Analysis at the intersection of Korean commercial law, corporate culture, and U.S.–Korea trade.
Korea’s 2026 Commercial Code Reform & the New Tariff Landscape
Two developments are reshaping the ground beneath any company doing business with Korea, and U.S. counsel should not assume their existing playbook still applies.
The Commercial Code overhaul. The reform promulgated in March 2026 is the most significant change to Korean corporate governance since the late 1990s. Directors’ fiduciary duties now run explicitly to all shareholders, not only the company; treasury shares acquired must, as a rule, be cancelled within a year; “outside directors” are reframed as independent directors and raised to at least one-third of the board; and a consistent 3% voting cap on audit-committee member elections takes effect in July 2026. For foreign investors and partners, this strengthens minority-shareholder protection and changes how board-level decisions—including those affecting joint ventures and M&A—are made and challenged.
The tariff framework. Under the U.S.–Korea Strategic Trade and Investment Deal, Section 232 tariffs on Korean autos and auto parts were cut from 25% to 15%, with semiconductor terms promised to be “no less favorable” than those offered to comparable competitors. In exchange, Korea committed roughly $350 billion in U.S. investment ($150B in shipbuilding, $200B across strategic industries). The practical effect: pricing, sourcing, and exclusivity terms drafted as routine in the U.S. can now collide with both the deal’s structure and the extraterritorial reach of the Korea Fair Trade Act.
The throughline is the same one I have advised on for three decades: Korean legal and commercial practice does not map neatly onto Western assumptions. The article below explains one of the most consequential—and most misunderstood—examples.
The Signature Paradox: Why Korean Partners Hesitate, and What Korean Law Actually Says
Over more than twenty years working with Korean companies, I have repeatedly run into what I call the paradox. Korean partners are enthusiastic about a collaboration, have invested months building the relationship, and clearly see the mutual benefit. Yet when it comes time to sign agreed-upon documents they hesitate, or simply don’t sign.
Western companies find this baffling. From their side, these agreements are routine steps that protect everyone and demonstrate good faith. The instinct is to read it as cold feet about the deal. It usually isn’t. The reluctance rarely reflects doubt about the relationship or commitment to the project.
Korea operates under a civil-law system, and Korean contract law has no consideration doctrine. Under the Korean Civil Act, a properly formed agreement is binding even without the exchange of value that common-law systems require. The practical implication is significant, and most U.S. lawyers do not know it: a document labeled “non-binding,” an MOU or a letter of intent, may already constitute an enforceable contract under Korean law, whether or not either party intended it that way. It is a reasonable response to a legal system where the signature, not the consideration, does the binding.
The weight an MOU carries in Korea works on three layers at once. Legally, under the no-consideration rule, it may already be a contract. Culturally, a signed MOU represents a decision taken at the leadership level with organizational commitment behind it; walking it back signals that your word cannot be trusted. Reputationally, Korea’s senior business community is smaller and more interconnected than most U.S. executives realize.
The mirror image
If the Korean side underestimates Western comfort with paper, the Western side overestimates the finality of its own contracts in a Korean context. In Korea, the contract solidifies the working relationship, and the relationship is expected to keep adjusting the terms to reflect business conditions. Good faith is not merely a canon of interpretation: under Article 2 of the Civil Act it is a positive legal obligation enforceable in court. The Standard Terms Regulation Act can void surprising or onerous boilerplate that was not specifically flagged, and Korean mandatory rules—PIPA, the Serious Accident Punishment Act, the Korea Fair Trade Act, the National Core Technology framework—can override even a New York or English choice-of-law clause.
What this means in practice
For Western companies, the takeaway is not to abandon documentation. It is to stop treating it as a neutral, friction-free formality. Get Korean counsel to confirm whether your “preliminary” document is in fact enforceable; flag your boilerplate proactively rather than waiting for it to be challenged; identify the Korean mandatory rules your deal engages at the drafting stage, not after a dispute; and budget for the hierarchy and board cycles that govern Korean sign-off. The patience this requires is not a cost of doing business in Korea. It is the business of doing business in Korea.
This advisory is general information on cross-cultural and cross-border legal practice, not legal advice. Confirm specific questions with qualified counsel.