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Frequently in the news of late, North Korea has a well-earned reputation for being isolated, eccentric, and completely unpredictable. South Korean lawyers who do regular work in or related to the hermit kingdom say that their experience backs up this perception.
In the past few weeks, the world might have been riveted by North Korea and its threats to attack the United States, but for South Korean law firms that do DPRK work, the reality has been far more mundane – negotiating agreements, advising government bodies and meeting with officials from their northern neighbour. But in one aspect, there is no difference: in private, the North is just as unpredictable as it is in public.
There are just a handful of South Korea law firms that have dedicated DPRK practices, and these include Big Five firms like Bae, Kim & Lee and Shin & Kim. In 2002, BKL became the first firm to launch a North Korea practice, and that currently has 14 attorneys, including five partners. Shin & Kim officially launched its DPRK practice in 2013, and that currently has eight lawyers, including four partners.
According to the two firms, “North Korea work” covers a wide range of services, from assisting South Korean businesses investing there to advising the government on legal issues related to inter-Korean relations, to even the legal aspects of a Korean unification.
Despite the variety of services offered, there is understandably a very limited number of clients for North Korea work, according to Lee Chan-ho, a senior foreign attorney in BKL’s North Korea practice. One of those is the South Korean government, which turn to law firms for advice on matters such as North Korean sanctions and the opening, and then suspending, of the Kaesong industrial project – a joint industrial complex between the two Koreas.
The practice is not limited to just North Korean law and its legal system, notes Kim Se-jin, a foreign attorney with BKL. “We also provide advice in connection with international law in general,” he says. “A lot of the sanctions on North Korea and their commercial relationships with other countries all need to be understood in the context of international law.”
ACCESS IS A CHALLENGE
Working with North Korea is obviously not easy. It’s a challenge to even get access to North Korean laws and regulations, or understand how North Korean officials enforce their laws in the real world, says Lee, explaining that North Korean law is still classified within the country, although it did start to publish court documents about 10 years ago.
This makes finding legal sources and precedents challenging as well, adds Kim. “Even if there is a law, there’s the question of how that law is actually interpreted,” he says.
For partner Yoo Wook, who launched BKL’s North Korea practice, the most difficult part of doing North Korea work is the lack of a transparent dispute resolution system. “North Koreans have their own court system, and we have no information regarding how cases are actually heard,” says Yoo, who also heads the firm’s legislative and regulatory consulting team. “And since we do not have any information related to how rulings are handed down, the only way to resolve disputes is through arbitration.”
But even that is far from foolproof. “North Korea is not part of the New York Convention, so it’s impossible to enforce arbitration awards in North Korea,” says Yoo.
Lee Soo-hyun, a partner at Shin & Kim who leads the firm’s North Korea practice, faces similar difficulties. “If we put a clause in a contract, we cannot predict that the clause will be enforceable by law, or taken seriously by a court,” he says. “In North Korea, there is no concept of court precedent.”
Lee shares an example where South Korean companies wanted to invest in North Korea through a joint venture together with Russia, but all his team could do was draft the contract and hope for the best. “We had no faith that, if there was a dispute, we could go to an independent court to plead our case and obtain a judgment,” he says. “There is no way to enforce a contract when there is a dispute. You just have to trust the North Koreans to honour the contract.”
Another challenge when it comes to North Korea work is verification. “There is no way to verify ownership of property,” he says. “Since there is no concept of private property in North Korea.”
“When working on a transaction, we first try to verify who owns a certain property, and then we can negotiate carefully and reach an agreement,” Lee continues. “In the case of a contract with North Korea, we cannot even verify if the property exists or not.”
And this problem also applies to people. “North Koreans don’t carry business cards,” he adds. “There is really no way to verify if a person is who he says he is.”
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