Korea has recently been affected by typhoons and severe flooding caused by the heaviest rainfall in centuries. These issues led to the loss of life, property, business and the livelihood of many individuals. Many alleged defaulting/breaching parties to an agreement have claimed Force Majeure as a defense to non-performance of contractual obligations.
A Korean court recognized Force Majeure Event offers relief to the alleged defaulting/breaching party, in Korea, if the party fulfils the legal requirements noted below.
Force Majeure Defined under Korean Law
Force Majeure provides a defense to party that is alleged to be in breach of contract or otherwise caused damages to a party. Thus, recognition of a force majeure by a court shall exempt an alleged defaulting/breaching party in Korea from performing a contractual obligation and from resulting damages from non-performance of the contractual obligation. The Supreme Court of Korea has defined an excusable Force Majeure event as an event in which:
- the cause was not in the control of the party claiming a force majeure event;
- the cause was not foreseeable by the party claiming a force majeure event; and the
- the cause was not preventable by the party claiming a force majeure event. (Supreme Court of Korea 2008 Da 15940)
Korean courts have been unwilling, in all but the most exceptional of cases, to recognize a Force Majeure event, since Korean courts have been apprehensive to reverse the loss to the non-breaching party. However, statutory law does have justification for excusing a “breaching” party for an unforeseeable event even absent a clause in an agreement between parties.
The Korean Civil Act allows for an Impossibility Defense (Article 537 of the Civil Act of Korea) in cases in which an unforeseen event is not attributable to either party. Additionally, the Korean Civil Act allows for a Impossibility Defense for damages when an alleged defaulting party is unable to perform because of no intentional or negligent actions of the alleged defaulting party (Article 390 of the Civil Act of Korea).
We advise all contracting parties that are considering the utilization of Force Majeure clause to consult with an attorney that understands the major precedence and that tailors the clause to the precedence. A simple, Western-type clause is not, always, useful for Korea and many lawyers are not well-aware of the major recent in Korea.
If you would like a consultation with our attorney, please schedule a call at: Schedule a Call with
an Attorney. IPG Legal has been assisting several foreign and local clients globally in contractual and non- contractual Force Majeure matters.
