The Private International Act, which determines the general principles and governing laws on the international jurisdiction of legal relations that contain foreign factors, will undergo a comprehensive revision for the first time in 17 years since 2001. The Ministry of Justice made a prior announcement of the bill to amend the Private International Act (the “Bill”) and held a public hearing on February 27, 2018. Once the Bill is passed, it is expected to bring significant changes to the process of resolving international disputes involving foreign factors.
I. Summary of Key Changes
The following is a summary of the key changes proposed by the Bill.
1. General Principle of International Jurisdiction
The Private International Act currently provides that a Korean court shall have international jurisdiction if a party or a case in dispute is “substantively related” to the Republic of Korea, but does not provide the specific criteria for determining the existence of “substantive relations.” The Bill fills in this gap by expressly stating that a court shall consider “fairness to parties and the propriety, efficiency and cost-effectiveness of litigation” in determining the existence of substantive relations (Article 2), which reflects the standard established by the Supreme Court in a series of cases (e.g., Supreme Court decision 2002Da59788 dated January 27, 2005, Supreme Court decision 2010Da18355 dated July 15, 2010).
2. Newly Added Provisions Corresponding to the Jurisdictional Provisions in the Civil Procedure Act
(1) General Jurisdiction Provision
The Bill added a new provision that corresponds to the general jurisdiction provision in the Civil Procedure Act (Article 3). In suits against natural persons, a Korean court shall have international jurisdiction over defendants who are domiciled in Korea, or defendants residing in Korea but whose domicile is nonexistent or unknown. Moreover, a Korean court has international jurisdiction over an entity or person other than a natural person that was incorporated under the laws of Korea, or has its principal place of business, statutory seat, or central administration in Korea.
(2) Provision on Jurisdiction for Related Claims
The Bill also added a new provision corresponding to the related claims jurisdiction provision in the Civil Procedure Act, which expressly states that, in case where several claims are joined in one lawsuit, it may be brought to the court having international jurisdiction over one of these several claims (Article 6). This change is expected to increase the efficiency of lawsuits by facilitating the evidence-gathering process, for example, as well as to prevent the risk of contradictory or conflicting decisions being rendered by the courts of multiple countries.
(3) Provision on Jurisdiction by Agreement
The Bill created a provision on jurisdiction by agreement, which states that parties may enter into an international jurisdiction agreement with regard to a lawsuit based on a specific legal relationship (Article 8). Such agreement is valid unless it falls under one or more of the enumerated exceptions that invalidate it (Article 8 Section 1 Subparagraphs). Furthermore, an exclusive international jurisdiction will be presumed from such agreement, unless indicated otherwise by the parties (Article 8 Section 3).
(4) Special Jurisdiction Provision
In accordance with the special jurisdiction provision in the Civil Procedure Act, the Bill newly provides that a lawsuit may be brought in Korea if it concerns the affairs of an office or business place against a person or entity who (i) keeps such an office or business place in Korea, (ii) conducts systematic business or sales activities in Korea, or (iii) directs such business or sales efforts to Korea (Article 4).
In addition, in order to promote the efficiency and accuracy of enforcement, the Bill provides that a lawsuit may be brought in a Korean court if the object of a claim or security is located in Korea, or the defendant’s property subject to seizure is located in Korea (Article 5).
3. Concurrent Proceedings in Foreign Courts
The Bill added a new provision on concurrent proceedings filed in Korea, where a lawsuit involving the same cause of action between the same parties is already on-going in a foreign court (Article 11).
Specifically, the Bill authorizes a Korean court to stay the concurrent proceeding filed in Korea, either by its own motion or by application of a party, if the following factors are satisfied: (1) the parties are identical to the on-going foreign proceeding, (2) the cause of action is identical to the on-going foreign proceeding, and (3) a decision that the foreign court will render will likely be recognized in Korea.
However, the Bill provides for an exception to this rule under two circumstances. A Korean court shall not stay the proceeding if it has exclusive jurisdiction by agreement, or when it is clear that resolving the dispute in a Korean court is more appropriate than resolving it in a foreign court.
II. Significance and Future Prospect of the Bill
As illustrated above, the Bill provided clear jurisdictional standards for each category of disputes concerning the existence of international jurisdiction and clarified the specific instances in which a Korean court may have international jurisdiction over disputes involving a foreign factor. Specifically, the Bill achieved this purpose by adding a number of new provisions that reflect the international principles governing international jurisdiction and significantly revising existing provisions that were previously unclear. As a result, once the Bill is enacted into law, parties to an international dispute will be better able to predict the existence (or absence) of international jurisdiction, and international disputes will be handled more efficiently across the board.