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. They are caught off guard when partners who seemed eager suddenly go quiet once the paperwork arrives. 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.
Western executives tend to assume the Korean caution is irrational, a cultural quirk to be managed around. Korean commercial law suggests otherwise.
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. Korean courts will enforce gratuitous promises if they are formed correctly.
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, for example with an MOU, carries in Korea works on three layers at once.
Legally, under the no-consideration rule above, 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, which in a relationship-driven business culture outlasts the deal.
Reputationally, Korea’s senior business community is smaller and more interconnected than most U.S. executives realize; a company that treats MOUs as disposable will find future Korean partners more guarded and more demanding of ironclad terms upfront.
The mirror image: the Western “immutable contract” assumption is also partly wrong
If the Korean side underestimates Western comfort with paper, the Western side overestimates the finality of its own contracts in a Korean context.
I was once told that in Korea the purpose of signing a contract is to formalize the partnership, and that over time the terms would be subject to change and renegotiation. In the West, a signed agreement is treated as immutable.
In Korea, the contract solidifies the working relationship, and the relationship is expected to keep adjusting the terms to reflect business conditions.
Korean law reinforces this.
Good faith is not merely a canon of interpretation in Korea. Under Article 2 of the Civil Act it is a positive legal obligation enforceable in court. Korean courts interpret contracts based on the parties’ actual intent and good faith, where U.S. courts apply an objective standard.
Two more features compound the effect:
The Standard Terms Regulation Act (STRA). Standardized “boilerplate” terms are not automatically enforceable in Korea, even in B2B contracts and even when signed.
Surprising clauses the counterparty could not reasonably have anticipated, and terms that exclude rights granted by Korean mandatory statutes, can be void. The party supplying the standard terms must specifically call attention to unusual or onerous clauses before signing, or risk losing them. This is one reason Korean teams question boilerplate that Western counsel consider settled.
The questioning is not obstruction; under STRA it can be necessary.
Mandatory rules override your choice of law.
Even a contract governed by New York or English law remains subject to certain Korean mandatory rules where Korean operations, Korean personal data, or Korean-designated technology are involved, including the Serious Accident Punishment Act, PIPA, the Korea Fair Trade Act (KFTA), and the National Core Technology framework. KFTA in particular has real extraterritorial reach: the Korea Fair Trade Commission has investigated foreign firms for effects in the Korean market even when the conduct originated abroad, and exclusivity and pricing terms drafted as routine in the U.S. can run into KFTA’s unfair-trade provisions.
After the ink dries: reinterpretation and personnel turnover
Perhaps more concerning than the negotiation itself is what happens afterward.
Terms mutually agreed within a binding agreement can be reopened. As Korean team members rotate onto the project, new staff are unfamiliar with prior compromises and understandings.
Responding to changing business conditions, they arrive with different expectations and press for fundamental changes that alter the agreement, requiring amendments, with all the associated time and cost. In the worst cases, the Western company refuses to alter what it considers fair and binding, and the relationship is seriously jeopardized.
Two structural realities make this slower than Western teams expect. Korean management is highly hierarchical: the working-level staff who negotiate the terms often lack authority to sign, and approval from senior leadership adds layers of delay.
These matters are frequently elevated to quarterly Board of Directors meetings, turning what Western companies see as routine administrative steps into executive-level agenda items. Even after agreements are signed, getting the executed copies returned can take weeks or months.
A worked example, and how it was unblocked
A very promising partnership once slipped from “sign by year-end” into a long, drawn-out ordeal.
A bottleneck formed each time the Korean team proposed content revisions: changes had to be reviewed and approved by the American working-level team before the Korean team would submit them to its leadership; once Korean leadership approved, the changes went to the American legal counsel; and if counsel had edits, the whole cycle restarted.
After analyzing the loop, I made two moves.
First, I brought everyone into weekly conference calls to address the major concerns directly, with a second call scheduled as needed for the legal counsels alone.
Second, I pressed both sides to recognize that the relationship was genuinely positive and sound despite the frustration, and stressed the need to compromise and minimize further revisions in order to reach a signed agreement. With all parties aligned, the project moved to signing in a timely manner.
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. Build the relationship and the paperwork in parallel, expect a staged transition from informal understanding to written terms as trust deepens, and recognize that under Korean law the line between “non-binding” and “binding” is blurrier than your standard playbook assumes.
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 under STRA; 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.
Bridging Culture Worldwide advises U.S. and Korean companies on the intersection of Korean corporate culture, trade policy, and commercial law. Learn more at bridgingculture.com.
This advisory is general information on cross-cultural, and cross-border legal practice, not legal advice. Confirm specific questions with qualified counsel.
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South Korea seeks US visa rule changes after mass arrests spark outrage
I am quoted and contributed to the article …. Don Southerton
KIM JAEWON and PAK YIU
September 11, 2025 12:16 JST
Updated on September 11, 2025 14:47 JST
SEOUL/NEW YORK — Moon Young-ju could not contain his anger when he heard the news that over 300 South Koreans had been detained after U.S. immigration authorities last week raided a joint Hyundai Motor-LG Energy Solution battery factory under construction in the state of Georgia.
The 54-year-old former merchant protested in front of the U.S. Embassy in downtown Seoul on Wednesday with a yellow banner reading: “Yankees go home. Get out america army.”
“I came here because I was so upset,” Moon said after lighting a cigarette. “We invested as they demanded. We built factories as they demanded. It’s our blood, sweat and tears.”
Moon is not alone. South Korea’s government faces widespread public outcry and calls to stand up to the U.S. over the treatment of its arrested citizens, some of whom were seen in footage being led away restrained by body chains, although the two sides have since agreed to send the detained workers home this week on a charter flight.
The raid came as U.S. President Donald Trump pushes ahead with a crackdown on illegal immigration even as he demands that countries like South Korea make massive investments to build state-of-the art production facilities in America — part of his policy of “reshoring” manufacturing and reducing trade deficits.
South Korean President Lee Jae Myung said at a news conference on Thursday that the raid would likely make some companies from his country “hesitant” to carry out more large investments in the U.S. “Companies are quite taken aback. The fact is that they sent these workers to the U.S. not for the long term, but to set up machinery in a factory because there aren’t enough workers in the U.S. who know how to do that,” he said.
The raid and the accompanying national indignation have pushed Seoul to demand that Washington loosen visa rules for workers from abroad amid confusion about the status of the detained.
Lee expressed hope that authorities in the two nations could negotiate changes to visa regulations that would make it easier for South Korean firms to send workers to the U.S. for limited periods.
The government dispatched Foreign Minister Cho Hyun to Washington. The ministry said that he had a meeting with U.S. counterpart Marco Rubio on Wednesday, asking the secretary of state to set up a new visa category for South Korean workers.
He also told Rubio that South Koreans were “hurt and shocked” by the arrests of their compatriots, who came to the U.S. to contribute to the revival of the country’s manufacturing industry.
After arriving on Tuesday, he hosted a meeting with executives from eight South Korean companies operating businesses in the U.S., including LG and Hyundai Motor.
Company executives asked the minister to bring up with the U.S. the potential launch of a separate visa under the E-4 category — which currently covers certain classes of special immigrants — for South Korean professionals, as well as increasing approvals of E-2 visas — which cover professionals with advanced degrees and persons of exceptional ability — for South Korean companies investing in America. They also asked the U.S. government to clarify guidelines for B-1 visas, a short-term business visa that employees of South Korean companies get when they make work trips to the country. Many of the detained South Korean workers held such a visa.
Cho told the businesspeople that their concerns had already been conveyed to Washington and pledged to continue making efforts to ensure the smooth operation of South Korean companies investing in the U.S.
Moon Young-ju stands next to his protest banner near the U.S. Embassy in Seoul on Sept. 10. (Photo by Kim Jaewon)
South Korean companies complain that there is only a limited quota of B-1 visas, meaning they cannot get them when they need them.
“Sometimes we need to send our employees immediately,” said an industry source familiar with the issue, who also requested anonymity. “It’s not easy to set up a plan a year in advance. Many Korean companies raised this issue before. I’m very sorry that [the raid] happened before the problem was resolved.”
The incident has rattled Asian investors who have set up factories in the U.S. and highlights some of the labor difficulties foreign companies face. Companies are now wondering how they can set up and build manufacturing in the U.S. if they don’t have support from the authorities, said Don Southerton, a business consultant who works with South Korean companies such as Hyundai.
He anticipates some projects will slow down, and this will send ripples through America’s battery market. Southerton says the incident underscores the urgency of visa revisions that would allow expat engineers to work more effectively and streamline projects that will foster American manufacturing. Currently, he said, the visa system “allows them to teach how to use a screwdriver but doesn’t actually allow them to use a screwdriver. How can you show them how it’s done without actually demonstrating?”
On Monday, South Korea’s foreign minister said that resolving the visa issue is a precondition for the country to deliver the$150 billion in investments promised during a summit between the two allies last month.
“At the previous summit, there was a request for … [South] Korea’s large-scale investment, and we also responded to it. To achieve it, I would stress to the U.S. side that this visa issue is a precondition,” Cho told lawmakers before his trip to the U.S. capital.
In a post on Truth Social on Sunday, Trump said foreign companies were encouraged to legally bring “your very smart people, with great technical talent, to build World Class products.” He added, “We will make it quickly and legally possible for you to do so. What we ask in return is that you hire and train American Workers.”
Analysts said that South Korea needs to use its investment package as leverage to pressure the Trump administration into reaching an agreement on the issue.
“Because there are already pledges of large-scale investment, it should be possible to solve the visa quota issue within that framework,” said Jung Jae-hwan, a professor of international politics and economy at Inha University in Incheon.
“Of course the U.S. could impose new conditions, such as a certain portion of local hires, but at least they should be able to mitigate the recurrence of this kind of detention case.”
Additional reporting by Steven Borowiec.
South Korea seeks US visa rule changes after mass arrests spark outrage