Legislation to expand the class action system — previously limited to securities — across all corporate activities is gaining momentum. The subcommittee of the National Assembly's Legislation and Judiciary Committee introduced 13 class action-related bills on January 8.
The bills would extend class action eligibility, currently limited to areas such as false disclosures by listed companies, to include personal data breaches, product liability, and general torts. The ruling Democratic Party of Korea plans to pass the class action law in the National Assembly this month.
The push for comprehensive expansion of the class action system was triggered by massive data breaches at Coupang and telecommunications companies. In December 2024, Acting President Lee Jae-myung cited the Coupang breach affecting 33 million users and emphasized the need to expand the class action system. He instructed the government and ruling party to strengthen the system, arguing that current laws fail to provide adequate remedies and penalties.
The problem is that the ruling party has competitively led bill proposals without sufficient discussion of the burden on corporations and the impact on industry.
The purpose of the class action system — protecting consumer rights — is understandable. However, a closer look at the bills reveals concerning provisions. First, they include punitive damages of up to five times the actual damages and a discovery system requiring companies to prove they were not at fault. Punitive damages raise concerns about double punishment, while the discovery system risks exposing trade secrets through excessive document demands.
A bigger problem is that the supplementary provisions include retroactive application to cases occurring before the law takes effect. This could undermine the constitutional principle against retroactive legislation and shake the foundation of legal stability.
The comprehensive expansion of the class action system should proceed cautiously after reviewing these issues. Although the class action system has been in place in Korea for over 20 years, it has been limited to the securities sector precisely because of the clear side effect of frivolous lawsuits.
If the bills pass as written, professional litigants seeking massive settlements could proliferate, exposing even routine corporate activities to litigation risks. Before expanding the class action system across the board, rigorous design and sufficient social discussion should filter out strict conditions for lawsuits and poison pill provisions.
