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Noh Woong-rae, director of Media and Win-Win TF Media of the Democratic Party (center), explains the results to reporters after the meeting in the National Assembly on the 9th. Reporters from national companies
In the first half of this year, the government is promoting the legislation of the ‘Three Litigation Abuse Act’. These are the amendments to the Basic Consumer Law, the enactment of the Collective Lawsuit Law and the amendment to the Commercial Law that completely introduces the punitive damages compensation system to revitalize the litigation of consumer organizations. Following the approval of the Third Corporate Regulation Law (amendment to the Trade Law and Fair Trade Law, enactment of the Financial Group Integrated Supervision Law), led by the ruling party last year, the ‘Namso Legislative Tsunami’ government is coming to jail companies. It is analysis.
According to the Proposal Information System of the National Assembly on the 9th, the government recently presented 210 cases of ‘plan to present legislation to the National Assembly by 2021’ to the National Assembly. The Fair Trade Commission plans to push through six bills, including the Basic Consumer Law this year. It is expected that the Consumer Framework Law will contain content that allows lawsuits for indirect damages and direct damages caused by products. Consideration is being given to adding 11 members of the Korean Association of Consumer Organizations to the range of organizations that can file consumer group litigation. It also contains the removal of the litigation permit system, which allows a group lawsuit to be filed only for cases that meet specific requirements, such as damage to life and property of consumers.
The Ministry of Justice completed the legislative notification process for the enactment of the proposed collective action law and the amendment to the commercial law introducing a punitive damages compensation system, and submitted the bill to the Legislative Office. The Class Action Law contains the content of the expansion of the class action system, which applied only to the existing value field, to all fields. The system of compensation for punitive damages is a system in which a maximum of five times the amount of damage is compensated for damages caused by intent or negligence. The government will present the corresponding bill to the National Assembly next month. In addition, the Democratic Party decided to introduce punitive compensation for damages to the media and portals.
The business community is expressing great concern about the government’s legislative plan, which could lead to abuse of consumer lawsuits. Choi Jun-seon, Professor Emeritus at Sungkyunkwan University School of Law, said: “The number of side effects, such as the rapid increase in ‘planning lawsuits’ aimed at large amounts of compensation due to the Namso 3 Act, it will not cease. ” If companies go bankrupt due to excessive damages, who will be responsible? ”
Easy class action, up to 5 times the compensation … Like I’m competing, spilling ‘corporate law enforcement’
The government prepares to present 210 bills this year
In the first semester of this year, the government presents to the National Assembly one after another the three lawsuits (amendments to the Commercial Law and the Basic Consumer Law, enactment of the Collective Action Law), which induce consumer lawsuits in the first semester of this year. If these bills pass through the National Assembly, lawsuits against corporations will be easier and the amount of damages will increase up to five times. The experts pointed out that the lawsuits aimed at the liquidation of damages with companies will increase indiscriminately.
“Letigation without direct violation of rights and interests”
The government is considering a plan to contain the content of the amendment to the Consumer Framework Law, which will be presented to the National Assembly in June, to allow the filing of a lawsuit even if it does not directly infringe rights. and life, body, or property interests of consumers. It consists of subtracting the requirement of ‘direction’ of infringement of the rights and interests of the consumer from the requirements of collective litigation of consumers stipulated by current law. For example, if you can file a lawsuit only for direct damage caused by a water purifier malfunction when purchasing a water purifier, it means indirect damage such as mold that may occur after installing the water purifier, they are also subject to demand.
In addition, he plans to abolish the litigation permit system, in which lawsuits can only be filed after obtaining court permission, to simplify the litigation process. The intention is to facilitate the filing of a claim. The number of consumer organizations that can file lawsuits is also encouraged to increase by 10 or more.
A system of compensation for damages up to 5 times punitive was introduced
In September last year, the Ministry of Justice announced a bill to enact the Collective Lawsuit Law and a bill to amend the Commercial Law to introduce a system of compensation for punitive damages. According to the draft of the Ministry of Justice, the Collective Lawsuit Law allows consumers in general to file lawsuits against companies with 50 or more people, not consumer groups. Concerns arise that if the bill is handled, companies may be caught up in trial planning. When introducing a punitive damage compensation system, companies must compensate victims up to five times the amount of actual damages.
An official from the Korean Employers’ Association said: “Companies are affected by the image of the complaint only, causing business damage such as a stock price collapse and a credit crisis.” “Small and risky companies that are weak in responding to litigation will be threatened with a cost burden.” He insisted. Another trade official said: “If consumer class action lawsuits are promoted and a collective action system is introduced, the Lawsuits against companies will increase significantly. “” The Ministry of Justice and the Fair Trade Commission are lowering the threshold for class action lawsuits as if they were competing. ” Criticized.
He massively promoted the bill ‘Distribution Prison Period’
In addition to the three lawsuits, the government is pushing for a bill this year that tightens regulations on online platform companies and their affiliates. The ‘Draft Act on the Equity of Online Platform Brokerage Transactions’, presented to the National Assembly on 28 last month, contains the content that obliges online platforms to draw up contracts. About the bill, the industry protested vigorously, saying: “Writing a contract means revealing trade secrets.”
The ‘Fair Business Transactions Franchise Transactions Act Amendment’ is also promoted, requiring the franchise head office to obtain prior consent from affiliates when running advertisements or promotional events. The bill introduces a reporting system for groups of affiliated store business owners and includes the mandatory franchise headquarters to operate directly managed stores. The FTC is expected to present the bill to the National Assembly in March.
The ‘Amendment to the Consumer Protection Law in Electronic Commerce, etc.’, which imposes the obligation to ensure transparency in search results and portal search rankings, is also presented to the National Assembly. The revised bill is noted as an excessive violation of administration rights, as it includes information on the extension of the FTC’s stay order for search results and search rankings that are unfairly displayed.
Reporter Kim So-hyun [email protected]
