The National Assembly's Legislation and Judiciary Committee is reviewing a bill to enact the class action law that has emerged as a hot-button issue. The class action law is a system in which, if a representative of victims with common harm files a lawsuit, the effect of the judgment extends to all victims. The core of the bill is to expand the scope of application, now limited to the securities sector, to all sectors, and to broaden the range of plaintiffs.
The issue is the "retroactive application" clause specified in some of the bill's supplementary provisions. It is a provision that allows lawsuits to be filed for damage that occurred before the class action law takes effect. Legal and industry circles are voicing concerns, saying "malicious 'planned lawsuits' could surge." On the other hand, some argue that blind spots should be addressed so that existing victims are not left without relief depending on when the system is introduced.
◇ National Court Administration also voices concern over retroactive class action law
According to legal sources on the 16th, the National Court Administration recently said the clause on retroactive application in the class action law requires careful review.
The National Court Administration said, "Even in cases where lawsuits are already underway for some victims, judgments have been finalized, or damages have been paid, a class action could still be filed," adding, "Disputes over the scope of res judicata (the binding force of a final judgment) could intensify."
The Korea Consumer Agency (KCA) also unusually said retroactive application needs careful review. According to review materials from the bill review subcommittee of The National Assembly's Legislation and Judiciary Committee, the Korea Consumer Agency (KCA) submitted an official opinion that "it should apply starting with claims for damages arising from the first act committed after the law takes effect."
This contrasts with the Ministry of Justice, which took a positive stance on retroactive application for the sake of effective victim relief. Inside and outside legal circles, some also note that the unpredictable social expense and corporate risks that retroactive application could bring may ultimately be passed on to consumers through product price increases or reduced services.
Industry groups such as the Korea Internet Corporations Association are pushing back strongly. An association official emphasized, "Retroactive application infinitely expands, after the fact, the scope of risks that corporations had anticipated and prepared for within the legal framework of the past," adding, "This directly violates the constitutional principles prohibiting retroactive legislation and protecting legitimate expectations."
They argue that if normal business activities by corporations suddenly boomerang into a "lawsuit bomb from the past" due to retroactive application, management uncertainty will inevitably peak.
◇ From corporations to local governments, "planned lawsuits" could become targets
Industry players worry that cases nearing the statute of limitations for damages claims could become concentrated targets of "planned lawsuits" or "indiscriminate lawsuits." Some law firms or brokers could dig up past cases just before the deadline to induce lawsuits.
In particular, there are projections that the burden on small and midsize enterprises will increase significantly. Because they have less capacity to respond to litigation than large companies, if past incidents such as personal data leaks or negligence in distribution processes later lead to class actions, it could impose a considerable burden on management.
Local governments and public institutions are no exception. If retroactive application applies, the Seoul "Ttareungi" case in which the personal information of 4.62 million people was leaked in Jan., the 2023 outage of the government administrative network "Government 24," and the Gyeonggi Provincial Office of Education student grade leak case could also lead to large-scale lawsuits. In that event, there are concerns that massive litigation expense could ultimately be covered by taxes.
Despite such concerns, some expect that expanding the class action system will allow victims who have been unable to seek redress due to the burden of individual lawsuits to exercise their rights more efficiently.
Experts emphasize the importance of balancing the legislative purpose of consumer protection with legal stability. A legal industry official said, "The National Court Administration and the Korea Consumer Agency (KCA) presenting caution in tandem suggests that excessive retroactive application could fuel legal confusion," adding, "A carefully calibrated system design is needed between the necessity of victim relief and legal stability."