CONTENTS
- 1. International Litigation | Concept and Necessity
- 2. International Litigation | Main Types
- - International Commercial Contract Disputes
- - Disputes Involving Overseas Local Subsidiaries and Joint Ventures
- - International Intellectual Property Disputes
- - International Investment Disputes
- - International Transport, Insurance, and Finance Litigation
- - International Labor and Personnel Disputes
- 3. International Litigation | Procedure
- 4. International Litigation | Key Issues
- - Overlap and Conflict of Jurisdiction
- - Uncertainty of Governing Law
- - Securing Enforceable Assets
- - Failure of Proof Due to Translation, Notarization, and Admissibility Issues
- 5. International Litigation | Legal Response Points
1. International Litigation | Concept and Necessity
International litigation refers to a case in which the legal effect of the parties or the dispute arises across two or more countries.
In other words, it includes situations in which a Korean company has a legal dispute with a foreign company, a foreign government, or an individual, or conducts litigation before a local court abroad or an international arbitration body.
Unlike domestic litigation, international litigation involves complex procedures and legal issues, such as jurisdiction, governing law, and the recognition and enforcement of judgments.
In the global business environment, the possibility of disputes is ever-present, including in overseas import and export, joint ventures, licensing, the operation of local subsidiaries, international M&A, financial contracts, overseas defaults, intellectual property disputes, and nonpayment of international transaction amounts.
Accordingly, a specialized international litigation strategy should be established that comprehensively considers each country's laws and litigation systems, private international law and treaties, local court precedents, and the feasibility of enforcement.
2. International Litigation | Main Types
The various international legal disputes that companies actually face, and the types of international litigation, are as follows.
International Commercial Contract Disputes
These disputes mainly arise in international sales of goods, international service contracts, OEM contracts, consignment sales contracts, distribution agency contracts, technology licenses, franchise contracts, financial contracts, and international investment contracts.
Nonpayment: import and export payments, claims for the return of advance payments, refusal of payment under a letter of credit
Claims for damages: compensation for penalties, indirect losses, and lost profits
Disputes over governing law and jurisdiction: depending on whether the contract specifies jurisdiction and governing law, issues arise as to the place of litigation and the applicable law
Disputes Involving Overseas Local Subsidiaries and Joint Ventures
When a corporation established abroad or a joint venture set up with a foreign company exists, disputes may arise over shareholder agreements, board operation, and management control.
Share purchase demands among shareholders, and provisional injunctions prohibiting the exercise of voting rights
Violations of the articles of incorporation, disputes over profit distribution, and disputes over liquidation procedures
International Intellectual Property Disputes
International litigation may arise from violations involving patent rights, trademark rights, copyrights, trade secrets, unfair competition prevention, or license agreements.
Litigation and provisional injunctions regarding unauthorized use of trademark rights
Royalty claims arising from breach of license agreements
International Investment Disputes
When a foreign investor suffers investment losses due to a violation of a bilateral investment treaty (BIT), the Korea-U.S. FTA, or the Korea-China FTA, an international investment dispute may arise.
Discriminatory taxation, prohibition of remittance, and deprivation of business rights
Confiscation of invested assets
International Transport, Insurance, and Finance Litigation
When a legal dispute arises in maritime transport, air transport, multimodal transport, insurance contracts, or trade finance, it may lead to international litigation.
Refusal to pay insurance proceeds and claims for mutual-aid benefits
Claims for performance of a payment guarantee
Disputes over jurisdiction and liability under multimodal transport contracts
International Labor and Personnel Disputes
Disputes may also arise over the hiring and dismissal of employees at local subsidiaries, unpaid wages, union strikes, and the interpretation of employment contracts.
Disputes over wages and welfare benefits for employees dispatched overseas
Litigation regarding unfair labor practices by unions and violations of collective agreements
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3. International Litigation | Procedure
International litigation generally proceeds according to the following steps:
(1) Confirming jurisdiction
Determining which country's court may hear the case based on the domicile of the disputing parties, the contractually agreed jurisdiction, and the jurisdictional standards under private international law
→ Disputes over jurisdiction are the most heavily contested issue at the early stage of litigation
(2) Determining the governing law
Determining the country's law to apply to the dispute in accordance with the international contract, private international law, and international treaties
→ Whether the governing law is Korean law or foreign law changes the outcome of the case and how the proceedings unfold
(3) Filing the suit and submitting the answer
Filing the complaint and submitting the answer with a foreign court, a Korean court, or an international arbitration body
→ Collaboration between a local law office and a Korean attorney with relevant expertise plays a critical role
(4) Collecting evidence and notarizing translations
Confirming each country's requirements for the admissibility of evidence, using foreign evidence-gathering systems, and notarizing translations
(5) Oral argument, witness examination, and expert testimony
Conducting oral argument, examination of evidence, and witness examination in accordance with the procedures of the foreign court
(6) Pronouncement of judgment and enforcement
After the judgment becomes final, proceeding with the recognition and enforcement of the judgment in the counterpart country
→ Confirming whether an enforcement treaty exists between the two countries
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4. International Litigation | Key Issues
The following reviews the key issues that often arise in international litigation.
Overlap and Conflict of Jurisdiction
In international litigation, it is frequently unclear which country's court has jurisdiction over the same case.
In particular, when a contract contains no jurisdiction clause, or when the laws of each country recognize the jurisdiction of their own courts, delays and uncertainty in the proceedings increase.
When jurisdiction conflicts, prompt and efficient resolution of the legal dispute becomes difficult, and the final outcome may also vary depending on the determination of jurisdiction.
Uncertainty of Governing Law
When it is unclear which country's law applies to a contract or dispute, the very legal basis for resolving the dispute may differ, so that the interpretation of the contract, the scope of damages, and the rules on the statute of limitations can change entirely.
In international litigation, the governing law clause should be clearly specified in the contract, or, where none exists, a determination of the governing law should be requested from the court at the early stage of the proceedings.
Securing Enforceable Assets
In international litigation, even after a judgment is obtained, enforcement may become impossible if the counterparty's assets do not exist within that country or have been concealed.
Therefore, a strategy of investigating the counterparty's asset status, including real estate, financial assets, and business property, in advance of litigation, and using preservative measures (provisional attachment and provisional injunction) to freeze the assets, should be carried out in parallel.
Failure of Proof Due to Translation, Notarization, and Admissibility Issues
Documents to be submitted to a foreign court must undergo notarization and apostille certification, and translations may require certified translation, so the procedures are demanding.
In this process, if the reliability or legality of the supporting documents is denied, there is a risk that the litigation itself may be dismissed.
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5. International Litigation | Legal Response Points
When proceeding with international litigation, reviewing the following legal response points may help in obtaining a favorable outcome.
Item | Points to Check |
|---|---|
Contract | Whether jurisdiction, governing law, and arbitration clauses are clearly stated |
Jurisdiction | Possibility of securing jurisdiction in a local court or an international arbitration body |
Governing Law | The applicable law in the event of a dispute and whether its interpretation is favorable |
Local Litigation Costs | Advance confirmation of bonds, deposits, and translation and notarization costs |
Evidentiary Materials | Admissibility requirements in each country and whether notarization and translation are needed |
Enforceability | Possibility of enforcement in the counterparty's country after the judgment becomes final, and the existence of assets |
Local Network | Availability of local attorneys, accounting firms, investigative agencies, and interpreters |
Arbitral Award | Applicability of the New York Convention and the reasonableness of the composition of the arbitral tribunal |
