Class/collective actions in South Korea: overview

A Q&A guide to class/collective actions in South Korea.

The Q&A gives a high level overview of class/collective actions, including current trends; the regulatory framework; limitation periods; standing and the procedural framework for bringing an action; funding and costs; disclosure; damages and relief; settlement; appeals; alternative dispute resolution and proposals for reform.

To compare answers across multiple jurisdictions, visit the Class Actions Country Q&A Tool.

This Q&A is part of the Class Actions Global Guide.


Overview of class/collective actions and current trends

1. What is the definition of class/collective actions in your jurisdiction? Are they popular and what are the current trends?

Definition of class/collective actions

There are currently no class or collective actions available for general claims under the law. Class actions are only available for claimants wanting to recover certain types of securities-related damages under the Securities Related Class Action Act. This defines a "securities related class action lawsuit" as a lawsuit seeking compensation brought by one or more representative party regarding losses suffered by numerous persons in the course of the purchase, sale and other transactions concerning securities.

In addition to securities-related class action lawsuits, qualified consumer groups or organisations can bring a legal action on behalf of consumers under the Consumer Act against enterprises or companies. However, since this is not a lawsuit that is brought directly by claimants, it is not a class or collective action in the true sense and so will not be covered in this Q&A.

Use of class/collective actions

Class or collective actions are, in principle, not permitted, and each claimant that seeks relief must file an individual action. The exception is damages arising from securities transactions where class actions are available under the Securities Related Class Action Act. The legislative purpose in passing the Act, which went into effect on 1 January 2005, was to effectively deal with the collective damages arising from unlawful acts in securities transactions, where typically there are multiple counterparties suffering from the same type of damages, and where the damages suffered by each party tend to be relatively modest. However, according to reports, from July 2014 there were only seven cases where certification of class was sought and to date there have not been any cases where a final decision on a class action was given.

Current trends

Certain law firms have been known to recruit claimants in cases involving accounting fraud or stock price manipulation. In 2016, the Supreme Court reversed two lower court decisions where requests for certification of class by investors claiming damages from alleged manipulation of rates of return by asset managers regarding equity-linked securities (ELS) had been rejected by the lower courts. Recently, the Supreme Court approved the certification of a class of shareholders that claimed damages resulting from window dressing/accounting fraud. The Supreme Court's approval of certification is expected to prompt more class actions in the future.


Regulatory framework

2. What are the principal sources of law and regulations relating to class/collective actions? What are the different mechanisms for bringing a class/collective action?

Principal sources of law

The only statute providing for class or collective actions is the Securities Related Class Action Act (see Question 1).

Principal institutions

Securities-related class actions are heard by three-member panels at the appropriate district court which has jurisdiction over the location of a defendant's general place of business.

Different mechanisms

Although a claimant in a regular civil suit can initiate legal action by filing a complaint, a person who files a securities-related class action lawsuit as a representative party must file a written complaint together with an application for "permission of the class action" with the court.

3. Are class/collective actions permitted/used in all areas of law, or only in specific areas?

Class or collective actions are only permitted for securities-related actions under the Securities-Related Class Action Act, regarding:

  • Damages arising from false disclosure (in registration statements or prospectuses, annual reports and other periodic reports, or the audit report).

  • Unfair securities practices, including insider trading or market manipulation.

  • Claims against auditors of financial records.



4. What are the key limitation periods for class/collective actions?

The class action must be brought within whichever of the following is earlier:

  • One year from the date that the claimant became aware of the unlawful act.

  • Three years from the date of the unlawful act (that is, the date of disclosure for false disclosure, or the date of the wrongful act for an unfair securities transaction).


Standing and procedural framework for bringing an action


5. What are the rules for bringing a claim in a class/collective action?

Definition of class

The term "class" means all parties who have a common interest in claiming damages for the same type of loss suffered by a number of persons in the course of the purchase, sale or other transaction of securities.

Potential claimant

Any person who has suffered damages from the defendant's alleged conduct can be a potential claimant and there are no particular restrictions.

Claimants outside the jurisdiction

A claim can be brought by individuals regardless of their nationalities or places of residence, as long as they suffered losses in relation to securities that are traded on the Korea Securities Exchange.

Professional claimants

Only a person who has personally suffered damages can bring an action and participate as a claimant in a class action. Claims cannot be assigned to third parties for the purpose of proceeding as a party in a lawsuit.


Qualification, joinder and test cases

6. What are the key procedural elements for maintaining a case as a class action?


The court certifies a class and grants "permission for a class action" if:

  • The requirement regarding the minimum number of members is satisfied.

  • There are common legal or factual issues in dispute.

  • The class action lawsuit is an efficient and appropriate means by which the interests of the rights of the class are protected.

  • The matters included in the application for permission for a class action and its accompanying documents are complete.

In a recent case, the Seoul High Court ruled that even if the above criteria are met, it would still be considered that there are insufficient grounds to grant permission for a class action if the claimants' allegations are mere speculation or unspecified suspicions that are not supported by facts or a showing that there is sufficient probable cause. The Seoul High Court ruling was affirmed in its entirety by the Supreme Court.

It should be noted that even if the class is not certified, individual claimants can still bring separate suits against the defendant.

Minimum/maximum number of claimants

The number of class members must not be less than 50 and the total number of the securities held by the class members must be not less than 1/10,000 of the total number of the outstanding securities of the defendant company. There can be ambiguities regarding the latter criterion where there are multiple types of securities. However, this point has not yet been addressed by the courts or the legislature.

Joining other claimants

The class action is filed by one or more class members (representative party), who file for the class after obtaining "permission for a class action" from the court. The court then issues a public notice of the filing of the class action. Any other person wishing to be a "representative party" must submit an application to the court within 30 days from the date of the public notice. Members of the class are automatically bound by the outcome of the suit unless they expressly elect to drop out (opt-out system).

Test cases

If a party that has decided to opt-out of the class action initiates a separate action, it is possible that the merits of the separate action are decided before the court gives a decision in the class action itself. Here, although the prior decision is not binding on the class action, it can substantially influence the court deciding the class action as a practical matter. However, there is no precedent for such an occurrence to date, and because of the rules on the statute of limitations, it is very difficult for litigants to wait to initiate a class action until after a decision is given in an individual action.



7. What is the usual procedural timetable for a case?

Generally, it takes several months to obtain certification of the class, and because such decisions by the court of first instance can be further appealed to the high court and the Supreme Court, it is possible that one or two years will pass before proceedings begin on the merits. Once the class certification is granted, procedures can vary on a case-by-case basis, but the case process is similar to other civil actions where the court conducts hearings where pleadings and evidence are submitted to the court and the court hears from the parties and witnesses. The number of hearings varies depending on the complexity of the issues and number of witnesses who testify. Normally, it takes 12 to 24 months for the court to complete the hearings and give its decision on disputes that involve securities-related claims.


Effect of the area of law on the procedural system

8. Does the applicable procedural system vary depending on the relevant area of law in which the class/collective action is brought?

Class actions are only available for damages arising out of certain securities-related transactions (see Question 3).


Funding and costs


9. What are the rules governing lawyer's fees in class/collective actions?

There are no special rules or restrictions on costs or contingency fees. Therefore, as in general civil actions, contingency fee arrangements are permitted.

10. Is third party funding of class/collective actions permitted?

There are no special rules or restrictions regarding third party funding. However, since transfers of claims to a third party for the purpose of entrusting lawsuits are prohibited in general civil actions, third party funding requires an arrangement that does not violate such restrictions.

11. Is financial support available from any government or other public body for class/collective action litigation?

Individuals who meet certain economic criteria can apply for government legal aid as in other civil actions. However, since class-members do not need to proactively opt-in, unless an individual wishes to initiate the lawsuit as a party representative, class members would not separately incur legal fees (although their pro rata share would still be reduced by the legal fees incurred by the class).

12. Are other funding options available to claimants in class/collective actions?

There are no special funding options available.



13. What are the key rules for costs/fees in class/collective action litigation?

There are no special rules regarding fees and costs in securities-related class actions, and each party is responsible for his own legal costs, as is generally the case in South Korea. For class action claimants, court-ordered costs including costs for experts, public notices, and sending notifications, must also be paid in advance, in addition to the stamp taxes generally payable in civil litigation. When the court gives its decision on a lawsuit, it decides which party bears the costs. The court usually orders the losing party to bear the costs, but this is subject to the statutory scale set by the court (which can be a fraction of actual attorneys' fees). Where the outcome is divided, the court apportions the costs between the parties.


Key effects of the costs/funding regime

14. What are the key effects of the current costs/funding regime?

The law firms that represent classes generally charge a very low upfront fee to encourage more securities holders to participate as party representatives.


Disclosure and privilege

15. What is the procedure for disclosure of documents in a class/collective action?

Before litigation

Disclosure of documents is generally not permitted before the commencement of civil litigation.

During litigation

Document disclosure is permitted (as in other civil litigation), and must be sought by a request to the court for a document production order by identifying requested documents with a relatively high degree of specificity. A party can also request the court to order the other party to disclose evidence by showing that there is risk that this evidence would not be available at a later time. In the case of a class action, a court can, if it deems necessary, examine evidence on the motion of either party even if there is no difficulty in the use of evidence. If it deems it necessary, a court can order a person who holds documents related to the lawsuit to submit them or order the person to send them.

16. Are there special considerations for privilege in relation to class/collective actions?

A party does not need to disclose any documents in its possession unless the court has issued a document production order for those documents. In a civil action, a party cannot be compelled to disclose documents containing communication with attorneys. There are no separate considerations regarding class actions.



17. What is the procedure for filing factual and expert witness evidence in class/collective actions?

There are no special requirements regarding expert testimony or expert reports for class actions. As in other civil actions, a party can request the court to appoint an expert to establish certain facts regarding the case or to assist the judge's understanding of any special laws and, if granted, the court-appointed expert must submit a written analysis or give oral testimony before the court. It is not unusual for the other side to object to the appointment of a specific expert, and the process can become quite contentious. Parties can also submit a written analysis by privately appointed experts.



18. Can one defendant apply to join other possible defendants in a class/collective action?

Joining other defendants

Third parties with an interest in the outcome of the litigation can participate in the class action as a defendant, so long as joining the party does not cause substantial delays to the process. If the claimant objects then the joining party must establish that he has a valid reason to join the action, and the court has the discretion to decide whether the joinder should be permitted.

Rights of multiple defendants

There are no special restrictions regarding the appointment of counsel and experts by multiple defendants. Defendants can collectively appoint a single counsel or expert or can each appoint an individual counsel or expert.


Damages and relief

19. What is the measure of damages under national law in the field of class/collective actions?


The law allows compensation for damages to property as well as non-pecuniary damages. However, with damages relating to capital markets transactions, only damages to property are recognised. The Capital Markets Act includes certain sections regarding the presumption of damages. For example, with false disclosure (including accounting fraud), damages suffered by the claimant are presumed to be the difference between the actual costs paid by the claimant in acquiring the security in question and the price of such security at the close of the proceedings (or where the security was sold before the close of the proceedings, the price of the security at the time of such sale), except that, to the extent that the defendant can establish that all or a portion of the amounts are due to factors other than the false disclosure, the defendant will not be held liable for the corresponding portion.

Punitive damages are not permitted under the law. Once the amount of damages is determined by the court in a class action and the damages are paid by the defendant, the amount is distributed to class members in a separate procedure, after deducting litigation costs and costs related to enforcing the claimant's rights.

Recovering damages

If a defendant who is jointly liable with one or more other parties pays the entirety of the damages, the defendant can claim contribution from the other parties, in proportion to the degree of fault between the parties.

Interest on damages

There are no special rules applicable for class or collective actions regarding the payment of interest. As in other civil actions, if the claimant prevails in the action, interest on damages accrues at the rate of:

  • 5% per annum from the date on which the alleged wrongful act occurred.

  • 15% per annum from the date on which the complaint is served on the defendant.

The above rates can be adjusted at the discretion of the court where it determines that there were bona fide grounds for the claimant to dispute the claims.

20. What rules apply to declaratory relief and interim awards in class/collective actions?

Declaratory relief

Declaratory relief is not permissible in class or collective actions.

Interim awards

As in other civil actions, preliminary attachments may be granted where the applicant shows that enforcement of the judgment (such as payment of damages) would be seriously at risk without such a preservation measure. However, the Securities Related Class Action Act is silent about whether the representative of a class and, therefore, it is unclear whether such preliminary attachments would be permissible. Interim relief including preliminary attachment is very rarely sought in the context of class actions.



21. What rules apply to settlement of class/collective actions?

Settlement rules

In civil actions, cases can be settled through in-court settlement, which is moderated by the court or through privately negotiated out-of-court settlements. There are no special percentage requirements for a settlement to be binding. Before granting approval of the withdrawal or settlement of a lawsuit or waiver of claims, which binds the entire class, the court must notify the class members in advance and provide an opportunity for them to present opinions. For class members that do not wish to be bound by the settlement, they can opt-out and initiate a separate suit.

Separate settlements

Separate settlements are permissible. However, because settlement with some defendants has an effect on the other defendants, practically, it is common for all defendants to collectively participate in any settlement discussions.



22. Do parties have a right to appeal decisions relating to class actions, such as a decision granting or denying certification of a class action?

Appeals are permitted by either party, first to the appellate level, and then to the Supreme Court. While there is no restriction on the grounds of appeal from the court of first instance, appeals to the Supreme Court are limited to the violation of the Constitution and various laws and regulations or administrative rules.


Alternative dispute resolution

23. Is alternative dispute resolution (ADR) available in class/collective actions?

Although voluntary mediation is available for securities-related disputes through the Korea Exchange and the Korea Financial Investment Association, these decisions are not binding unless both parties consent to be bound. Therefore, in practice, these mechanisms are not widely used for class/collective actions.


Proposals for reform

24. Are there any proposals for reform concerning class/collective actions?

Bills were proposed recently in the South Korean legislature for a more general class action statute that would be available for areas such as consumer claims and privacy-related claims. However, the bills were not passed and there is currently no movement towards another bill.


Online resources

National Law Information Centre


Description. The official website of the National Law Information Centre is maintained by the Korean Ministry of Government Legislation. Both current and past statutes as well as pending statutes are available on the website. English translations of the statutes are available in some cases (

Contributor profiles

Jin-Yeong Chung

Kim & Chang

T +82 2 3703 1108
F +82 2 737 9091 or 9092

Professional qualifications. Korea, Lawyer, 1985; New York, US, Attorney, 1995

Areas of practice. Litigation; insolvency and restructuring; finance dispute; banking; international arbitration and cross-border litigation; international litigation; corporate and mergers and acquisitions litigation; banking and finance litigation.

Languages. Korean, English, Japanese, German

Professional associations/memberships. Korean Bar Association; New York State Bar Association.


  • Getting the Deal Through: Securities Litigation: Korea Chapter, Co-author, Law Business Research, 2016.
  • Practical Law: Dispute Resolution Global Guide 2015/16: Korea chapter, Co-author, Thomson Reuters, 2015.
  • Practical Law: Class Actions Global Guide 2015/16: Korea chapter, Co-author, Thomson Reuters, 2015.
  • Chambers Legal Practice Guides: Litigation 2014: South Korea: trends and developments section, co-author, Chambers & Partners, 2014.
  • The Restructuring Review (6th, 7th edition): Korea chapter, co-author, Law Business Research, 2013-2014.
  • "Structuring LBOs in Korea: Proceed with caution" the 2012 guide to litigation and dispute resolution, co-author, IFLR, 2012.
  • "Kiko contracts survive initial challenges in court" the 2010 guide to dispute resolution: Korea section, co-author, IFLR, 2010.

Sungjean Seo

Kim & Chang

T +82 2 3703 1214
F +82 2 737 9091 or 9092

Professional qualifications. New York, US, Attorney, 1994

Areas of practice. International arbitration; cross-border litigation; engineering and construction disputes.

Languages. English, Korean

Professional associations/memberships. New York State Bar Association.


  • Practical Law: Class Actions Global Guide 2015/16: Korea chapter, Co-author, Thomson Reuters, 2015.
  • Chambers Legal Practice Guides: Litigation 2014: South Korea: trends and developments section, co-author, Chambers & Partners, 2014.
  • The 2012 guide to litigation and dispute resolution: structuring LBOs in Korea: Proceed with caution, co-author, IFLR, 2012.
  • "Kiko contracts survive initial challenges in court" the 2010 guide to dispute resolution: Korea section, co-author, IFLR, 2010.
  • The 2009 guide to Litigation: private equity beware, co-author, IFLR, 2009.

Dong-Wook Kim

Kim & Chang

T +82 2 3703 4683
F +82 2 737 9091 or 9092

Professional qualifications. Korea, lawyer, 2014; Certified Public Accountant, Korea, 2010

Languages. Korean, English

Professional associations/memberships. Korean Bar Association.


  • Practical Law: Class Actions Global Guide 2015/16: Korea chapter, Co-author, Thomson Reuters, 2015.

  • Deemed acquisition tax avoidance behaviour and principle of substantial taxation: Supreme Court Decision 2008 DU8499, Seoul National University Law Review Volume 3 (2012.12.).

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