Pure Economic Loss: A Korean Perspective

Abstract

In general, pure economic loss is understood as economic loss without antecedent harm to plaintiff person or property. Traditionally, pure economic loss was only a topic of interest in the limited number of countries such as Germany, England or the United States. Recently, pure economic loss began to be discussed intensively in the context of the harmonization of tort law, particularly in Europe. Finding out some common principles and rules regarding pure economic loss has been the most essential goal of this discussion. It may be difficult to come up with a single, clear-cut solution on this complicated issue. However, it is important to note that almost all the jurisdictions are concerned about the possible indefinite expansion of liability and chilling effect on the economic activity in a substantially similar manner. This explains various attempts to limit the liability for pure economic loss to a reasonable degree regardless of a jurisdiction. It may take different forms from nation to nation, yet substances are fundamentally similar. Korea is no exception to this. In principle, pure economic loss is recoverable under the open-ended tort liability regime under Korean tort law. Since the notion of pure economic loss has generally been used as a conceptual tool to deny or limit its recoverability in the jurisdictions where there is no comprehensive tort liability regime, this notion was hardly known in Korea. However, Korean

judiciary also shares the same concern that imposing excessive liability on economic loss in a densely intertwined society may lead to excessively cautious society, curbing the scope of economic activity for fear of liability. Therefore, Korean judiciary has also been striving to limit the liability by using other conceptual tools such as unlawfulness, causation or damage.