Korean Bar Association Urges Enactment of Collective Litigation Act: "Opt-Out and Punitive Damages Needed"

The Korean Bar Association on April 21 welcomed the renewed discussion on the Collective Litigation Act and called for its prompt enactment. The association stated that structural limitations of the current civil litigation system have repeatedly been pointed out, as it is difficult to provide effective remedies to individual victims in cases of large-scale damage arising from the same or similar causes.

Korean Bar Association

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The National Assembly's Legislation and Judiciary Committee will hold a public hearing on April 22 regarding the Collective Litigation Act, which expands the collective litigation system-previously limited to the securities sector-to all areas. This marks the committee's official start of the bill review process and is expected to become a major turning point in future legislation of the Collective Litigation Act.

The collective litigation system allows the rights of a large number of citizens who have suffered similar damages to be collectively remedied through lawsuits filed by some victims. It is considered a key system that provides an effective remedy for individual victims in cases involving small and numerous damages.

The association emphasized that introducing the "opt-out" model is essential to ensure the system's effectiveness. This is because, under a model in which each victim must explicitly state their intention to participate, the effectiveness of the system cannot be secured. The opt-out model allows the judgment to apply to all victims unless they explicitly opt out, regardless of whether they submit a separate participation request.

The association also called for the parallel adoption of punitive damages. They argued that simple compensation for damages is insufficient to deter repeated and systematic illegal acts by corporations. Only by imposing liability that exceeds the profits gained from illegal acts can the system's substantive function be ensured. They further explained that this is a minimum institutional device not only to restore already incurred damages but also to prevent future illegal acts and to induce responsible management by corporations.

The association also urged retroactive application of the law. It pointed out that limiting the law to incidents occurring only after its enforcement would severely restrict its effectiveness. They also raised concerns about fairness, as the possibility of remedy for victims would differ depending on the timing of the legislation. In particular, they emphasized that retroactive application is unavoidable, especially in light of recent frequent large-scale data breaches and other incidents that have already occurred, in order to open avenues for remedies in such cases.

A representative from the association stated, "Given the ongoing repetition of large-scale damages caused by large corporations and others, there is no justification for further delay in introducing this system," and urged the National Assembly to swiftly complete the enactment of the Collective Litigation Act.

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