Recent Developments

In January 2021, the Personal Information Protection Commission (PIPC) issued corrective orders and imposed administrative fines against Naver Corp. (Naver) and Gmarket Inc. (Gmarket) due to the continuous increase in electronic commerce fraud cases, such as the misuse of open market seller accounts. The orders were issued based on the grounds that the sellers did not take sufficient security measures when accessing the system. The PIPC considered the third-party sellers on Naver and Gmarket as personal information handlers of Naver and Gmarket, and held Naver and Gmarket responsible for their management and supervision of personal information handlers. 

Lee & Ko, on behalf of Naver and Gmarket, filed a lawsuit to cancel the corrective orders. Lee & Ko presented various evidence from different angles to prove that the sellers were independent personal information controllers who received personal information from Naver and Gmarket, rather than personal information handlers of Naver and Gmarket, and argued that the orders were illegal and unfair. 

The district court accepted the arguments of Naver and Gmarket and canceled the corrective orders imposed by the PIPC.

This case was the first case that clarified the scope of personal information handlers and holds significant value as a precedent in terms of the role and responsibilities of platform service providers in relation to e-commerce businesses, including open markets. The case is currently ongoing at the appellate court, and Lee & Ko continues to represent Naver and Gmarket.

In March 2020, during the construction of the double track as part of the Busan-Masan Double Track Private Investment Project, the segment of the underground tunnel that passes underneath a river was damaged, which led to the leakage of underground water and soil into the tunnel.  Since the occurrence of this accident, repairs are being undertaken to date, which are expected to result in repair/recovery costs amounting approximately to USD300 million and loss of profit up to USD100 million due to the delay of construction (KRW400 billion)

With respect to the construction, client has subscribed to Construction All Risk (“CAR”) Insurance, and presently there is a dispute regarding insurance proceeds payment between the client and the co-insurers relating to the accident, which is likely to develop into a legal dispute.  The legal issues that may be addressed in the prospective lawsuit are the subject of the insured interest, cause of the accident and whether the accident falls under a covered risk, obligation to explain the policy and whether the exclusions may apply to the accident due to the defective design and/or construction.  Especially, the lawsuit will require interpretations of the exclusions under the special conditions that reflect the special characteristics of the linear construction, e.g., warranty concerning sections clause and special conditions concerning the construction of tunnels, galleries, subsurface structures or installations under CAR policy.

Considering the lack of relevant of precedents relating to construction insurance in Korea, our team is providing comprehensive strategic advice regarding insurance claims to be made in the future, as well as advice on interpretation of the policies which include a wide jurisdictional research.  This case will be an important precedent and is expected to involve legal disputes in various insurance topics over the next several years.

Lee & Ko advised a group of lenders (with NH Investment & Securities acing as the mandated lead arranger) on one of the most notable acquisition financing deals in recent years, which involved MBK-UCK consortium acquiring a controlling stake in Osstem Implant Co., Ltd. (the largest dental manufacturer in Korea) through Dentistry Investment Co., Ltd. (a special purpose company set up by the consortium). The financing for this acquisition was structured to consist of (i) KRW1,700,000,000,000 bridge facility and (ii) KRW1,200,000,000,000 permanent facilities (KRW1,100,000,000,000 senior facility and KRW100,000,000,000 mezzanine facility). 

The acquisition aspect of the deal entailed two tender offers and a sale and purchase with the largest shareholder of the target company. The unprecedented size of the tender offers, especially amidst heated debates about whether or not Korea should adopt mandatory bid rules to ensure protection of general investors during M&A activities involving a listed company, was, in itself, enough to attract substantial market attention and scrutiny. 

Being a leading law firm in banking & finance, Lee & Ko’s team of lawyers took control of all legal, commercial and practical issues arising from the deal by, inter alia, providing its invaluable input and insight on structuring the financing aspect of the deal, negotiating key terms of financing, documenting the outcome of negotiations and arranging for the signing and closing, while also taking on the additional role of advising on tender offer processes to NH Investment & Securities. 

While working under time and other deal constraints was challenging, Lee & Ko’s team of lawyers have been successful in tapping into its abundant resources based on its unrivalled and time-tested legal expertise, experience and know-how in bringing this deal to a successful closing. Through this deal, Lee & Ko was able to demonstrate, once again, its exceptional capacity to tailor its advice and services to the specific, most ideal, deal structure for any given deal (including financing for the acquisition via tender offers), thereby highlighting its versatility and adaptability as legal advisor.

This transaction was led by Yeo Kyoon Yoon, Myoung Chul Kwak and Eui Yeon Jo, and assisted by Minsun Hwang.

Despite the actuaries’ significant role in designing and pricing insurance policies, premiums and pension plans and assessing accounting transparency, currently there is no statutory regulatory framework regulating actuaries, unlike other professionals such as attorneys, accountants or patent attorneys. As actuaries are widely employed in insurance companies, public pension agencies and other financial institutions, adopting a comprehensive regime regulating actuaries is nothing short of necessary.

Lee & Ko’s insurance practice group has a deep roster of insurance professionals who have long participated in the legislation and revision processes for the Insurance Business Act over the past few decades. The group also has capabilities to deploy various attorneys, former civil servants and former national assemblymen with experience in the executive/legislative agencies, the Regulation Reform Committee and the national assembly to offer the clients solutions-driven advice and obtain optimal results on their behalf.

Advising clients on the enactment of a new law is a much more challenging task than advising on the revision of an existing law. Lee & Ko’s unmatched competence and vast experience in the field has received a wide recognition in the field, leading to the appointment to advise on the legislation process for a potential law regulating actuaries. Lee & Ko’s Insurance and Reinsurance Practice Group worked intimately with the firm’s legislative consulting team, harnessing a collective expertise of leading attorneys and experienced professionals to meet the client’s needs.
 

Representing the South Korean government against the U.S.-based hedge fund Elliot Investment Management, Lee & Ko secured a remarkable victory in the investor-state dispute settlement arbitration, which resulted in the tribunal granting only 7% of the KRW 991.7 billion total claim amount. 

This was a dispute concerning the merger between Samsung C&T Corp. and Cheil Industries Inc. in 2015 whereby Elliot claimed it could have earned long-term profits from its shareholding in Samsung C&T, but instead suffered losses due to the alleged illegal intervention by the South Korean government.  Elliot claimed that the South Korean government pressured the National Pension Service to vote in favour of the merger between Samsung C&T and Cheil Industries, which resulted in damages, and sought to recover compensation for KRW 991.7 billion.

This case received considerable media coverage over the years, not least for the multitude of civil and criminal proceedings connected with this case, with both parties engaging in intense legal battle for more than five years since 2018.  Lee & Ko successfully defended the case by applying extensive knowledge and experience in ISDS matters, conducting a thorough and in-depth analysis of a vast volume of materials, collaborating closely with foreign law firms, and developing compelling arguments for some of the most critical issues.

On June 20, 2023, CJ CGV held a board of directors meeting and resolved a paid-in capital increase worth KRW 570 billion through a public offering of forfeited shares after a rights offering. CJ Corporation, which is the largest shareholder of CJ CGV, plans to participate in the rights offering (approximately KRW 60 billion worth of shares), and lead managers, which are Korea Investment & Securities, Samsung Securities and Shinhan Securities, plan to acquire the remaining shares after the public offering. In addition to the above, CJ CGV will allocate approximately KRW 450 billion worth of shares to CJ Corporation, and CJ Corporation will make an in-kind contribution of the 100% stake in CJ OliveNetworks.

Through this project, CJ CGV, by using a significant portion of the proceeds derived from the fundraising (KRW 380 billion) for the repayment of debt, will not only improve the debt-to-equity ratio from 912% to 297.7%, but will also improve the total equity to a significant degree, from KRW 356.6 billion to KRW 1146.6 billion. The capital increase will be completed by payment being made around September 14 and the issuance of new shares around September 27. Lee & Ko provided detailed advice on various complex issues arising from the simultaneous capital increase through public offering after a rights offering and a capital increase through third-party allotment by in-kind contribution.

A multinational veterinary pharmaceutical company (“Supplier”) entered into an exclusive distribution agreement (“Agreement”) with a Korean distributor (“Distributor”) and conducted business with the Distributor under the terms of the agreement until the Distributor changed its corporate governance structure. Following the change in the Distributor’s corporate governance structure, the Supplier terminated the exclusive distribution agreement based on the terms and conditions of the Agreement. The KFTC conducted an investigation into alleged violations of the MRFTA and Fair Agency Transactions Act (“Agency Act”) by the Supplier related to the following issues (i) the termination of the Agreement by the Supplier based on the change in the corporate governance structure of the Distributor, (ii) clauses on termination, the obligation to provide the Distributor a list of customers and records of transactions, and (iii) penalties for failing to meet minimum sales targets.    

Lee & Ko’s Antitrust & Competition Group addressed the issues raised by the KFTC asserting (i) the dispute is a private contractual matter between the parties and the Distributor is requesting financial compensation from the Supplier for exercising its rights under the Agreement, (ii) the Distributor was fully aware of the terms and conditions of the Agreement and exercised its own free will in entering into the Agreement so the Supplier was not in a superior bargaining position, and (iii) due to the nature of the Agreement and in supplying veterinary pharmaceutical products, the Supplier offered reasonable explanations for the clauses in question. Lee & Ko’s proactive approach to the investigation resulted in the Supplier being cleared of suspicions of violating the MRFTA and Agency Act.