The tiger on the Peninsula is digitized: Korean E-Commerce Law as a driving force in the world's most computer-savvy nation.

• Author: Blythe, Stephen E.

1. HISTORICAL BACKGROUND A. South Korea: The "Tiger" on the Peninsula B. The World's Most Computer-Savvy Nation C. Korean E-Commerce: Dramatic Growth II. OBJECTIVES OF THE ARTICLE III. ELECTRONIC SIGNATURES A. The First Electronic Signature Law: Utah B. Attributes of a Digital Signature System IV. KOREA'S FRAMEWORK ACT ON ELECTRONIC COMMERCE A. Electronic Messages B. E-Commerce Security Issues: Consumer Protections C. E-Commerce Policies and Strategies for Their Achievement D. Increasing Participation in E-Commerce E. The E-Commerce Mediation Committee F. Application to Foreign Persons or Entities V. KOREA'S DIGITAL SIGNATURE ACT A. Goals of the DSA B. Selected Definitions C. Legal Recognition of Certified Digital Signatures D. The Regulation of Certification Authorities E. Certificates F. Security and Reliability of the Certification Process G. Governmental Adoption of Digital Signature Certification Policy H. Criminal Offenses and Penalties VI. E-COMMERCE TRANSACTIONS CONSUMER PROTECTION ACT A. Purpose, Overlaps with Other Acts, and Selected Basic Definitions B. Limitations and Precedence of the CPA C. E-Commerce Transactions D. Protection of Consumers' Rights and Interests E. Inspection and Supervision F. Corrections and Penal Surcharges G. Criminal Violations VII. SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS A. Recent History of Korea B. The "Tiger" on the Peninsula: Economic Growth, Computer Adeptness, and Rise of E-Commerce C. Korean E-Commerce Law D. Recommendation: It Is Time for the World's Most Computer-Savvy Nation to Address the Online Piracy Problem ABSTRACT

   South Korea has been classified as one of the Southeast Asian "Tigers" because of its high rate of economic growth during the past twenty-five years. One recent aspect of the economic growth has been the remarkable surge of e-commerce since 2000. During the next five years, South Korean e-commerce is expected to grow even more. One of the drivers of the e-commerce proliferation is the high degree of computer literacy among the South Korean people, facilitated by the fact that South Korea enjoys the greatest percentage of citizens with high-speed internet connection in the world. Another important driver of South Korean internet commerce--and the primary focus of this Article--is its e-commerce law.

   The Framework Act on Electronic Commerce (ECA) of 1999, implemented by the Ministry of Commerce, Industry and Energy (MCIE), set the stage for electronic proliferation. The ECA recognizes the legal validity of several forms of electronic signatures, commensurate with the trend in global electronic signature law, and established basic consumer protections even at the earliest stage of South Korean e-commerce development. The Digital Signature Act (DSA) of 1999 is a companion statute to the ECA. The DSA focuses on one type of electronic signature--digital--and was implemented by the Ministry of Information and Communications (MIC). The MIC is responsible for licensing and regulating of Certification Authorities, the verifiers of the authenticity and integrity of digital signatures and the electronic records to which they are affixed. The DSA also establishes criminal penalties for the fraudulent use of digital signatures. While the ECA and the DSA are noteworthy, the E-Commerce Transactions Consumer Protection Act (CPA) of 2002 differentiates South Korean e-commerce law from the herd.

   The CPA provides some of the best--if not the best--consumer protections for e-commerce transactions in the world. The CPA is implemented by the Federal Trade Commission (FTC) and includes the imposition of criminal penalties for its violation. The CPA underwent a major overhaul in 2005 that will become effective on April 1, 2006. The CPA deserves to be considered as a model law for other nations to emulate as they develop their e-commerce law. South Korea is now ready to turn its attention to another pressing problem--online piracy of intellectual property.

1. HISTORICAL BACKGROUND

   During much of the past millennium, the Korean Peninsula was ruled as a unified, autonomous kingdom. After Japan's victory in the Russo-Japanese War of 1905, the Japanese began to occupy parts of Korea, and within five years they had officially claimed all of Korea as a Japanese possession. (1) For the next thirty-six years, Japan controlled Korea. (2) This period had a strong influence on Korean culture, an impact that is felt to this day. At the end of World War II, the victorious powers divided Korea into two parts; the northern portion adopted a Communist government, and the southern portion became a republic. (3) On June 25, 1950, North Korean military forces attacked South Korea. (4) The Korean War pitted the North Korean aggressor, supported by Chinese troops, against South Korean forces supported by several nations' forces representing the United Nations, most notably those from the United States. (5)

   The liberty and freedom now enjoyed by the Republic of South Korea was paid for in blood. The number of deaths occurring in the Korean War are grim statistics indeed: 547,000 South Korean civilians, 113,248 South Korean soldiers, 33,741 American soldiers, and 1,078 British soldiers. (6) Other countries also contributed troops to help the South Korean cause, and their killed-in-action figures were significant: Turkey (720), Canada (310), France (290), Australia (269), Greece (170), Colombia (140), Ethiopia (120), Netherlands (110), Thailand (110), Belgium (100), and Philippines (90). (7) After three years of combat, the two sides signed an armistice that split the two Koreas at approximately the thirty-eighth parallel. (8) To this day, North Korea continues to have a communist government while South Korea has evolved into a full-fledged democracy.

   1. South Korea: The "Tiger" on the Peninsula

      In 1960, South Korea was a very poor country whose underdeveloped economy was comparable to some of the African nations. (9) After 1980, however, due to a high rate of foreign investment and other factors, (10) South Korea's economy took off, and the nation experienced marked economic growth. (11) Due to its expanding economy, South Korea has often been referred to as one of the Southeast Asian "Tigers." (12) In 2004, South Korea--the Tiger on the Peninsula--was preparing to join the trillion dollar club of world economies, and was creating a Gross Domestic Product (GDP) per capita that was fourteen times that of North Korea. (13) The South Korean government has even bigger economic plans on the drawing board. The Ministry of Commerce, Industry and Energy (MCIE) intends for South Korea to become one of the world's top four industrial superpowers by the end of this decade, focusing on the "future strategic industries" of digital electronics, electronic medical equipment, the bio industry, the environmental industry, and the aviation industry. (14)

   2. The World's Most Computer-Savvy Nation

      The Republic of South Korea (South Korea or Korea) may be the most computer-adept nation in the world. By 2003, almost sixty percent of the population--more than 26 million South Koreans--were regularly connecting to the internet. (15) South Korea leads the world in broadband penetration--the percentage of citizens with access to high-speed internet connections, which offer significantly faster downloading capability and computer efficiency. (16) At least seventy-five percent of all households in South Korea have these high-speed connections. (17) On a per capita basis, this is three times the comparable figure of broadband penetration in the United States. (18) Amazingly, more South Koreans probably have wireless internet connections than regular wired access. (19) By 2008, the South Korean government predicts that at least 39.5 million citizens--out of a total of 48.5 million--will have broadband-connected mobile handsets. (20) This is eighty-one percent of the population! Is there any doubt that South Korea is the world's most computer-savvy nation?

   3. Korean E-Commerce: Dramatic Growth

      During the past five years, South Korean e-commerce has grown at a fast pace. This was predictable, given the high per capita income of the country and the computer-adeptness of the population. In 2000, e-commerce sales were $430 billion. By 2004, that statistic was expected to balloon to $7 trillion, (21) a growth rate of 1,628%! Additionally, the e-commerce growth continues: South Korea's National Statistical Office reported that e-commerce in September of 2005 amounted to 947 billion won. (22) If annualized, that figure would amount to 11.3 trillion won. (23) In September 2005 alone, 107 more online marketing websites (cybermalls) came into existence. (24) What about the future of South Korean e-commerce? If you want a sanguine answer, just ask Meg Whitman, CEO of eBay, the largest online auction firm in the United States. Currently, eBay owns a sixty-two percent stake in Internet Auction, the largest internet auction firm in South Korea. (25) While visiting South Korea last year, Ms. Whitman reflected upon the immensity of South Korea's IT infrastructure and its high broadband penetration, and described Korea's e-commerce growth potential as "limitless." (26)

      The attainment of such an impressive e-commerce growth was facilitated by the enactment of three important e-commerce statutes in South Korea:

      (1) the Framework Act on Electronic Commerce (ECA) (amended 2002);

      (2) the Digital Signature Act of 1999 (DSA) (amended 2002); and

      (3) the Act on the Consumer Protection in the Electronic Commerce Transactions, etc. (CPA) (most recently amended in 2005, effective as of April 1, 2006).

      Collectively, these statutes establish legal recognition of electronically negotiated contract, support the development of secure and reliable electronic payment systems, and create important rights and protections for e-commerce buyers. (27) Without these laws, e-commerce would have not been able to grow nearly as much. These statutes are the...