logs. Today I see a global reinsurance company has been browsing Korea Law Blog after finding its way here via Google search for the terms ”lawyers professional indemnity largest claim korea”—yikes. I’m sure there’s an interesting story behind that search (and I would love to hear it).

To my knowledge there has not yet been a large lawyers’ professional indemnity lawsuit in Korea which has proceeded to judgment. This profession is still far too clubby for that. In fact, very few lawyers carry professional-indemnity insurance, because they are secure in the knowledge that there isn’t any reasonable possibility of a judgment against them. Not because the judiciary will protect them, but because no Korean lawyer will take a professional-indemnity case, least not for a foreign client against a Korean law firm. There is a hell of a lot of malpractice going on here, same as in any other legal market around the world, but as yet it is not subject to meaningful market discipline in the form of monetary damages hanging over the heads of the lawyers.

Things will change. Too many new lawyers are being turfed out into the marketplace for them to maintain that solidarity forever, and the young English-speaking Korean lawyer who carves out the niche as the foreigners’ bulldog for professional-liability cases is likely to have his or her hands full toute suite. But as for today, if you’ve got a large lawyers’ professional indemnity claim and insist that it be handled by one of the major English-speaking international firms in Seoul you’re probably out of luck. I would still love to hear the stories, though.

UPDATE 7/24: I spoke to a partner in passing about this issue, and he said that the issue is not that no Korean lawyer will take a professional-indmenity case, but that lawyers would be extremely reluctant to take a case unless the evidence was clear and convincing. This is, after all, a very small community of less than 10,000 practicing attorneys. There have indeed been professional-liability cases against individual lawyers, for matters relating to mismanagement of client funds, failure to meet filing dates, and similar misconduct, but in respect of cases concerning overlooking legal issues or failure to inform of risks the body of jurisprudence is still quite lacking.

Sugar Makers Get Smacked for Cartel

by Brendon Carr

The Korea Fair Trade Commission (KFTC) has slapped three Korean sugar manufacturers with a total of W51.1 billion (US$55.8 million) in fines for 15 years of price fixing, reports the Chosun Ilbo today. Faced with competition from imports, the Korean manufacturers decided solidarity and market manipulation would be preferable to real competition—thus costing consumers, according to the article, W520 billion (US$568 million) in higher prices they had to pay for sugar and products containing sugar during that period. Half a billion dollars sounds like a lot of money, but over 15 years and split between three companies, it probably wasn’t all that much in profit.

The KFTC is also referring criminal prosecutions against executives of two of the companies. The executives face fines or jail time. Interestingly, CJ Corporation, which has already been found to have engaged in price fixing in respect of three categories of staple foods, and which had the largest share (48%) of the fixed market, will enjoy the “whistleblowers’ leniency” for its cartel activity. Half the W22.7 billion that CJ was fined is being exempted, and CJ executives will not be prosecuted—because CJ rolled over on its erstwhile co-conspirators. Leniency is a powerful tool to crack cartels, and KFTC is smart to use it.

Is it me, or is the KFTC more active than ever before? It’s not just me. Yonhap News reports that the KFTC has slapped fines of W329 billion (US$360 million) on companies in the first six months of 2007. That’s against only W111 billion in all of 2006, and a total of W1.2 trillion in the 20 years since 1988 when the KFTC acquired the power to fine. So the first six months of 2007 has produced fines for collusion equal to nearly 25% of the preceding 19 years.

For law hounds, the relevant article of the Monopoly Regulation and Fair Trade Act (MRFTA) is Art. 19, which prohibits “Improper Cartel Activity”.

Paragraph (1) of this Article provides:

No business shall agree with other businesses by contract, agreement, resolution, or any other means to jointly engage in an act, or to permit others to engage in an act, which falls under the following subparagraphs and unfairly restricts competition (hereinafter referred to as “Improper Cartel Activity"):

1. Fixing, maintaining, or changing prices;

2. Determining terms and conditions for transactions of goods or services, or payments of prices therefor;

3. Restricting production, delivery, transportation, or transactions of goods or services;

4. Limiting the territory of trade or customers;

5. Preventing or restricting the establishment or extension of facilities or the installation of equipment necessary for the production of goods or the rendering of services;

6. Restricting the types or specifications of goods or services in producing or transacting goods or services;

7. Jointly carrying out and managing the main parts of a business, or establishing a company [or other organization] to jointly carry out and manage the main parts of a business; or

8. Any other practice not enumerated at subparagraphs 1-7 that substantially limits competition in a business sector by means interfering with or restricting the activities or scope of business.

These definitions are very broad. In a better environment, there would be many clear administrative-tribunal and court precedents to interpret what is meant by these categories. Unfortunately, in Korea the history of KFTC enforcement is fairly short (see the total fines cited above) and many of its past “successes” have been accomplished through “administrative guidance” or informal cautions to companies to do or not do something. These are not published.

Still, our experience with similar matters is broad enough that we can offer the following concrete examples of what not to do:

• Price fixing—of course this is no good
• Market segmentation or agreements to divide territory in order to avoid competition
• Agreements to hold price cuts within a certain limit
• Agreements to set a certain price ceiling for raw materials purchase from third parties
• Division of customer lists, sales territories, or worker pools
• Production pooling, where such pooling is not approved by KFTC
• Agreements to limit or control wage hikes
• Agreements to limit or control output

This doesn’t mean you can’t discuss matters of common concern. But give the KFTC’s sudden—and welcome—enthusiasm to enforce the law, anything that gives the appearance of collusion between companies to reduce competition is a strict no-no. Because the line between discussion of common concerns and collusive behavior is so difficult to gauge, we recommend anyone going into such a meeting keep a recording, so that the fact a certain topic was raised cannot be distorted into a conclusion that in fact there was agreement to take action in respect of that topic.

And given the leniency principle for whistleblowers, if there is any concern about becoming or having become involved in an unlawful scheme, talk to your lawyers and then run, don’t walk, to the KFTC.

UPDATE: After this, I tuned into China Law Blog and found the topic of today is price fixing—namely, how China Law Prof Blog (greetings to Prof. Donald Clarke!) reports five Beijing milk companies have issued a press release touting their collusion to prevent ill effects from an “undisciplined market.”

Enforcement of Foreign Judgments in Korea—Tips and Traps

by Brendon Carr

China Law Blog (I read it every day, and you should too) from time to time will touch on the profound misunderstandings that American and foreign (but, really, mostly American) clients and colleagues have about suing a Chinese defendant. For some reason, they often think it’s a great idea to sue in the United States (American courts are better, after all) and are egged on by US lawyers to plow through to a default judgment when the Chinese defendant doesn’t turn up. I’m sure they think Aha! Gotcha, you bastards! when that default judgment is in their hands.

But the default judgment is basically worthless, as Dan Harris explains:

Caller: I have a two million dollar judgment against Chinese company X in China, can you help me enforce it?

Me: Is it a default judgment here in the United States?

Caller: Yes.

Me: The Chinese courts don’t enforce United States’ judgments and though they often at least look at the basis for a United States judgment on the merits, they don’t give any credence whatsoever to United States default judgments. To collect against this company in China we will need to sue them anew in China. Did you discuss this possibility with your U.S. lawyer before you sued here?

Caller: [long silence] .... Yes. He told me getting a judgment here couldn’t hurt?

Me: Did he charge you to get it?

Caller: Yea. I had to pay him and I had to pay all sorts of people to get that company served in China.

Me: Sorry.

I have had this exact same conversation dozens of times from my vantage point here in Seoul, including cases where the client’s US lawyer in Bakersfield or somewhere like that has persisted in US litigation despite the existence of an arbitration clause in the agreement.

See Chinese Companies Can Say, “So Sue Me”, and Enforcing Foreign Judgments in China—Let’s Sue Twice for background.

The foreign-judgment enforcement picture in Korea is not as bleak as in China, in that Korea’s Code of Civil Procedure expressly recognizes conditions for the enforcement of foreign judgments, namely:

1. Jurisdiction. The Korean court must be convinced that the foreign court had proper jurisdiction over the controversy settled by the judgment.
2. Proper Service of Process. The defendant, if Korean, must have actually received service of process by methods not improper under Korean law—i.e., not service by notice or publication. In this regard, at the commencement of planning litigation against a Korean defendant, counsel are cautioned to take note of Korea’s accession to the Hague Service Convention, which prescribes methods of delivering judicial process. Ignore this at peril of an unenforceable judgment.
3. Not Contrary to Public Policy. The statute says enforcement of a foreign judgment “should not be contrary to the public order and good morals of Korea”, which is a matter difficult to define. In principle, it means that certain matters of mandatory Korean law—such as matters concerning property rights, family law, etc.—should not be settled by foreign courts. But there is a trap here for the default-judgment holder, and that is the Korean court is generally pretty lenient about rescheduling or suspending procedures where the defendant does not respond. Getting a default judgment in the US based on failure to appear presents the possibility of a public-policy objection to enforcement in Korea.
4. Reciprocity. The foreign state issuing the judgment must afford Korean judgments reciprocal recognition and enforcement. Any state which is found not to enforce Korean judgments—or, in some cases, which cannot be proved to have enforced Korean judgments—will find judgments of its courts not enforceable here.

In my experience, reciprocity between US courts and Korean courts is not a problem, and in commercial disputes public-policy considerations rarely are raised. That leaves jurisdiction (check the clauses of your agreements, and get an opinion on Korea’s Private International Law Act), and service of process. By far, the most common and tragic mistakes I see involve the US lawyer’s ignorance of the Hague Service Convention, or (worse) unwillingness to let the time required for proper service delay the commencement of proceedings.

But even if you do everything right, none of it matters if there’s nothing in the cupboard when you get your judgment. Over at China Law Blog, in the comments to “Chinese Companies Can Say, ‘So Sue Me.’”, I left a comment that bears repeating here:

Although there are a lot of laws which aren’t respected, when it comes time to enforce your [foreign] judgment you’ll find that limitation of liability by share capital is one which is observed all around the world.

So your judgment against XYZ Co., Ltd. in Seoul doesn’t do you a bit of good if the managers of XYZ clear the bank accounts out once they know a dispute is possible (you should silently file a pre-judgment attachment against accounts and against shares in the company, then start blustering about possibly taking legal action) or if the company is basically an insolvent shell.

Always, always, always take reliable security in advance. If your partner can’t get a domestic financial institution or insurer to put up a letter of credit or a performance bond, that should be a signal to you. Where nobody in China wants to be this guy’s unsecured creditor, why should you volunteer?

In future days I’ll post some tips on how to take good security. Only a few will see them before opening trading relations, however. So at a bare minimum, if you can’t take good security in advance, at the very least before commencement of proceedings do a thorough due diligence on why you’re suing, and whether you can gain anything from the process.

Getting Rid of the Representative Director: Seven Corporate Governance Tweaks for Your Company

by Brendon Carr

Another day, another country manager to remove at short notice. Honestly speaking, as my practice has come to have more and more of an employment-law component over the years, I must have been involved in the termination of 200-250 employees including the most difficult of all—the Representative Director. These days it’s at least one of them per month.

It’s a fact of business that the management of a company—unless the management also owns the company—serves at the pleasure of the shareholder. And the corollary of this is that the management has to leave upon the displeasure of the shareholder. But the shareholder’s ignorance of Korean law and a failure to plan for this disaster can make things more difficult than need be—it’s not necessarily the client’s failure, but rather may also be described as a failure of the legal advisor to anticipate future needs. Just because a client hasn’t asked about the issue doesn’t mean it doesn’t exist. I admit having been as complacent as the next guy in this regard, which is why today I offer some tips based on hard experience.

Here are seven recommendations for corporate-governance practices which should be adopted by foreign-invested companies in Korea. Check your company’s Articles of Incorporation, and if necessary, schedule an amendment of the Articles:

1. Increase Directors. Most foreign-invested companies start off with a Board of Directors comprised of three (3) directors, which under the older iterations of the Commercial Code was the minimum number required by law. Change the number of authorized directors from three to five, and appoint at least one more (a fourth) director. See the next item for the reason why.
2. Keep a Spare Representative Director. Change the Representative Director system of the company from single R/D to multiple R/D, and appoint one of your headquarters-based officers as a second, independent Representative Director. Because a company must have at least one Representative Director, snap removal of the Korean-resident one—if necessary—is made very difficult if the company only has the minimum three directors and there is no other Representative Director already in office. But if you have four directors and one of them is another Representative Director, then poof!—a troublesome Korean-resident Representative Director may be removed overnight.
3. Adopt Direct Election. By default, the Commercial Code provides that the Representative Director is elected by the Board of Directors from among its members. Convocation of the Board can take some effort because people travel or are otherwise unavailable. Change the election method for Representative Director from vote of the Board of Directors to direct election by resolution of the shareholders. This way, the shareholder cannot be frustrated in its desire to convene a meeting by the refusal of the Representative Director to attend the Board of Directors’ meeting.
4. Shorten Directors’ Term of Appointment. Change the term of appointment for all directors and the statutory auditor from three years (the bog-standard Korean company would have a three-year term, which is the longest allowed by law) to one year. The reason to shorten the term of office from three years to one is that the Commercial Code gives sacked directors a right to claim compensation (their salary for the remaining balance of the appointed term) when removed “without cause”. The standard is less than the “just cause” required to sack an employee under the Labor Standards Act, so it’s not insurmountable, but things are made much easier when the potential liability—and therefore the company’s exposure in a dispute—is capped by a shorter term of appointment
5. Open Up the Convocation Power. Allow any director to call a meeting of the Board of Directors, or a meeting of the shareholders. Another reason to have a second Representative Director is that by default under the Commercial Code, only the Representative Director has the power to convene a meeting of the shareholders. Sometimes in a control struggle the Representative Director, knowing his neck is on the chopping block, will refuse to convene a shareholders’ meeting and we are forced to go to court to obtain an order convening the meeting. But if there is a second Representative Director, that second Representative Director can convene the meeting. What if that second Representative Director is unavailable? If this recommendation has been adopted, any other director convenes the meeting, the shareholders resolve to axe the problem first Representative Director and things roll merrily along. This adds flexibility.
6. Authorize Video Conference Meetings. The Commercial Code does authorize meetings of the Board of Directors to be held by the telecommunications-based method of video conferencing, as well as in person. By contrast, telephone conferencing is not allowed. Modern technology permits for recording and archiving of computer-based conferencing, which is recommendable for evidentiary value.
7. Authorize Meetings Anywhere. By default, it is expected that meetings of the Board of Directors and the Shareholders should be held in the registered headquarters of the company. Amend the Articles of Incorporation to permit meetings anywhere in the world.

We can’t promise that these recommendations will cure all your heartaches, but they should strengthen the shareholder’s hand and reduce operational impacts in the case of the need to terminate the Representative Director.

Korean Legal Market Opening to Begin?

by Brendon Carr

Get distracted for a minute and you can miss some really Earth-shaking news. Yesterday’s Law Times (Korean-language) newspaper reports that the Foreign Legal Consultants Act is about to leave committee and head to the National Assembly for approval or rejection. On July 18 the committee studying the law scheduled a public hearing for August 7 to solicit opinions on the law. Thus the long-awaited legal-market opening appears imminent.

And I said it would never actually happen. My experience here over the last 10 years, where every year the legal market has been said to be opening “in two years”, has made me cynical on this topic. So the Law Times has brought a nice surprise, one which will restructure the legal market to be sure, but which will be of enormous benefit to the nation.

I’ve got an English translation of the Act, but it’s about a year old by now and some details may be different. We are currently comparing the publicly-announced version of the Act to the old English translation. Interested parties should check with us (drop me a line through this site) and we’ll be glad to share an updated English translation with anyone who wants one.

Credentials Scandal Claims Another Victim

by Brendon Carr

Star English teacher and KBS Radio “Good Morning Pops” host Lee Ji-Young has become the latest Korean “star” to be unmasked as an academic fraud. The Chosun Ilbo reports that Lee claimed bachelor’s and master’s degrees from the University of Brighton in England but that she had never actually attended that university. (She did, however, enroll in a UK language institute for a year and then attended a “polytechnic” school—which I presume to be a vocational/technical institute—in Brighton for a year.)

It will be interesting to see whether Ms. Lee is fired over this. Legally speaking, she has an argument that KBS would not have cause to terminate her employment, because she was recruited to host her program based on her past performance as a media host, and a college degree in English is not material to whether she is qualified to host one of those “educational” programs. It’s possible there is some regulation which says that anyone “teaching” English on TV must hold a teacher’s certificate or be a native speaker of English (such a regulation does exist in respect of “home-shopping” sale of insurance products, where each person who appears in the advertisement must hold an insurance agent’s license), and that would change things in respect of Ms. Lee’s legal position.

However, it’s pretty clear she’s toast.

UPDATE: One hour after I posted this, the Marmot’s Hole relates that Ms. Lee has been forced off her show. This is beginning to look like a social wave—like small-town suicides come in waves once someone goes first. If you’re an employer who has a “suspicious” employee that you want gone, now is definitely the time to confirm credentials and put the squeeze on. A background check at the time of hiring is always better, but in our experience whenever there are rumors floating around the office that a certain employee (usually a real bully who brings everyone else down) is a fraud, the investigation always turns up something.

Contact my friend Mr. Jungnam Chi, former Los Angeles Times Seoul Bureau reporter and now an investigative consultant, at his company Providers Korea for a quotation on background checks. Another excellent independent consultancy, which in the past has done excellent work for us (but these days I’m not sure they’re still doing background investigations as they have a thriving security-consulting practice) is Prescient Consulting. Plus the usual Hill & Associates, Kroll and other suspects are around town as well.

UPDATE 2: This just in! The social wave is confirmed. We’ve now got an admission that overly plastic-surgeried “Miss World Cup 2002”, pop tart Mina is not 29 as she originally claimed, but a decrepit 35! Stay tuned for more jaw-dropping revelations. (Thanks to the Marmot’s Hole.)

Another Resource on Korean Law: KoreaLaw.com

by Brendon Carr

Over in the blogroll, astute observers will note I’ve added KoreaLaw.com. While not really a “weblog” per se, KoreaLaw.com has enough useful content to make it worthwhile to check for information about Korean business law.

Although they make it hard to find out who’s behind it (no name, phone number, or link to their firm site), Korea Law Blog is glad to tell you KoreaLaw.com comes from Sigong Law P.C., a boutique firm south of the river, and specifically two of its foreign legal consultants Mr. Hoon Lee and Ms. Jenny Cho. Browsing through Sigong’s members, one might notice a strong commonality—all of their senior members come from our firm Hwang Mok Park P.C.

Although they left HMP before we joined in February, my partner Mr. Doil Son and I have had the experience of working across from Mr. Lee on the world’s biggest photovoltaic solar energy plant project, in which he was counsel to the construction company and prime contractor Dong Yang Engineering & Construction. We found Mr. Lee easy to work with and capable. If you don’t hire the best lawyers in town (that’s us), you would not go wrong with Sigong.

Check out KoreaLaw.com if you have a chance. 

Customer Service in China: Trust No One!

by Brendon Carr

Lefty public radio has a great piece on “customer service” in China and the greater effort necessary to assure quality. My friend Sperwer calls it the “brain damage” necessary to do business in Asia. He says it mainly in respect of Korea, but from the story it looks to be the case everywhere in Asia. My guess? Lack of common cultural understanding is to blame. Foreigners respond to all the wrong cultural cues, and are completely oblivious to many screaming warning signs.

(Hat tip to the always excellent China Law Blog)

Forged Credentials and Korean Employment Law: What to Do With Professor Shin

by Brendon Carr

The latest scandal du jour occupying headlines in Korea is the case of disgraced Dongguk University art professor and wunderkind museum curator “Dr.” (and this is the crux of the matter) Shin Jeong-ah, whose appointment to chairmanship of the prestigious 2008 Gwangju Biennale (I know, what?—but apparently it is something in the art world, and especially in Korea’s art world) proved to be the straw that broke the camel’s back, leading to her dirty little secret being outed.

You see, it seems “Dr.” Shin lied about her Yale Art History Ph.D. and her M.A. and B.A. from the University of Kansas. (I’m from Columbia, Missouri—if I had attended KU I would have to lie about it too!) If the allegations against her are true, Prof. Shin not only did not finish a Ph.D., but she dropped out of KU in her third year without a degree. So she is a high-school graduate and art curator.

Her story is chronicled in a zillion articles, but as of this writing my favorite is a Chosun Ilbo editorial entitled “The Fraud Who Commanded Korea’s Art World”.

So why hasn’t she gotten the sack yet?

Generally speaking, an employer seeking to terminate an employee faces the obstacle of Art. 31 of the Labor Standards Act, which requires “just cause” for termination of an employee. Court precedents interpreting this concept of just cause have limited just cause to be some “fault attributable to the employee”—some misconduct or breach of trust so serious that it’s not possible to continue the employment relationship even with efforts to remediate the problems. These cases have established that such fault includes but is not necessarily llimited to continuous and persistence unsatisfactory performance, criminal or deliberately tortious acts committed against the employer (or in some cases, against another employee; for example, sexual harassment), an “improper relationship” with another employee, and—germane to the case of the errant “Dr.” Shin—material misrepresentation in the hiring process.

“Material misrepresentation” means that the misrepresentation had some concrete connection to whether or not the candidate would have been hired. It would not, for example, be considered material if an applicant had said that she had served in the Navy except in the case that prior Navy service was essential to successful performance in the position. A taxi driver who claimed to have graduated from Yale could not be dismissed on the basis of that statement, because a Yale degree is not essential to getting hired as a taxi driver. However, most universities do require an advanced degree in the subject for which a professor is being hired. If “Dr.” Shin lied about her degree(s)—and she is now attempting to get over by admitting her “dissertation” was plagiarized (something which is not unusual among Korean Ph.D. holders) but that she did in fact obtain the degree—then the good professor is in some trouble.

So, it appears there is “just cause” to terminate. Again, why hasn’t she gotten the sack yet? I wrote about this in the comments to a related post on the Marmot’s Hole:

Getting hired based on forged credentials is “just cause” for termination under the Labor Standards Act, but an employer cannot simply can someone the minute it is discovered there is substantive just cause. The employer is also required to follow its own regulations and procedures in respect of disciplinary action — to follow so-called procedural just cause as well.

So they give her a few weeks to run around with OJ and the Clue Crew looking for the real forgers, then summon her before the university’s disciplinary committee to explain herself and to provide evidence supporting her version of events. Then they fire her.

One of the things we’re learning as this goes along is that Dongguk University, like so many other employers including major multinationals, was so impressed by her personality and command of English that the university failed to verify her credentials. Dongguk apparently did not verify her Kansas undergraduate and graduate enrollment records, and accepted from Prof. Shin a faxed copy of a “Yale” diploma which apparently bears little resemblance to an actual Yale diploma. Today the university, apparently embarrassed at it becoming known how incompetently they check their applicants, tried to convince the public that they had in fact tried to verify by dispatching letters addressed to “University of Kansas, USA” and “Yale University, USA”. But Dongguk never followed up when those letters were allegedly not answered.

I have encountered this so many times in my career here as an employment lawyer. Multinationals tend to hire for English first, and in the early days of getting set up, they hire the first available smiling face that can speak English. That’s a recipe to get burned, and a lot of them surely do get burned.

Advice to employers: Verify the background of everyone who applies for a job, and gather as much information (including information about family members, which is not generally available but which becomes invaluable when fraud is discovered, as it is usually a family member who helps with the escapade) at the commencement of the employment relationship, when everyone is happy and helpful. Once you’re suspicious, it’s way too late to get the information you need.

And don’t—for the love of God—get mesmerized by language ability and a firm handshake.

Bird Flu (H5N1 Influenza) Preparation and Korean Law

by Brendon Carr

Maybe it’s all hype, but bird flu season approaches and the usual doomsday predictors of pandemic are making their announcements.

Last May, before we merged into Hwang Mok Park, my former law firm SEOUL Law Group helped leading Hong Kong law firm Johnson Stokes & Master prepare a regional survey entitled “Pandemics and the Workplace: A Regional Analysis” which focused on the preparations an employer should make and what steps could be taken in response to an outbreak of bird flu or other deadly contagious disease. That report is being checked again and updated for this bird-flu season (and to change our phone numbers and logo), but if anyone is interested to receive the former version please contact me through this site and I’ll be glad to forward.

Fix for Internet Explorer 6 “Drop Float” Bug in Brian Gardner’s “Silhouette” Theme

by Brendon Carr

Korea Law Blog uses an off-the-shelf free template called “Silhouette”, designed for WordPress blogs by Brian Gardner. I’ve adapted my own HTML templates for the content-management system I use and recommend—ExpressionEngine from EllisLab. But some folks in my office told me on Friday there was a problem with the display of the third, right-hand column on their PCs. Because Koreans all—all—use Microsoft Windows and Internet Explorer, and I don’t, this looked to me to be one of Internet Explorer’s many bugs in the display of cascading stylesheets.

For those with the “dropped-column” problem in Internet Explorer 6, be aware that you’re experiencing a known bug in Explorer and others have found the solution. After noticing the problem, I did a search on “IE float bug” yesterday evening and found that this is known as the “drop float” bug. It took all of five minutes on Google to find an example, verify the fix, and update my CSS. The following addition to the base Silhouette CSS fixed it for me:

* html #r_sidebar {
display: inline;
margin-left: -200px;
}

If you add this code above to your stylesheet, your dropped column should be showing in the correct place. Brian, you might think about adding this to the base CSS for Silhouette.

Although I haven’t tested it, comments to this drop-float hack in other forums indicates this will crash IE if you attempt to print the document. This means you ought to put together a print-media CSS stylesheet as well. As for me, I use Safari on Mac (because Macintosh OS X rocks) but we have to admit, IE6 still has a significant market share and we need to take account of its quirks. If there is anyone using this site with IE7, I’d appreciate feedback as to whether or not it does in fact work under that browser too.

Time to Make Big Foreign Direct Investment Play on North Korea?

by Brendon Carr

Via Tom Coyner’s Korea Economic Reader clipping service, we learn that Egyptian cement giant Orascom (I’ve learned this name through travels in India and by watching StarTV; I think they have a big-time telecoms company affiliate) today announced a very substantial investment ("total value” US$115 million, although we aren’t told clearly whether this is for the 50% stake Orascom is taking, or the new valuation for the total enterprise) in a North Korean cement plant.

The deal, which might be for more than just the cement factory, is definitely bold and visionary, as it anticipates a surge in infrastructure investment—all of which needs cement—in North Korea. From the press release, it seems Orascom is getting into more than just the cement plant:

Based on the signed agreement, OCI will acquire 50% of Sangwon Cement for a total value of US$ 115 million. The acquisition will take the form of a capital increase from which the proceeds will be used to modernize, rehabilitate and upgrade the plant capacity to reach 3 million tonnes per year. The proceeds will also be used to invest in ready-mix concrete and distribution activities. In addition to the Sangwon cement plant, the agreement also includes mining perations related to the cement production including limestone quarries, a coal mine and a gypsum quarry. It also includes a dedicated hydroelectric power station near the plant. The plant also has its own railway connection to the national railway grid which connects the plant to the Port of Nampo thus allowing for exports.

So, basically, Orascom is providing money and knowhow, North Korea will provide access to skilled, low-cost labor, raw materials, and a clapped-out factory site—of which there is an abundance in North Korea—and they will split the profits 50-50. Still, US$115 million (even US$57.5 million) is a very large investment while these days South Korea is having a hard time attracting new foreign investment. Things are not good when the big investments are north of the DMZ. Obviously that’s a bit of a joke, when this past year’s FDI total for South Korea was US$3.6 billion (3M alone just dropped US$140 million on a new plant in Hwaseong), and North Korea hasn’t really had new foreign investment in the last 20 years.

Let’s hope Orascom’s vision is realized. The precondition for that infrastructure-investment surge is peace, stability, and some opening to the outside world. Those all sound good to me.

There are at least three law firms which now claim North Korea offices (interestingly, all three have claimed “first” status):

• British/US lawyer (and former Bae Kim & Lee foreign legal consultant) Dr. Michael Hay’s Hay KALB & Associates, which opened in summer 2004
• Italian law firm Birindelli e Associati, which formed a joint venture called BeA-KJC Law Office with the Korea Jurist Committee in 2005
• Singapore law firm Kelvin Chia Partnership

Did any of these firms assist Orascom in the deal? Korea Law Blog hopes to find out.

What David Beckham Can Teach Us About Korean IP Law

by Brendon Carr

David Beckham—apparently he’s a soccer player from England—has arrived in Los Angeles to vault Major League Soccer and his new team the Los Angeles Galaxy into the stratosphere of popularity. ESPN.com columnist Gene Wojciechowski chronicled the feverish excitement around the great man’s arrival and introduction. Apparently, not everyone got the word:

[In the reporters’ event suite] Beckham, 32, doesn’t say anything particularly interesting. Wait, that’s not exactly true. He says he approached one of his new Galaxy teammates earlier in the morning and said, “Nice to meet you.” The teammate said, “Nice to meet you too. What’s your name?”

This made me laugh out loud. Here in Korea, where my cable television carries CNN International, they haven’t stopped talking about Beckham this, Beckham that all weekend long. I hope they shut up about the guy soon. How am I going to find out what Paris Hilton ate for lunch if this keeps up?

But there is a lesson in all this for both of you, dear readers of Korea Law Blog. Don’t be so sure your “famous trademark” is so famous here in Korea. The only effective way to protect your intellectual property is to be the first person to register because Korea is a first-to-file jurisdiction. And don’t forget the domain names either!

Filing your trademarks won’t necessarily protect you completely, but it’s a start and the only way to win this game is to play by Korean rules. See also discussion of Starbucks’ problems from the Marmot’s Hole earlier this year.

Korea Fair Trade Commission Moves Closer to “Global Standard”

by Brendon Carr

A blurb in the Korea Times today (I know, I know—Who reads the Korea Times? But it is published in English, which makes it a more fruitful link for non-Korean readers) sheds light on some of the decisionmaking of the Korea Fair Trade Commission concerning merger control. In the last year or two, the KFTC has been surprisingly active in enforcing market order and promoting open competition. And now it appears the KFTC will be taking welcome steps to adopt standards understood around the world:

“Current rules take full account of various considerations when allowing M&A that goes beyond calculating excessive market share,” said Kim Byung-bae, vice chairman of the [KFTC].

Kim, however, said that the [KFTC] is moving to use the Herfindahl-Hirschman Index (HHI) as a reference to evaluate M&A requests.

The HHI is a measure of the size of firms in relation to the industry, and is used in the United States as a indicator of the level of competition within a business area. It could give anti-trust authorities an indication of possible dangers of market domination by a large company.

How does the HHI work? Businesspeople and lawyers with competition-law and M&A responsibilities already know, but for common understanding, I’d like to provide an explanation. According to the “For Dummies” version on the Department of Justice webpage:

“HHI" means the Herfindahl-Hirschman Index, a commonly accepted measure of market concentration. It is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. For example, for a market consisting of four firms with shares of thirty, thirty, twenty and twenty percent, the HHI is 2600 (302 + 302 + 202 + 202 = 2600).

The HHI takes into account the relative size and distribution of the firms in a market and approaches zero when a market consists of a large number of firms of relatively equal size. The HHI increases both as the number of firms in the market decreases and as the disparity in size between those firms increases.

Markets in which the HHI is between 1000 and 1800 points are considered to be moderately concentrated, and those in which the HHI is in excess of 1800 points are considered to be concentrated. Transactions that increase the HHI by more than 100 points in concentrated markets presumptively raise antitrust concerns under the Horizontal Merger Guidelines issued by the U.S. Department of Justice and the Federal Trade Commission. See Merger Guidelines § 1.51.

When foreign clients consider investments in Korea, competition-law reporting under the Monopoly Regulation and Fair Trade Act (MRFTA) is always a factor—whether it’s making the deal impossible because of excessive market concentration, or affecting the closing schedule because we’re hanging around waiting for KFTC clearance. Knowing that the HHI is an element to be considered by KFTC in deciding whether or not to approve an acquisition is an important step toward being able to predict regulatory outcomes.