Equivocal expressions in laws confuse businesses

The management of a medium-size company raising annual sales about 270 billion won (246 million U.S. dollars) is having a hard time understanding a law that bans placing orders to the subsidiaries of a company. The company has established 17 subsidiaries at home and abroad to reduce manufacturing cost and promote sales of cutting tools. The management worries whether the company’s activities will be regulated under the law.

“Fair trade act used to say trade with subsidiaries under conspicuously advantageous conditions shall be banned. But the amendment changed the expression into ‘significantly advantageous conditions.’ We are anxious because we cannot understand the differences,” said an executive director of the company. “The only effect of the amendment seems to strengthen the authority of officials in charge. I can only think of lobbying such officials more.”

Companies are complaining about laws of which arbitrary interpretations can be made. Legislations regarding economic democratization passed this year, in particular, have been designed to regulate business activities based on ambiguous expressions such as “conspicuously,” “significantly” or “unfair,” which are expected to aggravate the business situation.

The Dong-A Ilbo conducted a study with the Federation of Korean Industries on laws and enforcement decrees having great impact on business activities. The study found that each law or enforcement decree contains as small as dozens up to 144 vague expressions. It was conducted of Monopoly Regulations and Fair Trade Act, Corporate Tax Act, Restriction of Special Taxation Act, Labor Standards Act and their enforcement decrees.

A total of 144 imprecise expressions were found in Monopoly Regulations and Fair Trade Act and its enforcement decree while 13 were found in Labor Standards Act and its decree, 27 in Corporate Tax Act and its decree and 11 in Restriction of Special Taxation Act and its decree.

Business community says uncertain expressions allowing arbitrary interpretations or power abuse by officials can damage business management because different judgments on same issues can increase lawsuits, which, in turn, will push up management cost.