Product Liability & Safety 2023 Comparisons

The following are the key pieces of South Korean product liability legislation.

• The Framework Act on Consumers, which serves as the applicable law on the safety of consumers; it also prescribes consumers’ rights and duties, the duties of the state, local governments and businesses, and the roles of consumer organisations and relationship between consumers and business entities.
• The Framework Act on the Safety of Products, which prescribes the basic requirements necessary to ensure the safety of products so as to contribute to the improvement of the quality of life for citizens and the prevention of damage to health and property.
• The Framework Act on Food Safety, whose legislative intent is to ensure public health by clarifying the rights and obligations and the responsibilities of the state and local governments with regard to food safety; the Act also specifies fundamental matters with regard to the formulation, co-ordination, etc, of food safety policies.
• The Food Sanitation Act, which aims to improve public health by preventing sanitary risks caused by food and promotes the qualitative improvement of nutrition by ensuring accurate information about foods.
• The Electrical Appliances and Consumer Products Safety Control Act, which provides for the safety control of electrical appliances and consumer products; in the context of the Act, consumer products refer to industrially manufactured products for consumer use without additional processing (this excludes products that require simple assembly) and the components/parts of such products.

General

The main regulatory authority for product safety is the Korea Consumer Agency (KCA), an affiliated organisation of the Korea Fair Trade Commission. The KCA is responsible for maintaining the Consumer Injury Surveillance System, which monitors and collects information on unsafe products, as well as carrying out corrective measures. Depending on their severity, these corrective actions could include simple warnings, the release of public statements regarding a breach of product safety regulations, and/or requesting the Korea Fair Trade Commission (KFTC) to order a compulsory recall.

Food, Drugs, Cosmetics and Medical Devices

Concerning food, drugs, cosmetics and medical devices, the Ministry of Food and Drug Safety sets the relevant safety standards and appoints testing and inspection agencies, in accordance with the Act on Testing and Inspection of Food and Drugs. If a violation is found, the Ministry can confiscate and destroy the relevant products and, in severe cases, may order a suspension or cancellation of the business permit.

Electronic Goods and Consumer Products

Concerning electronic goods and consumer products, the Ministry of Trade, Industry and Energy oversees a committee deciding the criteria for product safety, as well as the agencies authorised to provide testing and inspection. In accordance with the Electrical Appliances and Consumer Products Safety Control Act, it is unlawful to sell, in South Korea, electrical appliances or consumer products that have not received approval from a government-appointed agency, and the sale of products without such an approval may result in their confiscation and destruction, as well as a suspension of business permits. It may also lead to criminal charges.

General

In most cases concerning corrective action, the relevant regulations merely state that the government authority may commence corrective action. However, under Article 17 of the Framework Act on Consumers, the government and relevant local governments are required to have the facilities and organisations necessary for testing the quality and safety of products, and are also required to commence tests if (i) requested by consumers, or (ii) there is reason to believe tests are necessary. Both national and local government are also required to commence corrective action if the tests reveal any problems.

Under Article 47 of the same Act, the seller has an obligation to notify the regulatory authorities if it becomes aware of a possible breach of product safety (see 1.4 Obligations to Notify Regulatory Authorities). In such cases, the relevant Minister has an obligation to request a test at the facilities designated in the above-mentioned Article 17, as well as commence the relevant corrective actions.

Under Article 48 of the same Act, sellers have an obligation to recall/destroy/repair/exchange or cease to manufacture/import/sell/provide products if there is a problem that threatens or may threaten consumer safety.

Foods, Drugs, Cosmetics and Medical Devices

Under Article 15(1), (2) of the Food Sanitation Act, and Articles 15(1) and 16(1) of the Framework Act on Food Safety, a suspicion of a food safety violation (eg, by containing harmful substances) may warrant the relevant Minister to implement a test to verify whether the food complies with regulations. If there is a possibility that the food in question may cause significant harm to the health of the citizens, the Minister must forbid the sale, collection, manufacture, import, cooking, storage, delivery, etc, of the food until its quality can be further verified.

In addition, per Articles 71 through 74 of the Food Sanitation Act, if the Minister or any relevant head of a local government discovers that a manufacturer or seller of foods is in violation of this Act, they must commence corrective actions – which may entail issuing a correction order, the confiscation and destruction of the foods, or the suspension or cancellation of licences.

Electronic Goods and Consumer Products

In accordance with Article 20 of the Electrical Appliances and Consumer Products Safety Act, if the Minister of Trade, Industry and Energy discovers that a manufacturer received an approval (see 1.2 Regulatory Authorities for Product Safety) via illegitimate means, the Minister must cancel the approval.

General

In general, notifications are risk-based rather than incident-based, and there are no formal requirements for reports. The specific contents of notifications may be set in the relevant decrees.

Under Article 47 of the Framework Act on Consumers, the manufacturer has an obligation to notify the regulatory authorities if a manufacturer learns that:

• a product it has manufactured, imported or sold has a defect that may cause injury or damages to consumers; or
• the same product has been found to be defective in a foreign country and (i) has been recalled or destroyed, or (ii) the relevant foreign government or authority has issued or suggested a recall or destruction of said goods.

Foods, Drugs, Cosmetics and Medical Devices

According to Article 31 of the Food Sanitation Act, manufacturers must test their own products to see if they comply with regulatory standards. If they discover possible threats to the health of consumers, they are obliged to report those results to the Minister of Food and Drug Safety.

Under Article 46 of the Food Sanitation Act, the same obligations apply when a manufacturer discovers a foreign substance in foods it has manufactured, processed, subdivided, imported, etc.

Electronic Goods and Consumer Products

Under Articles 7 and 15 of the Electrical Appliances and Consumer Products Safety Control Act, agencies that provide testing for electrical appliances and consumer products (see 1.2 Regulatory Authorities for Product Safety) must regularly check if approved products continue to adhere to regulations. And if they discover any products failing to adhere to regulations, they must report their findings to the Minister of Trade, Industry and Energy.

As mentioned in 1.2 Regulatory Authorities for Product Safety and 1.3 Obligations to Commence Corrective Action, a breach of product safety obligations may result in correction orders, the confiscation and destruction of products or, in severe cases, a suspension or cancellation of businesses.

The CISS (see 1.2 Regulatory Authorities for Product Safety) and the Ministry of Food and Drug Safety keep lists of violations and the resulting corrective actions. The majority of cases result in a prohibition of sales and corrective orders, with occasional suspensions of business.

Most violations result in simple fines, and when prosecuted will usually result in summary orders (under Article 448 of the Korean Criminal Procedure Act, a district court may, at a prosecutor’s request, impose a fine, minor fine, or confiscation upon the criminal defendant by a summary order without ordinary proceedings of trial), although these cases are rarely published.

However, regarding food safety, there have been cases of alleged violations going to trial. These cases usually pertained to a failure to maintain a level of freshness or the inclusion of harmful ingredients (eg, Supreme Court Decision 2016Do6329, decided 29 November 2018 and Supreme Court Decision 2015Do2479, decided 22 March 2017).

Damages Other Than Those to the Product

Under the Korean Civil Act, product liability is classified as a tort, but the Product Liability Act acts as a special law to the Civil Act. Under the Product Liability Act, a product liability claim can arise if there is a defect in the product that caused damages (excluding damages inflicted only to the product).

Under the Act, a defect may refer to:

• a defect in manufacturing – a lack of safety caused by the manufacture or process of a product not in conformity with the originally intended design;
• a defect in design – a lack of safety caused by failure of a manufacturer to adopt a reasonable alternative design where an alternative design would have reduced the damage caused; or
• a defect in indication – where a manufacturer failed to provide reasonable explanation or instructions leading to damages or risks.

These claims can be brought against the manufacturer, including the persons engaged in the manufacture, processing, or import of said products, as well as those who provided a misleading indication that they were engaged in the manufacture of the said products by placing their name, trade mark or other discernible sign on the product.

Damages to the Product Itself

In accordance with the Civil Act (or the Commercial Act where applicable), if the purchaser directly entered into a contract with the manufacturer, the purchaser of the product may claim that the manufacturer failed to abide by their contractual obligations by providing a product that did not meet the standards of the contract. If the purchaser entered into a contract with a seller who was not the manufacturer, the resulting contractual claims would not be classified as product liability claims but comprise contractual claims instead.

Damages Other Than Those to the Product

According to the Product Liability Act and the Civil Act, a person or persons who suffered damages to life, body, or property caused by the defective product may have standing to file product liability claims. When the damages are to life, the inheritors of the deceased have standing to bring product liability claims.

Damages to the Product Itself

According to the Civil Act and the Commercial Act, the person who entered into contract with the manufacturer has standing to bring a claim. If a person entered into a contract with the manufacturer, according to which the manufacturer would supply the product to a third party, the person who made the contract (rather than the third party) would have standing.

Damages Other Than Those to the Product

Under Article 7 of the Product Liability Act, the right of claim for damages shall be extinguished by the completion of the prescription period if the injured persons or their legal representative do not exercise their rights within three years from the date on which the injured person or their legal representative became aware of both the damages caused and the person liable for the damage. In addition, the right of claim must be exercised within ten years from the date on which the manufacturer supplied the product which caused the relevant damage. However, if the damages occur only after a certain period of time has passed, the ten-year time bar commences when damages become apparent.

Under Article 68-3 of the Framework Act on Consumers, if a consumer requests a Consumer Dispute Settlement from the Korea Consumer Agency or refers a case to the Consumer Dispute Settlement Commission (see 2.5 Pre-action Procedures and Requirements for Product Liability Claims), the above time-bar period will be stalled during the process. However, if the settlement procedure is terminated prematurely, the effect of the suspended time bar will not take effect unless a lawsuit is instituted within one month from the date of the termination.

Damages to the Product Itself

In a civil case, according to Article 582 of the Civil Act, claims regarding a defective product must be submitted within six months of realising the defect.

Per Article 69 of the Commercial Act, in a commercial sale between merchants, the buyer must inspect a product without delay and immediately give notice if any defect is found, so as to retain the right to claim damages. The same applies where, within six months, the buyer should reasonably discover and notify an implicit defect which may not have been immediately discoverable.

Damages Other Than Those to the Product

The Korean Civil Procedure Act provides several criteria for determining the jurisdiction of the court for product liability claims. As product liability claims are classified as tort claims, under Article 18(1) of the Civil Procedure Act, a lawsuit concerning a tort may be brought to the court in the place of the alleged tortious act.

Damages to the Product Itself

Under Article 8 of the Civil Procedure Act, a lawsuit concerning a property right may be brought to the court having jurisdiction over the place of residence of the claimant or the place of performance obligation. According to Article 467 of the Civil Act, the place of performance obligation regarding a sale of goods is the residence of the buyer. Accordingly, the court in the place of the buyer’s residence would have jurisdiction.

For Both Cases

As product liability claims are civil, the parties can agree on the court in which the proceedings will take place, as long as they are brought to the regional courts that deal with civil matters (this will exclude patent courts, family courts, as well as the constitutional court). This agreement need not be explicit, and if the defendant responds to a suit brought to a court that would not normally have jurisdiction, both parties are thereafter unable to claim a lack of jurisdiction.

Under Korean law, there are no pre-action procedures necessary for product liability claims.

While not compulsory, under Articles 55 through 59 of the Framework Act on Consumers, it is possible for consumers to request the Korea Consumer Agency (see 1.2 Regulatory Authorities for Product Safety) to commence a Consumer Dispute Settlement. This involves:

• the consumer requesting guidance from the KCA;
• the consumer requesting a dispute settlement;
• the manufacturer being informed of the proceedings; and
• the KCA thereafter commencing the investigations.

The investigation will take into account the statements of the manufacturer. It will also entail review of documents, conducting tests, visiting the manufacture site. Depending on the outcome of the investigation, the KCA will recommend a settlement between the consumer and the manufacturer. If this is unsuccessful, the KCA will delegate the dispute to the Consumer Dispute Settlement Commission (defined in Articles 60 through 68-3 of the Framework Act on Consumers), which will commence mediation.

According to Article 67 of the Framework Act on Consumers, if the Consumer Dispute Settlement Commission is able to have both parties reach an agreement, the results of the mediation have the same effect as those of court proceedings.

Under Korean law, there are no special rules specifically tailored for the preservation of evidence in product liability cases. Therefore, the general rules of the Civil Procedure Act apply. As the consumer as claimant bears the initial burden of proof (see 2.9 Burden of Proof in Product Liability Cases), the consumer must show there exist faults in the product itself.

Under Korean law, there are no special rules regarding disclosure of documents in product liability cases. Therefore, the general rules of the Civil Procedure Act apply. Under Articles 349 through 351, failure to present documents or intentional destruction or damages to the said documents may result in the court drawing a negative inference against the party failing to adduce the relevant documents.

Under Korean law, there are no special rules relating to expert evidence in product liability cases. However, it is possible for the parties to request that the Korea Consumer Agency (as mentioned in 1.2 Regulatory Authorities for Product Safety) provides test results on whether there was a defect found in the product in question. While the court has no obligation to be bound by the results of this test, the court has previously ruled in favour of the decisions made by the KCA (eg, Seoul Regional Court Decision 2015GaHap547075, decided 13 June 2017).

Damages Other Than Those to the Product

In most tort cases, the person bringing claims bears the burden of proof to show that the opposing party caused damages via an intentional or negligent act. Before the amendment of the Product Liability Act in 2017, the person bringing claims would have to show that a defect existed in the product, damages occurred, and that these damages were caused due to the defect. Due to the challenges faced by consumers who lacked the relevant information or knowledge on how a particular product operated, case law tended to shift the burden of proof to the manufacturer by assuming that when a product was used in a typical manner (in accordance with its original intended use) and damages occurred, those damages were caused by the defect. However, Article 3-2 of the Product Liability Act now provides written legal grounds for a presumption of defects.

Under the said article, if the person bringing claims shows that the damages caused occurred while the injured person was using the product normally, the damage caused was attributable to a cause practically controllable by the manufacturer, and that the damage would not ordinarily be caused if it were not for the relevant defect of the product, the burden of proof is shifted to the manufacturer, and it is presumed that the product was defective and that the defect caused the damages.

Damages to the Product Itself

As the Civil Act does not have legislation regarding a shift in the burden of proof, the aforementioned case law applies, so if a person bringing claims shows that the product was used in a typical manner and the product was damaged regardless, the court would assume that the product was faulty.

Product liability claims are classified as civil cases, so they can be brought to any regional court that handles civil cases (see 2.4 Jurisdictional Requirements for Product Liability Claims).

Korean law does not implement a jury system in civil cases, and the cases are decided in a bench trial. The size of the claim determines whether a case will be decided by a single judge or by a panel of judges. Where the claim exceeds KRW500 million (roughly USD380,000), the first trial will be decided by a panel of judges, and claims lower than this amount will be decided by a single judge.

Damages

There is no court-specific threshold on the award of damages, but under Article 3(2) of the Product Liability Act, courts can award compensations for the damages caused (other than damages to the product itself), as well as punitive damages up to three times the value of the damages caused. The amount of punitive damages depends on the following factors:

• the degree of intentionality;
• the severity of damage caused due to the defect of the relevant product;
• the financial gains obtained by the manufacturer from supplying the relevant product;
• where any criminal punishment or administrative disposition is imposed on the manufacturer due to the defect of the relevant product, the severity of such criminal punishment or administrative disposition;
• the period during which the relevant product was supplied and the supply volume;
• the financial status of the manufacturer; and
• any efforts made by the manufacturer to repair the damage.

Korean civil cases generally do not allow for punitive damages, and the allowance of punitive damages in product liability claims is relatively new, as the legislation was only recently enacted.

There are no special appeal mechanisms exclusive to product liability cases, and the general procedure for appeals, as set out in the Civil Procedure Act, applies. Under the said procedure, an appeal must be filed within two weeks of receiving the decision of the court. The application for appeal may merely state the intention to appeal, and can be supplemented with subsequent written grounds.

Damages Other Than Those to the Product

As the person bringing claims bears the initial burden of proof (see 2.9 Burden of Proof in Product Liability Cases), the manufacturer can disprove any of the three criteria required to shift the burden of proof.

According to Article 4(1) of the Product Liability Act, even if a manufacturer is found to be liable for damages under Article 3 of the Act, the manufacturer can be made exempt by proving any of the following:

• that they did not supply the product;
• the existence of the defect could not be identified given the state of scientific or technical knowledge at the time they supplied the product;
• the defect is attributable to them complying with the standard prescribed by any Act or subordinate statute in force at the time when they supplied the product; and/or
• in the case of raw materials or components, that the defect is attributable to the design or the instruction on manufacturing by the manufacturer of the product made of the relevant raw materials or components.

The above exemptions take into consideration that if the manufacturer was unaware of possible damages and complied with all relevant legislation at the time, the manufacturer should not be held liable. However, under Article 4(2) of the Product Liability Act, if the manufacturer was aware of, or would have been able to know of, the existence of such a defect after supplying the product, the manufacturer cannot claim exemption under any of the above defences except the first (ie, not supplying the product).

Under Article 6 of the Product Liability Act, a special agreement intended to exclude or limit any liability for damages under the Act are void. But this does not apply to cases where a person who is provided with any product to be used for their own business enters into the said special agreement with respect to damages caused by the product to their own business property.

Damages to the Product Itself

According to Article 580(1) of the Civil Act, if the purchaser was aware of the defect or was not unaware due to negligence, the seller is not liable for damages to the product itself. Thus, the manufacturer could claim that the purchaser was either aware of the defect or was unaware due to negligence.

As mentioned in 2.12 Defences to Product Liability Claims, if the manufacturer complied with the standards prescribed by any Act or subordinate statute at the time the product was supplied, and was not aware and could not have been aware that a defect existed before or after supplying the product, the manufacturer will be exempt from liability for damages.

As a violation of relevant regulatory requirements is cause for criminal punishment and administrative dispositions (see 1.2 Regulatory Authorities for Product Safety), compliance with regulatory requirements is a consideration in the scope of damages, as mentioned in 2.10 Courts in Which Product Liability Claims Are Brought.

There are no special rules regarding payment of costs for product liability claims, so general regulations, as set forth by the Civil Procedure Act, will apply. Concerning the recoverability of costs, the court will usually order the losing party to pay for the cost of proceedings and to split costs if claims are partly successful. However, in certain instances where one of the parties acted in bad faith (eg, suppressing evidence or intentionally delaying proceedings) the court may order said party to pay for the cost of proceedings regardless of whether the claim was successful.

These costs cover fees for stamps, court clerks, translators, witnesses, expert witnesses, delivery, issuances of statements in newspapers, etc. These costs are generally set in separate laws or capped accordingly, and are small in scope. However, costs also cover fees for legal counsel, though such fees are calculated depending on the value of the subject matter in the litigation and not the actual fees paid.

As mentioned in in 2.5 Pre-action Procedures and Requirements for Product Liability Claims, consumers can request a dispute settlement from the KCA or the Consumer Dispute Settlement Commission and, if successful, all costs arising from this process are to be borne by the manufacturer. Aside from this process, there is no official litigation funding or assistance regarding product liability claims. No domestic legislation specific to third-party funding exists at present.

According to Article 70 of the Framework Act on Consumers, a business entity’s infringement of the rights and interests of consumers relating to their lives, bodies, or property entitles the following organisations to file a class action.

• A consumer organisation which is registered with the Fair Trade Commission and meets each of the following requirements:
1. an organisation which is aimed mainly at the promotion of consumers’ rights and interests pursuant to its articles of association;
2. an organisation the number of whose regular members is at least 1,000; and
3. an organisation for which three years have passed since it was registered pursuant to Article 29.
• The Korea Consumer Agency.
• The Korea Chamber of Commerce and Industry under the Chambers of Commerce and Industry Act – the federation of small and medium-sized enterprise co-operatives under the Small and Medium Enterprise Co-operatives Act, and a nationwide economic organisation prescribed by Presidential Decree.
• A non-profit and non-governmental organisation under Article 2 of the Assistance for Non-Profit, Non-Governmental Organisations Act which meets each of the following requirements:
1. an organisation which is requested to institute a class action by at least 50 consumers who have suffered legally or factually identical damages;
2. an organisation which has the actual results of its activities for at least the preceding three years according to the purpose of promoting the rights and interests of consumers specified in its articles of association;
3. an organisation the number of whose regular members is at least 5,000; and
4. an organisation which is registered with a central administrative agency.

An organisation that meets the above criteria must first request that the business entity cease its infringements via written request, then gain permission from the relevant regional court to proceed.

Class actions are not often used in product liability cases because (i) the above criteria for organisations are very specific and cannot be easily met; and (ii) courts have shown reluctance in approving class actions, sometimes deliberating for years.

To address the issue, the Fair Trade Commission has recently announced plans to revise the Framework Act on Consumers by allowing for classes to request preventive prohibitions as well as abolishing the need for court approval to proceed with a class action.

Supreme Court Decision 2013Da26708, 26715, 26722, 26739, Dated 11 November 2017

In this case, a manufacturer of blood products was sued for product liability when consumers suffering from haemophilia used bloods products supplied by the manufacturer contracted Type C hepatitis.

The Supreme Court ruled that because it is nearly impossible for consumers to prove that a pharmaceutical company was negligent or that there was a fault with the product itself, if the consumers proved that (i) they did not have hepatitis before using the blood products, (ii) they were diagnosed with hepatitis after using the products, and (iii) there is a substantial possibility that the products were infected with the virus, that would be sufficient to shift the burden of proof onto the pharmaceutical company.

This case is notable as it addressed a shift of the burden of proof, and even lessened the initial burden of proof of the consumers by stating that they may not need to prove that a defect existed – ie, merely providing that there was a possibility of a defect was sufficient in certain cases.

Supreme Court Decision 2017Da267774, 2018Da207601, Dated 25 August 2022

In this case, the inheritors of a welder who had developed Parkinson’s disease filed a product liability claim against the welding rod’s manufacturer, on the grounds that the welding rod had contained manganese.

The Supreme Court upheld the Busan District Court’s decision. It ruled that, although the welding rod contained manganese, manganese is a critical and irreplaceable component to the strength of the weld, and the product packaging had specified the possibility of inhaling steam caused by welding. Therefore, in terms of product liability, the manufacturer could not be held responsible.

This case is notable as it specified that even if a product was inherently dangerous, if that danger was caused by a necessary component to the product and that danger had been properly indicated, product liability claims would not be upheld.

The Product Liability Act is itself relatively new. There had been attempts to enact such legislation since 1982, but those attempts were hindered by overwhelming opposition from corporations. The Act was enforced in 2000, and was not amended until 2013, and most of the amendments then were simply changes to grammar and vocabulary.

In 2017, several significant amendments were made to the Product Liability Act. The first was the addition of punitive damages, something that had not been common under Korean law (see 2.10 Courts in Which Product Liability Claims Are Brought).

The Framework Act on Consumers

As mentioned in 2.16 Existence of Class Actions, Representative Proceedings or Co-ordinated Proceedings in Product Liability Claims, the Fair Trade Commission has announced its plans to amend the procedure involved in class actions.

Focus on Artificial Intelligence

While artificial intelligence (AI) has long been an area of focus for industrial and commercial sectors, it has recently attracted attention in the legal sector regarding autonomous driving technology. The core of the issue is to what degree manufacturers can be held responsible for the failure of AI, and who is to be held responsible (and to what degree) when drivers are injured while using autonomous driving technology that is incomplete.

On 30 April 2019, the Korean government enacted the Act on the Promotion and Support for the Commercialisation of Autonomous Vehicles. This act does not yet regulate Product Liability or Product Safety and instead sets rules on when and where such vehicles may be used as well as making insurance policies obligatory. In 2021, the Act was amended to provide a list of government-approved institutions that would be authorised to certify the safety of autonomous vehicles, and also specified that these certification institutions may be held responsible for damages caused as a result of certification activities.

The Minister of Land, Infrastructure and Transport; the Minister of Trade, Industry and Energy; as well as the Minister of Environment issued a joint statement on 15 October 2019 regarding providing safety guidelines by 2021, implementing temporary licences by 2024, and enacting regulations on the legal status of autonomous vehicles as well as setting standards on liability by 2024.

The COVID-19 pandemic has not directly affected the product liability and product safety regime. However, in accordance with government policies to restrict the number of people in a single gathering as well as to deal with the rising number of people who have contracted COVID-19, courts in Korea underwent lockdowns in February, August and December of 2020.

Regarding vaccines for COVID-19, there had been concerns regarding product liability (eg, pharmaceutical companies’ requests for exemption from product liability for side effects caused by vaccines).