How can I protect myself in international business deals?

March 27, 2008 12:16 PM

Will the Korean doctor rob me blind?? Here's the long and short of it... my father is the doctor that pioneered tumescent liposuction. he teaches his techniques to other doctors on a regular basis and manufactures the tools and equipment involved with the procedure. Recently, a doctor from Korea, I'll call him Dr. Lee, took my father's course and liked it so much that he expressed an interest in teaching the course in Korea and to sell my fathers products in his courses. My father is very interested, but feels concerned that he must submit all of his technical files to Dr. Lee so that he can submit them in an application to the Korean FDA for approval.

He will be distributing them through his company.

What should I/my father do? What risks can I avoid and what haven't I thought of? What recourse would I have if we were double-crossed?

If anyone can think of a solution and/or talk me down from committing a heinous mistake, I would be eternally grateful.


Thanks a million,

--Luke

posted by lukeklein to law & government (9 comments total)

I always hate the "get a lawyer!" call-outs, but damn: get a lawyer.
posted by nitsuj at 12:17 PM on March 27

get a lawyer, specifically one who is familiar with doing business in korea.
posted by lia at 12:19 PM on March 27

I am not a lawyer, but I hear from my colleagues that the US and South Korea enjoy very good, very strict intellectual property relations. Get advice from a large international IP law firm like Greenberg Traurig....
posted by Paleoindian at 12:20 PM on March 27

Thanks, Paleoindian. I understand the GET a lawyer thing everyone is saying, and I definitely wouldn't proceed without one, but reasuring me that America and South Korea anjoy good foreign intellectual property relations and giving me the name of a law firm is very helpful.

--Luke
posted by lukeklein at 12:34 PM on March 27

A lawyer your father retains might have to consider / work through the following issues:

Licensing agreement between your father and "Dr. Lee's" company
Additionally / alternatively / potentially, incorporation documents for a separate corporate entity, either for your father or for a joint venture (and it could be a partnership, limited partnership, corporation, limited liability company, etc.)
Retention of local (Korea) counsel to handle Korea FDA issues (potentially on behalf of Dr. Lee's company, but maybe the joint venture)
Retention of tax advisors

I find it improbable that your father doesn't have some sort of corporate lawyer (if he's manufacturing and selling surgical instruments).

As far as I know, there are NO American law firms "in" Korea. There are large law firms / lawyers with experience dealing with Korean firms and issues. Their interest in your business will depend on how complex a transaction this really is -- and that's not something you should really be posting in public.

I have successfully "tagged" womeone with litigation in South Korea -- but it is by no means an easy process. International litigation / arbitration is extremely complicated.

In short, this is a lot more complicated than many of the "get a lawyer" call-outs seen on Ask. The generalities you get from random people (even lawyers) on the Internet are probably not going to be very helpful to you.

IAAL but IANYL and TINLA.
posted by QuantumMeruit at 1:20 PM on March 27

I couldn't help myself and did some Googling. I see that the questioner's father appears to have incorporated his own surgical supply company (for which he is the registered agent) and has no fewer than 9 patents to his name. So I'm a bit curious as to the subtext -- is this gathering topics for discussions with current counsel, prompted by dissatisfaction with current counsel, or something else altogether?
posted by QuantumMeruit at 1:42 PM on March 27

[comment removed - please take metacommentary to metatalk or email]
posted by jessamyn at 1:45 PM on March 27

I have Korean clients and the biggest difficulty in enforcing a judgment against a SK defendant is that it is extremely difficult to locate and attach assets in SK.
posted by Mr_Crazyhorse at 2:21 PM on March 27

How can I protect myself in international business deals?

I do not know the answer to this, or most of your other questions, but hopefully the information I can give will be of some use to you. I got here from the associated Metatalk thread. I've been living in and working in Korea for almost 10 of the last 12 years, for what it's worth.

It's difficult to say negative things without being tarred with the brush of overgeneralizing, or worse, being prejudicial, but I'll give it a try.

There are a few things to be aware of when doing business with (some, more old-school) Koreans, particularly if the people in question do not have much experience in international business. I won't bother repeating some of the advice given here, which is mostly reasonable if very general.

The first thing to be aware of (and again, I generalize by necessity, and emphasize that this is not, of course, always the case) is that Korean businesses, particularly when we're talking at the level of business partnerships between individuals rather than corporations, strongly emphasize personal, verbal agreement over contractual paper. This is probably the number one stumbling point for many non-Koreans doing business in Korea or with Korean nationals. The North American idea that a signed piece of paper is binding, and that all is settled and that disputes can be arbitrated according to that contract is, if not entirely absent, certainly taken as secondary to one's word by many, especially older, Korean business people.

The catch-22 in this situation is (and I say this aware that, again, I am talking in broad generalizations here, and wish to avoid being excoriated because misunderstood) that because a foreign business person (ie, you) is not immediately a part of any of the Korean business person's circles or networks, there is less cultural impetus on their part to 'do the right thing' and honor their word. I do not mean to imply that your Korean counterpart would or even might deliberately renege or cheat, but that the cultural context (of which your Korean counterpart might not even be consciously aware) means that they may feel less inclined to honor the letter of verbal agreements with a non-Korean, and the business culture is such that written agreements are derogated in importance out of the gate. A double whammy. Context for why I say this is so (and you are welcome to think I'm incorrect) is in this comment I wrote a long time ago (defending myself against spurious accusations of racism, which is why I am trying to be careful here).

So one needs to be aware that any contract needs to be comprehensive, but also aware that there's a possibility that your counterpart might just simply ignore it after an agreement is reached, and you need to have strategies in place beforehand to deal with that possibility.

In terms of negotiation, it is almost universally noted among people that perform negotiations in Korea or with Koreans that one will believe an agreement to be hammered out, ready to commit to paper, or even already committed to paper, and your Korean counterpart will come back and request changes, attempting to continue negotiation. This is incredibly frustrating, but is part of the business culture, and you should be aware that it may happen.

Next thing to be aware of is that business laws in Korea, although they have been undergoing a simplification in recent years, are still incredibly byzantine, and favour the Korean person in any dispute, although, again, the playing field is being levelled to some extent. You are going to need to consult with someone (and it will have to be a Korean expat, probably, because as far as I know there are no actual foreign lawyers licensed to practice law in Korea) on that front. But, as mentioned above, there are large law firms and lawyers with experience dealing with Korean firms and issues. Not to do your research here would be negligent, I'd say.

I'm not sure exactly what tumescent liposuction is, but minor cosmetic surgery has become a huge business here in Korea, and although it is also true that the population is on average less obese than in North America, that is also changing. It's certainly a growth industry.

One other thing that might be worth thinking about are the three Free Economic Zones here in Korea: the port areas of Incheon, Gwangyang (where I live), and Busan/Jinhae. There are special tax breaks and incentives and regulations to deal with foreign businesses incorporated in these areas. Beyond that I can't tell you much in detail, but there may be advantages to investigating if you can leverage the regulations for those special areas to your advantage.

All of these things said, I don't want to paint a negative picture. There is a lot of business to be done here in Korea, and some markets are just wide open or in desperate need of innovation and modern business thinking, and although a great deal of caution and prudence and research is wise, many Koreans, as with many people anywhere, are honest and forthright in their business dealings. If you talk to non-Korean people who have done business at an individual or small-company level in Korea, though, you will hear a lot of stories of frustration and broken contracts, so it's a common enough problem that I feel I should advise you to be extra-cautious, and to have damage-control strategies in place beforehand.

OK, that's all that comes to mind at the moment. Not specific, I'm aware, but hopefully helpful.
posted by stavrosthewonderchicken at 5:53 PM on March 27 [3 favorites]