Noh Woong-rae, head of the Media and Media Win-Win TF of the Democratic Party (center), explains the results of the meeting to reporters after the meeting at the National Assembly on the 9th. National Company Reporters
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 Act, the enactment of the Class Action Act, and the amendment to the Commercial Act that fully introduces the punitive damage compensation system to revitalize litigation by consumer organizations. Following the passage of the 3rd Corporate Regulation Act (amendment to the Commercial Act and Fair Trade Act, enactment of the Financial Group Integrated Supervision Act), led by the ruling party last year, the government’s’Namso Legislative Tsunami’ is coming to imprison companies. It is analysis.
According to the National Assembly Proposal Information System on the 9th, the government recently submitted 210 cases of’plan to submit bills to the National Assembly for 2021′ to the National Assembly. The Fair Trade Commission plans to push forward six bills including the Basic Consumer Act this year. The Framework Act on Consumers is expected to contain content that allows lawsuits to be filed for indirect damage as well as direct damage caused by products. It is under consideration to add 11 members of the Korean Consumer Organizations Association to the range of organizations that can file consumer group lawsuits. It also contains the removal of the litigation permit system, which allows a group lawsuit to be filed only for cases meeting specific requirements, such as damage to consumers’ life and property.
The Ministry of Justice completed the legislative notice process for the proposed class action law enactment and the commercial law amendment that introduces a punitive damages compensation system, and submitted the bill to the Legislative Office. The Class Action Act contains the contents of expanding the class action system, which was applied only to the existing securities field, to all fields. The punitive damage compensation system is a system in which a maximum of five times the amount of damage is compensated for damage caused by intention or negligence. The government will submit the relevant bill to the National Assembly next month. In addition, the Democratic Party decided to introduce punitive damage compensation to the media and portals on this day.
The economic community is expressing great concern over the government’s legislative plans that could lead to abuse of consumer lawsuits. Choi Jun-seon, an emeritus professor at Sungkyunkwan University Law School, 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 will not cease.” “If companies go bankrupt due to excessive damages, who will be responsible?”
Easy class action, up to 5 times compensation… As if competing, pouring out’corporation law’
Government prepares to submit 210 bills this year
In the first half of this year, the government submits to the National Assembly one after another the three lawsuits (amendments to the Commercial Act and the Basic Consumer Act, enactment of the Class Action Act), which induce consumer lawsuits in the first half of this year. If these bills pass the National Assembly, lawsuits against corporations will be easier, and the amount of damages will be increased by up to five times. Experts pointed out that lawsuits aimed at settlement of damages with companies will increase indiscriminately.
“Letigation without direct infringement of rights and interests”
The government is considering a plan to contain the contents of the amendment to the Framework Act on Consumers, which will be submitted to the National Assembly in June, to allow a lawsuit to be filed even if it does not’directly’ infringe on the rights and interests of consumers’ life, body or property. It is to subtract the’directness’ requirement of infringement of consumer rights and interests from the consumer group litigation requirements stipulated by the 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 that indirect damage such as mold that may occur after installing the water purifier is also subject to lawsuit.
In addition, it plans to abolish the litigation permit system, in which lawsuits were filed only after obtaining permission from the court, to simplify the litigation process. The intention is to make it easier to file a lawsuit. The number of consumer organizations that can file lawsuits will also be increased by 10 or more.
Introduced up to 5 times punitive damage compensation system
In September of last year, the Ministry of Justice announced a bill to enact the Class Action Act and amendments to the Commercial Act to introduce a punitive damages compensation system. According to the Ministry of Justice’s draft, the Class Action Act allows general consumers to file lawsuits against companies with 50 or more people, not consumer organizations. Concerns arise that if the bill is handled, companies may be caught up in planning lawsuits. When a punitive damages compensation system is introduced, companies must compensate victims up to five times the amount of actual damages.
An official from the Korea Employers Association said, “Companies are hit by the image of the complaint only, which leads to business damage such as stock price collapse and credit crunch.” “Small and venture companies that are weak in responding to litigation will be threatened with cost burden.” Insisted. Another business official said, “If the consumer group litigation is activated and the class action system is introduced, the number of litigations against companies will increase significantly.” Criticized.
Massively promoted the’Distribution Prison Period’ bill
In addition to the 3 lawsuits, the government is pushing ahead with a bill this year that will strengthen regulations on online platform companies and affiliates. The’Enactment Bill on the Fairness of Online Platform Brokerage Transactions’, submitted to the National Assembly on the 28th of last month, contains the content that obliges online platforms to write contracts. Over the bill, the industry is strongly protesting, saying, “To write a contract is to disclose trade secrets.”
The’Amendment of the Act on Fair Franchise Business Transactions’, which requires the franchise headquarters to obtain prior consent from affiliates when conducting advertisements or promotional events, is also promoted. The bill introduces a reporting system for affiliated store business owners’ groups and includes the mandatory franchisees to operate directly managed stores. The FTC is expected to present the bill to the National Assembly in March.
The’Amendment of the Act on Consumer Protection in Electronic Commerce, etc.’, which imposes an obligation to secure transparency in search results and search rankings of portals, is also submitted to the National Assembly. It is pointed out that the revised bill is excessive infringement of management rights as it includes information on expanding the FTC’s suspension order for unfairly displayed search results and search rankings.
Reporter Kim So-hyun [email protected]