Foreign friends doing business in Korea often ask me “Can I trust Korean Courts?” When we go to a foreign country for the first time and wonder whether we can drink tap water, the best answer is to see whether the local people drink tap water.
Then, let's see how trustworthy the Koreans find the courts here. Last year, the OECD surveyed 37 member countries by asking how many of every 1,000 people trust their own court systems. The result shows Korea had the lowest numbers of all countries surveyed. Various surveys in Korea also show that two out of three Koreans do not trust the courts.
But when we ask “Can I trust your country's judges?” it has two aspects. One is fair trial between the local people, and the other is whether there is a bias against foreigners in favor of Korean nationals in the court room. It is an interesting phenomenon that the level of legal protection for foreign companies often depends on the extent of the country's economic development.
In general, it is easy to think that the more advanced a country, the more it protects foreign companies. That's only half true. The U.N. has found in its report that a country with low GNP per capita protects foreign companies strongly to guarantee direct investment by foreign companies.
As domestic companies grow to a certain extent, the country weakens the protection of foreign companies in order to protect the domestic economy. However, when a country's economic development peaks, it strengthens the protection of foreign companies again to ensure fair competition. Now let's see where Korea places in this respect. As the 10th largest economy in the world, the highest level of legal protection for the foreign party in the Korean courtroom is expected and it should be so for the sustainable economic growth of Korea.
However it is still often seen that Korean small and medium-sized enterprises often appeal to patriotism in the courtroom against large foreign companies, saying “Your honor, if a giant foreign company wins this case, it will ruin the roots of the Korean economy.”
Fortunately, I have not seen many cases in which such emotional arguments have had an effect in the Korean courtroom. Rather, I saw a real case of a foreign conglomerate place high trust in the Korean judicial system.
A foreign conglomerate has been fined a large amount by the Korea Fair Trade Commission; it received similar fines in other countries on similar issues. But the foreign company filed a lawsuit only in the Seoul Central Court to determine the legality of the commission's fine and not in other countries. Why? The foreign conglomerate believed that the Korean court would make a fair ruling without discriminating against a foreign company while they were afraid that they may not be able to expect a fair trial in other countries.
In this regard, I think the international trust in the Korean judiciary is largely admirable. Here I would like to share lessons of the past. I have seen cases where a judge's patriotism today hurts tomorrow's national interests. A long time ago, a judge in Korea nullified the letter of credit issued by a Korean bank to protect a Korean company. The judge presumably thought it was a patriotic ruling that saved Korean companies.
Since that ruling, the letter of credit issued by a Korean bank became unreliable and rejected in export transactions by foreign companies. I believe most Korean judges now know his or her patriotism today could hurt tomorrow's national interests, and trusted that the judicial service of a country is most beneficial to national interests. Therefore, I have trust in Korean judges.