Class Action Scarcity: An Empirical Analysis of the Securities Class Action in Korea
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Class Action Scarcity: An Empirical Analysis of the Securities Class Action in Korea Hai Jin Park1
© T.M.C. Asser Press 2019
Abstract Class actions, originally developed in the United States, have recently spread internationally. Not every country that has emulated the US’s style of class actions has seen the class action tool being frequently used. Korea, one of the civil law countries that adopted a US-style class action in securities law more than 10 years ago, has a securities class action that serves as an excellent example of a legal transplant that is underutilized. Over the last 13 years since the Securities-Related Class Action Act (‘the SCAA’) was enacted in Korea in 2004, only 10 class action suits have been filed. Instead, securities damage suits in the form of non-class actions (‘securities damage suits’) are more frequently used in Korea. In this article, I aim to fill the gap in the literature by empirically researching why the securities-related class action is seldom used in Korea, focusing on the perspective of the plaintiffs’ lawyers and considering securities damage suits as a substitute. To accomplish this, the study relies on a mixed-methods research approach: (1) interviews with plaintiffs’ lawyers and plaintiffs themselves and (2) a content analysis of court decisions on securities class action suits and securities damage suits. This research finds that risk-averse plaintiffs’ lawyers, facing large costs in bringing securities class action suits, consider bringing securities class actions only for cases that have a higher possibility of winning and enforcement. This research provides insights into the conditions for successful legal transplants to other countries considering a US-style class action as an option. Keywords Class action · Securities class action · Legal transplant · Plaintiffs’ lawyers
* Hai Jin Park [email protected] 1
J.S.D Candidate, Stanford Law School, Stanford, California, USA
123Vol.:(0123456789)
H. J. Park
1 Introduction The class action, originally developed in the United States,1 has recently spread throughout the world.2 Not all countries that have emulated the US-style class action have seen the class action tool being frequently used.3 The central factors that enabled the success of the class action in the United States are the common fund doctrine, the contingency fee, the availability of a jury system and punitive damages, and the American rule against fee-shifting.4 Countries that import the class action mechanism from the United States may lack some or all of the key features that are present in the United States5 and also have existing alternative legal remedies to class actions. The export of class action law from the US to other countries is an example of a legal transplant. Adopting law from another jurisdiction is nothing new in history,6 ranging from entire legal systems to a single rule. The initial discussion about legal transplants concerned whether legal transplants are pervasive or do not occur at all.7 The subsequent discussion gradual
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