Proposed Revision to the Class Action Act Could Trigger a Flood of Lawsuits

Discussions on revising the class action law are gaining full momentum in the National Assembly. The trigger was Coupang’s leak of the personal information of 30 million people last December. The key issues in this bill are the full expansion of its scope of application and its retroactive application.

Regulation is already sufficient. Corporate liability has been greatly expanded through the Serious Accidents Punishment Act and the Yellow Envelope Act (Revised Labor Commission Act), among others. If the class action system is now also expanded across the board, excessive ex ante regulation and ex post litigation will overlap. The burden will accumulate, and the predictability of business management will weaken.

Expanding the applicable areas raises serious concerns about a flood of lawsuits. Existing securities class actions have amounted to only 12 cases over the past 20 years. That was because the requirements were strict. However, the current revision bill broadens the scope to include personal information and consumer damages, among others, and in some cases even introduces an opt-out system. As the scope widens, disputes will inevitably increase.

Major countries abroad operate class action systems only on a limited basis. Germany, Japan, and the United Kingdom restrict class actions to specific areas or implement them gradually. This is a choice intended to prevent abusive litigation and reduce the waste of judicial resources. In contrast, this revision bill expands a previously limited system to all sectors, simultaneously opening the door to excessive litigation.

The United States, where class actions are highly active, is no different. Lawsuits increased, but the effect of victim compensation remained limited. Criticism continued that the system had become industrialized, as a substantial portion of damages awarded ended up going to attorneys’ fees.

The opt-out method is also problematic. Including individuals in litigation without their consent conflicts with the right to seek a trial and the principle of party disposition. Rather than broadening the scope of rights protection, it may instead restrict individuals’ freedom of choice. It creates a structure in which greater control over rights is expanded under the pretext of protecting rights. This flawed approach may enhance lawyers’ ability to plan litigation, but the resulting costs will ultimately be borne by the entire business community, undermining competitiveness.

Retroactive application is an even more fundamental problem. The law must be predictable. The moment liability is imposed on past conduct through ex post legislation, legal stability collapses. Korea has a statutory law system in which liability is determined based on legislation. Ignoring this and forcing through such a measure would earn the stigma of being legislation designed to target specific companies.

At a time when ex ante regulation is already seriously infringing on corporate management, adding a class action system will only make legal standards more unclear and inevitably discourage corporate investment decisions. If full expansion and retroactive application are combined, litigation risk will spread across industry as a whole. As even past incidents are converted into present costs, the burden on businesses will increase sharply.

Relief for victims is necessary, but an excessive expansion of litigation is not the answer. Policy should shift toward easing excessive ex ante regulation and strengthening dispute mediation and administrative relief functions. Now is the time for a balanced institutional design.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

---

Original title: 집단소송법 개정안, 소송 남발을 부른다

Author: Sung-no Choi

Date: 2026-04-09

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=28791