- Introduction of injunction system, Subcontracting Act amendment passed by the National Assembly -
The Korea Fair Trade Commission (KFTC, Chairperson Han Ki-jeong) announced that an amendment to the Act on the Fairness of Subcontracting Transactions (hereafter, “Subcontracting Act”) has passed the plenary session of the National Assembly on August 27. The amendment introduces a private party injunction system that allows victims of unfair subcontracting practices to seek injunctions directly from the courts.
Under the newly passed amendment, subcontractors who have suffered or are at risk of suffering damage from violations of the law may file directly with the court for prohibition or prevention of the unfair conduct, without going through the KFTC. The scope of injunctions has been broadly recognized, covering 12 categories of unfair subcontracting practices, including misappropriation of technology, for the protection of subcontractors.
- The 12 categories include: setting unfair terms (Art. 3-4), unfair determination of subcontracting payments (Art. 4), coercive purchase (Art. 5), unfair cancellation of subcontracting (Art. 8), unfair returns (Art. 10), reduction of payments (Art. 11), unjust payment claims (Art. 12), coercion of providing economic benefits (Art. 12-2), requests for and misappropriation of technical data (Art. 12-3), unfair in-kind payments (Art. 17), unfair management interference (Art. 18), and retaliation (Art. 19).
In particular, for cases of misappropriation of technology, even if the injunction is granted, continuing damages may arise from products or facilities already manufactured. Therefore, subcontractors may additionally request the disposal of goods or facilities created through the violation. To prevent abusive lawsuits, the amendment also includes provisions on security deposits and court jurisdiction.
The amendment will take effect three months after promulgation, following deliberation by the State Council and other procedural steps.
Through the injunction system under the Subcontracting Act, violations can now be halted at the early or preventive stage, allowing for swift remedies and damage prevention before administrative sanctions or compensation claims. This is expected to complement existing KFTC sanctions and provide subcontractors with stronger protection.