[Korea-US Business Dispute] Successfully Negotiates The KFTMA Mediation For U.S. Company
Recently, K-Law Consulting successfully represented a U.S. company, our client, in dispute with Korean Company A (the “Company A”), which refers to a local distributor. We reached an agreement on about 20% of the amount demanded by Company A.
Our client is a global company and operates the business with local distributors all over the world. Likewise, our client signed a distributorship agreement with a Korean local distributor, Company A.
Last year, our client sent a notice of termination of the distributorship agreement to Company A. While they discussed remaining commissions, a dispute arose regarding the commission amount. After the failure of about 4 months of negotiation between them, Company A filed a petition for mediation with the Korea Fair Trade Mediation Agency (the “KFTMA”), alleging violations of the Korean Monopoly Regulation and Fair Trade Act (the “Korean Antitrust Law”) against our client. Referentially, the KFTMA mediation has a distinct characteristic, unlike general mediation. If an agreement is not reached in the KFTMA mediation procedure, a complaint is usually filed to the Korea Fair Trade Commission. In order to respond to the Fair Trade Commission's compulsory investigation, a lot of time and money must be consumed, and it is highly likely that it will be difficult to continue business in Korea due to the Fair Trade Commission's sanctions.
Based on Attorney Jinhee Lee’s abundant knowledge and experience as a lawyer licensed in Korea and a foreign legal consultant in CA, he accurately pointed out that our client did not violate the Korean Antitrust Law even though the case was complicated and there were various legal issues. And, he strongly argued for the interpretation of the agreement and the industrial practice for a fair and reasonable commission amount. As a result, Company A agreed to accept about 20% of the amount that they originally demanded of our client.
The risk of disputes is very high if you don't know and are not familiar with Korean law and the dispute resolution system while doing business with a Korean company. Also, it is difficult to access Korean law and the dispute resolution system in the United States. K-Law Consulting is a foreign legal consulting firm specializing in Korean law located in Los Angeles, California. K-Law Consulting's clients can receive legal advice on Korean law in the United States through the only Korean lawyer (Jinhee Lee) registered with the State Bar of California as a Foreign Legal Consultant for Korean law. Therefore, disputes with Korean companies can be resolved in a convenient and efficient way for clients.
If you have a similar issue in your Korean business, please let K-Law Consulting step in and guide you. We are here, close to home in the U.S., to help you develop and make your business in Korea strong.
*Please understand we cannot disclose details of the case due to our confidentiality obligation.