Can a Foreign Company Be Required to Provide Security for Costs in Korean Litigation?

Short Answer

Yes. A foreign company may be required to provide security for litigation costs in Korea if it files a lawsuit as a plaintiff and certain legal requirements are satisfied.

This does not happen automatically just because the plaintiff is a foreign company. Korean law focuses mainly on whether the plaintiff has an address, office, or place of business in Korea, and whether security is necessary under the circumstances.

If the court orders security and the plaintiff fails to provide it within the required period, the lawsuit may be dismissed.

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What Is Security for Costs in Korean Litigation?

Security for costs is a procedural device that protects the defendant’s ability to recover litigation costs if the plaintiff loses the case.

In simple terms, the defendant may ask the Korean court to require the plaintiff to provide money, securities, or another approved form of security before the case proceeds.

This issue often arises in cross-border disputes where the plaintiff is located outside Korea and the defendant may have difficulty recovering litigation costs later.

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Does Every Foreign Company Have to Provide Security?

No.

A foreign company does not automatically have to provide security simply because it is foreign.

The key question is generally whether the plaintiff has an address, office, or place of business in Korea. If the foreign company has a meaningful business presence in Korea, the risk of a security order may be lower.

By contrast, if the plaintiff has no office, business place, or assets in Korea, the defendant may be more likely to request security for costs.

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When Can a Defendant Request Security for Costs?

A defendant may request security for costs when the legal grounds are satisfied.

In practice, the issue may arise where:

• The plaintiff has no address, office, or place of business in Korea
• The plaintiff appears unlikely to reimburse litigation costs if it loses
• The claim appears clearly unfounded based on the court record
• Additional security is needed because existing security is insufficient

The court may also order security where the statutory requirements are met.

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When Should the Defendant Raise This Issue?

Timing is important.

If the defendant knows the grounds for requesting security but proceeds to argue the merits of the case without raising the issue, the defendant may lose the right to request security for costs.

For this reason, defendants usually raise security-for-costs issues at an early stage of the litigation.

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How Does the Court Decide the Amount of Security?

If the court orders security, it will specify both the amount and the deadline.

The amount is generally based on the defendant’s expected litigation costs for the relevant court instance.

The amount may vary depending on the case, including:

• The nature of the dispute
• The amount in controversy
• The expected litigation costs
• The procedural stage of the case
• Whether the case is likely to involve appeals

There is no single fixed amount that applies to all cases.

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How Can Security Be Provided?

Security may be provided in different ways depending on the court’s order and approval.

In practice, this may include:

• Cash deposit
• Deposit of securities
• Court-approved guarantee instrument
• In some cases, a form of surety bond or insurance bond

Foreign plaintiffs should not assume that only cash is available, but they should confirm the acceptable method with Korean counsel and the court.

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What Happens If the Plaintiff Does Not Provide Security?

If the court orders security and the plaintiff fails to provide it within the required deadline, the court may dismiss the lawsuit without hearing the merits.

This can be a serious procedural risk for foreign plaintiffs.

However, if the plaintiff provides the required security before the dismissal judgment, the defect may be cured and the case may continue.

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Can Security for Costs Be Used as a Delay Tactic?

It can be used strategically, but it is not automatic.

A defendant cannot obtain a security order simply by asserting that the plaintiff is foreign. The court must determine whether the legal requirements are satisfied.

Also, because the defendant may lose the right to request security if it waits too long, the issue usually needs to be raised early.

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What Should Foreign Companies Consider Before Filing a Lawsuit in Korea?

Before filing a lawsuit in Korea, a foreign company should consider:

• Whether it has an office, business place, or assets in Korea
• Whether the defendant may request security for costs
• Whether security can be provided if ordered
• Whether litigation costs and enforcement costs have been budgeted
• Whether alternative dispute resolution may be more efficient
• Whether urgent measures, such as provisional attachment, are needed

Security for costs is only one procedural issue, but it can affect the timing and cost of the lawsuit.

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Practical Considerations for Foreign Companies

Foreign companies should plan for security-for-costs issues before commencing litigation in Korea.

In particular, they should review:

• The plaintiff’s legal presence in Korea
• The availability of funds or approved guarantees
• Expected litigation costs
• Possible delay caused by a security application
• The broader enforcement strategy

In cross-border litigation, procedural planning can be just as important as the merits of the claim.

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Conclusion

A foreign company may be required to provide security for costs when filing a lawsuit in Korea, but this is not automatic.

The key issue is not merely the plaintiff’s foreign nationality. Korean courts focus on whether the plaintiff has an address, office, or place of business in Korea, whether security is necessary, and whether the defendant raises the issue properly and in time.

For foreign companies, security for costs should be considered early as part of the overall litigation and enforcement strategy.

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