Managing documents for international litigation

By Yoon Byung-chol

Kim & Chang, Partner

Most Korean companies have experience in managing documents for Korean domestic litigation proceedings. This is not a difficult task as the scope of internal documents a party must disclose to the opposing party is very narrow, even if the documents are relevant to the issues at hand.

However, with the increase in Korean companies venturing outside of the boundaries of the Korean peninsula, there is accompanying such ventures a proportionate increase in the number of disputes in foreign jurisdictions, either in litigation or international arbitration.

Therefore it has become necessary for Korean companies to manage documents in preparation of not only domestic litigation procedures but also under English- and American-style document production as well. This is a great challenge for these companies.

The main concept that Korean companies must understand before entering foreign markets is the concept of ��쐂iscovery.��� In England and the U.S., both parties to a suit must have access to the same documents.

Under this process, when the opposing party requests certain documents because they are relevant to the issues of the litigation, even if they are a company��셲 internal documents, they must still be disclosed.

Although this duty to provide documents is broad, there are equally broad exceptions to such disclosure, such as attorney-client privilege. The English and American companies make full use of these exceptions by consulting with attorneys at every stage of a deal and prior to any dispute that may arise.

In contrast, Korean companies do not seem to take advantage of such broad exceptions to the discovery process and tend to consult attorneys once a dispute has developed. Therefore English and American companies start with an advantage in foreign litigation and/or arbitration against Korean companies, as many potentially disclosable documents are covered by privilege, whereas similar documents held by Korean companies will have to be disclosed as attorneys were not involved at an earlier stage.

In such discovery proceedings, Korean companies may face a nasty surprise as they are required to produce documents that they believed would never see the light of day, such as documents which hold highly confidential corporate information or the entire company email server itself.

For example, a Korean IT company diligently reviewed potential documents that may be subject to discovery in arbitration proceedings and decided, without legal consultation, that they could refuse to comply with any discovery requests by arguing that the documents were confidential.

However, when arbitration commenced, the opposing party submitted an undertaking of confidentiality with the request for production of documents, making such documents potentially disclosable.

Therefore, with legal advice, the IT company produced certain documents but was able to prevent the disclosure of trade secrets as it produced the documents only to the opposing party��셲 attorneys, who were forbidden from passing on the information to their clients.

The scope of discovery also covers electronic documents where email servers and even the entire hard drive of a certain person can be disclosed. It is therefore important for companies to establish document management procedures and to ensure strict enforcement of such procedures.

This includes only keeping documents which it must retain under its document retention procedures and forming a task force team to prepare for discovery by taking measures such as collecting and safeguarding the company��셲 internal documents.

If this is not done then a party can leave a very poor impression on a judge or arbitrator because the document management procedures were non-existent or not strictly enforced which may impact negatively on the result of any litigation and/or arbitration