Fair Trade Dispute Mediation Procedure

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1. 1Application for dispute mediation
2. 2Notice of receipt and request for materials
3. 3Submitting the written answer and materials
4. 4Fact investigation and appearance
5. 5Dispute Mediation Council deliberation and statement of opinions
6. 6Recommendation to agree and presentation of the mediation proposal
7. 7Successful mediation and preparation of the mediation record
8. 8Submitting the results of carrying out the agreement
9. 9End of mediation and report to the KFTC

• Basic step
• Additional action / option
• Rejection / objection
• End of procedure

Time required

Whether mediation succeeds is decided within 60 days from the day the application (for cases referred by the KFTC, the referral) is received (90 days if both sides agree to an extension; time for supplementing is excluded)

Cost

No separate cost to apply for mediation at KOFAIR (KOFAIR FAQ); lawyers' fees are separate

Procedure guide

Read from start to finish in order. Red text marks deadlines set by law.

1. 1

   Parties to a transaction can apply for mediation to KOFAIR's area-specific Dispute Mediation Council, and the KFTC may also refer cases for mediation (Fair Trade Act §76(1)(2)). An application interrupts the prescription period (§76(4); not if it is withdrawn or dismissed). However, cases such as those the KFTC had already begun investigating before the application are dismissed without examination (§77(3)), so check before applying whether the case is eligible for mediation.

2. 2

   On receiving an application, KOFAIR notifies the KFTC and both sides of its receipt immediately (§76(3)), and the investigator in charge requests materials by official letter sent by registered mail. While mediation is in progress, the KFTC cannot issue corrective measures or corrective recommendations on matters for which no disposition had been made before it began (§77(6)). Subcontracting cases that the KFTC is investigating are an exception (Subcontracting Act §24-5(6)).

   Current step
3. 3

   Both parties submit the requested materials, such as a supplementary statement, a written answer and a general status sheet, within the deadline set in the official letter (KOFAIR guidance). If a party fails to respond to requests for materials 2 or more times, mediation may fail. If it ends in failure, the applicant can report to the KFTC, so even as the respondent it is to your advantage to answer in good faith.

4. 4

   KOFAIR reviews the materials and, if necessary, calls in the parties to investigate the facts (§77(2)). A request to appear is notified at least 7 days before the appearance date (Enforcement Decree §67(1)). The facts established at this stage form the basis of the Council's judgment, so submit enough contracts and transaction records. If the parties reach an agreement between themselves, mediation may end there.

5. 5

   Every case goes through deliberation by the Dispute Mediation Council, and the parties can appear before the Council and state their opinions (§74(4)). It is a chance to explain circumstances you could not fully convey in writing.

6. 6

   The Council recommends an agreement or presents a mediation proposal (§77(1)). The parties decide whether to accept the proposal. If one side refuses, mediation ends (§77(4) item 3), but it may then lead to a report to the KFTC, so weigh the consequences of refusing as well.

7. 7

   If mediation succeeds, a mediation record is prepared, and it has the same effect as a judicial settlement (§78(1)(5)). All five laws (Fair Trade, Subcontracting, Franchise, Large-Scale Retail and Agency) provide for the same effect.

8. 8

   Carry out what was agreed and submit the results to the KFTC (§78(3)). For matters on which no disposition had been made before mediation began, if the agreement is carried out, the KFTC does not issue corrective measures or corrective recommendations on those matters (§78(4)). Check the submission deadline given by the Council or the KFTC.

9. 9

   If mediation has not succeeded after 60 days (90 days if both sides agree) from the day the application is received, mediation ends and the result is reported to the KFTC (§77(4)(5)). For large-scale retail disputes, the 60 days are counted from the day notice of the application for mediation is received. If it fails, the applicant can report to the KFTC, and if it leads to a disposition, it is contested within 30 days from the date of notice of the disposition through an objection (§96(1)) or a lawsuit at the Seoul High Court (§99(1) and §100; if an objection was filed, within 30 days from the date the written ruling is served).

Frequently asked questions

Practical questions that come up right away in this procedure.

QWhich disputes are covered by fair trade dispute mediation?

Disputes arising from unfair trade practices, subcontracting transactions, franchise transactions, large-scale retail transactions and agency transactions are covered. In all five areas, the area-specific Dispute Mediation Councils set up at KOFAIR handle them in the same way. Standard terms (adhesion contract) disputes are handled by a separate Standard Terms Dispute Mediation Council, so they are treated separately from this procedure.

QThe other party has applied for mediation. Does the company have to take part?

Mediation is not compulsory, so the company can refuse it. If one side refuses, the mediation procedure ends.However, if it ends in failure, the applicant can file a report with the Korea Fair Trade Commission (KFTC), which may lead to a KFTC investigation. Also, for matters on which no disposition had been made before mediation began, the KFTC cannot issue corrective measures or corrective recommendations while mediation is in progress.So before refusing, compare ending the matter through mediation with going through the KFTC procedure.

QHow long does mediation take?

The law provides that if mediation is not achieved within 60 days from the day the application is received, it ends. If both parties agree to an extension, it continues for up to 90 days.The time spent supplementing the application is not counted in this period. For large-scale retail disputes, the 60 days are counted from the day notice of the application for mediation is received.

QWhat effect does it have if mediation succeeds?

A mediation record has the same effect as a judicial settlement (a settlement made in court).So it is practically difficult to dispute what was agreed later. KOFAIR also advises that it cannot be canceled on grounds such as mistake.Also, you can agree on and carry out matters on which no disposition had been made before mediation began. In that case, the KFTC does not issue corrective measures or corrective recommendations on those matters.

QCan a case the KFTC is already investigating be mediated?

A case the KFTC began investigating before the application for mediation is dismissed without examination. However, after receiving a disposition such as a corrective measure from the KFTC, you can apply for mediation.The Subcontracting Act has no such exception. For subcontracting cases, if the KFTC is investigating, the suspension of sanctions during mediation does not apply.

QWhat happens next if mediation fails?

The applicant can file a report with the KFTC or file a lawsuit in court, following the notice letter from KOFAIR. If mediation ends in failure, the prescription period that was interrupted by the application starts running anew from that point.So you must decide whether to sue within the prescription period. If it leads to a report to the KFTC, you move on to the procedure for responding to a Fair Trade Commission investigation.