Class Actions Coming to South Korea

You’d be forgiven for letting it pass you by, but President Geun-Hye Park has been paving the way for the introduction of class action lawsuits to South Korea. As part of her economy democracy pledge – a raft of changes aimed at increasing fairness, competitiveness, and consumer rights, and restricting the large, family-owned companies that have long held too much power – Ms. Park has identified the introduction of class actions as part of the revamp of the country’s fair trade laws.

For South Korea, the drive to ensure a fair economy, to improve consumer rights, and to make sure companies remain accountable before the law and to their customers makes class action lawsuits an obvious and effective step.

Does it matter? Are class action lawsuits worth having? Or is it more surprising that a major world economy and stable democracy doesn’t actually have class actions already?

Class action lawsuits originated in the U.S., and remain a predominantly U.S. phenomenon. They evolved over time as the U.S. legal system itself developed, and it was not until the 1960s that class actions as we recognize them today became standard, with the Federal Rules of Civil Procedures’ Rule 23 making opt-out class actions the standard form. Modern class actions are now at the heart of U.S. consumer rights and company accountability. If a product or service fails to deliver, or harms large numbers, a collective suit assures ease and effective retribution.

Or at least, that’s the basic idea.

Still, class action lawsuits are far from an essential part of any legal system. Plenty of countries don’t have them. Are there any real benefits?

The main draw of class action lawsuits also happens to be the first requirement under U.S. law: they involve a large number of individual claims, which can be grouped together. For efficiency and cost-effectiveness, class action lawsuits make it feasible for individual plaintiffs to go through the legal process, and save courts from repeated and wasteful cases. The final compensation for a single individual seeking damages for a company’s mishap may well fail to justify the costs and time of a lawsuit. Gathered together with a hundred others? Suddenly, the case becomes feasible.

There are drawbacks, of course. Lawyers’ fees are often many, many times the compensation that individual class members actually receive. There are also questions about the legitimacy of some cases, and their impact on the image of the U.S. justice system. Genuine individual cases can get lost among poorly argued class cases, and compensation is always in the form of money, coupons, or future services, excluding other forms of compensation.

For South Korea, the drive to ensure a fair economy, to improve consumer rights, and to make sure companies remain accountable before the law and to their customers makes class action lawsuits an obvious and effective step. In Europe, countries with civil law systems are already developing models to allow for similar group actions to be brought. As consumer awareness improves with the Internet, and widespread access to breaking news, product information, reviews, and legal information makes it easier than ever for companies to be held accountable, class action lawsuits provide one of the best models for multiple parties with related complaints to receive a prompt hearing. The world’s changing and the relationship between individuals and the companies and products they use is becoming less one-sided every day. Ms. Park’s proposals make good sense – class action lawsuits are a big boost to economic diversity and fairness.