Principal Attorney
More Korean manufacturers and construction firms are expanding operations in the U.S. to avoid rising tariffs. As a result, business disputes between Korean companies are becoming more common. However, even as these companies operate on American soil, their contracts, communications, and key documents are often in Korean, creating unique legal challenges when disputes arise.
Jurisdiction Challenges: Do Korean Companies in the U.S. Must Litigate in Korea?
Korean companies operating in the U.S. face a critical legal issue in determining where to resolve disputes. Contracts between Korean companies, especially those in Korean, often have clauses stipulating that any disputes must be settled in Korean courts. But when business operations and disputes occur in the U.S., does this provision still apply?
U.S. courts may assert jurisdiction over disputes involving Korean companies if those companies primarily conduct business within the U.S. Even if a contract specifies Korean jurisdiction, the reality of U.S.-based operations can lead to a different legal outcome.
For instance, in a construction project in the U.S. with disputes over local regulations or project delays, U.S. courts may determine they have the authority to resolve the matter. This highlights the importance of carefully drafting contracts and considering operational realities that can influence jurisdictional decisions.
Contract Issues: The Risks of Using Korean-Language Agreements in the U.S.
A common mistake made by Korean companies expanding to the U.S. is using contracts written solely in Korean, without proper English translations or legal adaptation to U.S. laws. This can lead to serious complications, including:
- Unenforceable Clauses: Some contract terms valid in Korea may not be enforceable in U.S. courts.
- Misinterpretation: U.S. courts require contracts to be translated into English, and translation errors can alter key terms.
- Conflicting Legal Standards: Differences between Korean business practices and U.S. legal expectations can create loopholes and ambiguities.
How to Avoid Contract Disputes:
- Use bilingual contracts that comply with U.S. laws.
- Consult with attorneys familiar with both Korean and U.S. contract law to ensure legal adaptation.
- Regularly review and update agreements to align with evolving business operations.
Evidence Challenges: Handling Korean-Language Documents in U.S. Litigation
When Korean companies in the U.S. become involved in litigation, one major hurdle is presenting evidence. Most business communications—contracts, emails, invoices, and text messages—are in Korean, posing several challenges:
- Translation Costs & Time Delays: Certified translations are required by U.S. courts, which can be expensive and time-consuming.
- Admissibility Issues: Poor translations can lead to disputes over accuracy, affecting the validity of evidence.
- Lost Context & Intent: Legal wording is critical, but direct translations may not fully capture the nuances of Korean business language.
How to Prepare for Evidence Challenges:
- Ensure key documents, such as contracts and major agreements, are bilingual from the outset.
- Use certified legal translators for business records before a dispute arises.
- Maintain organized records of business communications to preserve key evidence.
Expect More Lawsuits as Korean Companies Expand in the U.S.
With new tariffs on Chinese imports, more Korean companies are moving their manufacturing and construction to the U.S. to remain competitive. This trend is likely to lead to an increase in legal disputes, particularly in industries like construction, where contract issues, subcontractor relationships, and project delays often result in lawsuits.
To minimize legal risks, Korean companies should proactively address potential disputes before they escalate. Conducting due diligence on U.S. laws, maintaining compliance, and establishing clear communication channels with experienced legal counsel are essential steps to reduce risks related to jurisdictional conflicts, contract enforceability, and evidence handling.
Protecting Your Business with Sul Lee Law Firm
Expanding into the U.S. offers great growth opportunities but also brings legal challenges. Understanding jurisdiction, contract enforceability, and evidence rules is key to protecting your business. By partnering with legal professionals familiar with both U.S. law and Korean business practices, you can ensure compliance and effectively manage disputes.
Sul Lee Law Firm, PLLC, provides expert bilingual legal support to safeguard your operations. Contact us today.