Strengthen Collective Litigation Instead of Expanding Class Actions [Expert View]

Concerns are deepening in the business community and academia as the pro-government camp, which holds a majority of 179 seats in the National Assembly, has signaled that it will push ahead with legislation on corporate regulation in the second half of the year as well. A leading example is the proposed Class Action Act, of which as many as 14 bills have been introduced. Of these, 12 bills, including the one proposed by lawmaker Park Gyuntaek, are based on the U.S.-style class action system, while the remaining two are based on the civil law-style organizational litigation system.

Both the class action system and the organizational litigation system are modern damages litigation mechanisms designed to provide efficient relief for collective small-value harms that are difficult to remedy through individual lawsuits. The U.S.-style class action system allows a representative party to seek damages on behalf of all victims, including those who do not participate in the lawsuit, unless they file an opt-out notice. By contrast, the class action systems of Sweden and Italy, as well as the organizational litigation systems of Germany, France, and Japan, allow only those victims who file an opt-in notice to bring a damages claim. Few countries outside the United States have adopted the U.S.-style class action system because of the following problems arising from its opt-out structure.

First, because damages are claimed on behalf of all anticipated victims, the amount sought can be enormous. At the same time, it is difficult to determine the scope of the victims, the standing of the representative party, and the commonality of the issues, while damage calculations necessarily rely on sample-based and statistical methods. As a result, such litigation inevitably becomes costly and protracted.

Second, even victims who fail to opt out simply because they were unaware of the case are bound by the res judicata effect of a judgment or judicial settlement. This means that even if they are dissatisfied with the amount of compensation, they can no longer contest it, thereby infringing upon their constitutional right of access to the courts.

Third, because lawyers must actively recruit victims and bear litigation costs over a long period, the system is criticized for merely expanding the market for large specialized law firms while leaving each individual victim with only a negligible amount of compensation, thereby creating little more than a paradise for lawyers.

Because of these fatal problems, Europe and Japan gave up on introducing the class action system more than a decade ago and instead adopted an improved organizational litigation system, under which public-interest groups such as consumer organizations confirm liability for damages on behalf of victims, after which the victims claim compensation for their own losses. In Korea as well, it would be desirable to improve the organizational litigation mechanisms under the current Framework Act on Consumers and the Personal Information Protection Act so that they become modern organizational litigation systems that also allow claims for damages.

Some class action bills contain retroactivity provisions stating that they “also apply to claims for damages arising from causes that occurred before the law took effect.” In response, some argue that if the statute of limitations for the liability claim has not yet expired, this constitutes quasi-retroactive legislation, and that retroactive legislation is also permissible because it merely prescribes judicial procedures for claiming liability that has already arisen.

However, “causes that occurred before the law took effect” refer to factual relationships that have already been completed, so legislation concerning damages claims arising from them is true retroactive legislation. In addition, class action legislation, while applying to existing facts or legal relationships, imposes unfavorable legal effects on defendants that they could not have anticipated, and therefore constitutes prohibited retroactive legislation. Nor can it be said that there is any sufficiently weighty public interest that would justify recognizing an exception to the constitutional principle prohibiting retroactive legislation. Therefore, enacting a Class Action Act while also including a retroactivity provision is unconstitutional because it runs counter to the rule-of-law principle, which encompasses protection of trust and legal stability for individuals and businesses. It is worth recalling the precedent set when the Securities-Related Class Action Act was enacted: not only was the principle prohibiting retroactive legislation observed, but, reflecting industry conditions at the time when window-dressing accounting was rampant, all but large-scale companies were given a two-year grace period, thereby even providing an opportunity to clean up such accounting practices.

Sukhoon Han, Adjunct Professor at Yonsei University, Former Professor at Sungkyunkwan University Law School

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Original title: 집단소송 확대 대신 단체소송 강화를[전문가 시선]

Author: Seok-hun Han

Date: 2026-07-01

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=1&idx=29224