When governing laws are foreign laws, and there is no clause about jurisdiction, can the Korean court have jurisdiction? – Winning case of K&P Law Firm

 

K&P law firm represented a Malaysian company and won the case in the Korean court.

 

A Malaysian company imported expensive machinery from Korea. Due to a defect in the machinery, it filed a lawsuit to rescind the sales agreement and to seek a refund of the purchase price and various expenses related to the purchase of the machinery.

 

The governing laws in the invoice were Malaysian laws, but there is no clause about jurisdiction.

 

The main issue was that the Korean court has jurisdiction over the case.

 

1. Whether the courts of the Republic of Korea have international jurisdiction

Athe rticle 2 of the Act On Private International Law stipulates as follows.

Article 2 (General Principles) (1) The court of the Republic of Korea (hereinafter referred to as "court") shall have international jurisdiction where a party or a case in dispute has a substantial connection with the Republic of Korea. In determining whether any substantial connection exists, the court shall adopt reasonable principles, compatible to the ideology of the allocation of international jurisdiction, which aims to achieve impartiality between the parties, and appropriateness, speediness, and economy of adjudication. (2) Where there is no provision regarding international jurisdiction in this Act or in any other statutes or regulations, or treaties of the Republic of Korea, the court shall determine whether it has international jurisdiction, in consideration of the provisions of the domestic laws on jurisdiction, but shall give full consideration to the special nature of international jurisdiction, in light of the purport of paragraph (1).

 

The Supreme court’s decision is as follows.

The determination of international jurisdiction should follow the basic idea of aiming to achieve impartiality between the parties, and appropriateness, speediness, and economy of adjudication, and should, more concretely, take into account not only private interests such as impartiality between the parties, convenience, and predictability, but also interests of the court as well as of the state such as appropriateness, speediness and efficiency of adjudication, and effectiveness of judgment. The issue of which interest among such diverse interests deserves protection should be determined reasonably, applying in each individual case the objective criteria of a substantial relationship between the court and the parties, and a substantial relationship between the court and the case in dispute(Supreme Court Decision 2002Da59788 Delivered on January 27, 2005).

 

K&P Law Firm explained that

• The cause of the claim in this case is a claim for restoration and compensation for damages following the rescission of the contract in this case. The court of the Republic of Korea, where the defendant is domiciled, has jurisdiction as a general forum of a person. If the plaintiff wins the case in the Korean court, it is easy to enforce it.
• To conclude the contract, the plaintiff's employees visited the defendant's company and discussed product performance and unitThe defendant's company in Korea also carried out the production of the machine in this casein Korea.
• There is a possibility that if this case is tried in a Korean court, it is expected that litigation costs, including appraisal costs, will increase somewhat. However, it is difficult to conclude that the fairness, convenience, and appropriateness, speed, and efficiency of the trial of the parties may be significantly deteriorated by trialing this case in the Republic of Korea based solely on the circumstances asserted by the defendant.

 

2. Whether there is an exclusive international jurisdictional agreement between the plaintiff and the defendant

 

In the above case, the defendant argued that "there is an agreement between the plaintiff and the defendant that the Malaysian courts have international jurisdiction."

 

Article 3 of the invoice in this case stipulates Malaysian law as the governing law for the validity, interpretation, and implementation of the contract in this case. Article 3 also stipulates that ‘Each party shall bear their own solicitors' fees save and except in the event X(the plaintiff) is enforcing their rights under this proforma invoice and the Malaysian Courts rule in their favour then, in addition to and not limited to the Malaysian Courts' orders and judgments, Y(the defendant) shall solely bear all of X's costs and expenses including their solicitors' fees.'

 

3. The judgment of the Korean court

The court held that the clause seems to be an agreement between the parties regarding the burden of litigation costs, and it is unreasonable to expand and interpret it as an agreement on international jurisdiction between the parties.

 

The court accepted K&P Law Firm's argument, and K&P Law Firm won the case.

 

K&P Law Firm

Attorney Taejin Kim

Incheon Songdo, South Korea

====

We provide English legal services in English.

We communicate in English directly with clients.

Tel. +82 32 864 8300

Email: info@kimnpark.com

Please Visit our Website: www.kimnpark.com