Making things harderThe government is relentless in its anticorporate campaign. The Justice Ministry has suddenly announced new legislation designed to expand the legal scope of class-action suits and punitive damage awards. One bill would extend compensation from a class-action suit with more than 50 plaintiffs to nonplaintiffs if those people have been similarly affected by a situation.
Another bill would make punitive damage claims easier. Current laws allow punitive damage suits if their products cause damages. The new bill will hold companies liable for actions or activities.
The government claims the new legislation is for the benefit of consumers. It cites the case of a diesel emission fraud case. The government says that consumers in the United States and Europe, where class-action suits are common, were well compensated, whereas Korean owners of the same car were not compensated due to differences in the law.
Class-action suits can cause serious negative effects. In the United States, cost of class-action suits amount to $240 billion a year. The cost to companies could translate into a loss of jobs. Many developed economies have mechanisms to cushion the negative effects of class-action suits and punitive damage awards.
When the government enabled a class-action suit in securities-related frauds in 2005, authorities made the procedure complicated so as not to encourage more such suits. The opposite is happening now. Companies will have to work harder to prove their innocence. Moreover, the ministry is allowing retroactive applications in past cases, which could violate our Constitution.
Companies are being hammered as they struggle against an unprecedented pandemic crisis. The commercial, fair trade and financial supervisory laws have been revised to toughen regulations on businesses. On top of that, our companies now face a flood of lawsuits.
They complain that the government is out to kill them. The government has been spending massively to create jobs — yet it is lashing out at businesses.
A foreign investment bank has pointed out that an overload of regulations is undermining Korea Inc.’s effective response to challenges like the coronavirus. Korea is turning into a harder place to do business. Who will answer if jobs get lost as a result of this legislation?