Archive for the ‘Statutes’ Category

North Korea revises economic management laws

Tuesday, December 22nd, 2009

Institute for Far Eastern Studies (IFES)
NK Brief No.09-12-21-1

The Korean Central Broadcasting Station (KCBS) announced on December 16 that the North Korean Supreme People’s Assembly Standing Committee has revised the North’s Real Estate Management Law, the Commodities Consumption Level Law, the General Equipment Import Law, and other laws related to economic management. This on the heels of the November 30th announcement, when authorities announced across-the-board currency reform measures, apparently in an attempt to regain control of the country’s market economy.

The KCBS reported that the Real Estate Management Law “regulates fundamental issues of real estate registration and inspection, use, and payment of user fees,” but offered no further details.

Since 2006, North Korean authorities established new offices in each city, county, and region throughout the country. These offices were responsible for surveying property, occupied and vacant, claimed by organizations and businesses, as well as recording the size of each structure on these lands.

In the mid-1990s, with the onset of serious food shortages, food rations to workers were halted and North Korean authorities from every branch and level (including the military, railway, business enterprises) were encouraged to distribute foodstuffs in ways more beneficial to themselves. These authorities planned to resolve food distribution issues through agricultural moves.

The new Real Estate Management Law appears to be aimed at labeling land used for private purposes as strategic nationalized land and strengthening the state’s ability to collect real estate taxes. However, the broadcaster failed to explain in detail how this restructuring would occur.

By enacting the Commodities Consumption Level Law, North Korean authorities can control the basis at which goods are injected into each production sector. This appears to be in preparation for taking cost-reduction measures for enterprises related to production in each region. The broadcaster explained that there were legal demands for the enactment and enforcement of regulations on the level of consumption.

The General Equipment Import Law newly regulates import plans, contracts, and the use of goods by factories, schools, hospitals, ships and broadcasters in an effort to control quality. In each sector, the measure prevents double-investment and controls consumption competition.

As these economic control measures are focused on factories and other bases of production along with importers, it appears that, in conjunction with the recent currency reform, North Korean authorities are attempting to control production quality on all levels. For example, as the North is suffering ongoing supply difficulties due to a lack of materials, the law on consumption levels is an attempt to restrict goods by forcefully managing demand. The law on imports appears to be in an effort to regulate general-use goods in light of the increased reliance on foreign equipment.


The trial of US journalists and North Korean criminal law

Tuesday, August 18th, 2009

Institute for Far Eastern Studies (IFES)
IFES Forum No. 09-8-18-1
Choi Eun-suk, Research Professor, IFES, Kyungnam University

Detention of U.S. Journalists

Korean-American Euna Lee (Lee Seung-eun) and Chinese-American Laura Ling, reporters for the U.S.-based Current TV, were detained by North Korean soldiers on March 17, 2009 while near the Tuman River border between North Korea and China. On June 8, the Central Court, the highest court in North Korea, sentenced each of the two to an unprecedented 12 years of ‘Reform through Labour.’ However, after less than two months, a visit by former U.S. President Bill Clinton on August 4 led to the ‘special pardon’ of the two women, bringing a relatively swift conclusion to their plight.

What laws were enforced against the two American reporters? North Korean criminal code article 69 (Jo-seon-min-jok-Jeok-dae-joi, or literally, Korean Nation Antagonism Crime) states, “If a foreign person resides abroad with the intention of antagonizing Korea or injuring the body or assets of a sojourning Korean, or if national discord arises, they shall be faced with a sentence of more than 5 and less than 10 years of Reform through Labour (Ro-dong-Ky-ohwa-hyeong). In serious circumstances, [the person] faces a sentence of more than 10 years Reform through Labour.” Criminal Law article 233 (Illegal Border Crossing) dictates that “A person illegally crossing the national border faces less than 2 years of labor discipline (Ro-dong-dan-ryeon-hyeong). In serious circumstances, [the person] faces less than 3 years of reform through labour (Rodong Kyohwa-hyeong).

North Korea’s Criminal Procedures and the Accused’s Right to Council

The North Korean legal system maintains a 3-tier, 2-trial system. That is, the courts are divided into three levels, but actually, trials may only be heard twice. However, in the case of the two reporters, the trial was directly handled by the Central Court, meaning that only one trial would be held, and there was, of course, no chance to appeal.

Examining the North’s judicial system and criminal law, one can see that the DPRK constitution divides power among the Central Court, Provincial Courts, People’s Courts, and Special Courts (Constitutional Law, article 153). In addition, according to North Korea’s Criminal Procedure Law, the Central Court was established in order to handle appeals when verdicts handed out by lower courts were challenged (Criminal Procedure Law, article 129, clause 1), and it was designated the supreme court in the North Korea (Constitutional Law, article 161). The law also allows for the direct intervention of the Central Court, or for a case to be sent to a court on the same level or of the same kind as the court giving the initial verdict (Criminal Procedure Law, article 129, clause 2). Furthermore, according to the system established by these codes, after a case is opened in one of these courts, it must be completed within 25 days (Criminal Procedure Law, article 287). In the case of the two American reporters, the prosecution received notice of their charges on May 14, meaning that if they were to be prosecuted, the trial would have to have been completed by June 7.

When the Central Court holds the initial hearing in a prosecution, there are two possibilities for retrial. Only “in the event that it becomes known that the evidence upon which a decision is based was false,” or, “facts become known that could influence a decision and that were not known at the time of the trial,” can a Central Court case be reheard (Criminal Procedure Law, article 409). The decision to retry is in the hands of the North’s judicial authorities, meaning that it would have been difficult to find a route to appeal or retrial for the two reporters.

The verdict in an initial trial is decided by a judge and two civilian jurors, although in special cases a panel of three judges is allowed (court organization law, article 9). Any North Korean citizen with the right to vote can be a judge or civilian juror (Court Organization Law, article 6), and judges and jurors are chosen through democratic elections (Court Organization Law, article 4). A criminal case in North Korea follows a process of investigation, pretrial hearing, indictment, and trial (in that order). A detention order must be signed by a public prosecutor within 48 hours of a suspect’s arrest, and charges must be filed within 10 days (Criminal Procedure Law, article 144, clause 1).

The two reporters were apprehended March 17, and were not transferred to the court until May 14, almost two months later. According to North Korean law, a preliminary hearing must be held within two months of opening a pre-trial investigation (Criminal Procedure Law, article 151, clause 1). If investigators want to extend the investigation period, they must receive permission from a public prosecutor, and then can only extend the investigation for an additional two months (Criminal Procedure Law, article 152). Charges of crimes against the state or against the nation are investigated by the State Security Department (Criminal Procedure Law, article 124). In the case of Lee and Ling, investigators did not apply for an extension, and handed the case over to the courts within the allowed two-month period.

The North Korean constitution guarantees a public trial and the guaranteed the right of defense, although in some cases courtrooms are allowed to be closed (Constitutional Law, article 158). The constitution also guarantees that a foreigner will be able to speak in their native tongue during a hearing (Constitutional Law, article 159). A defendant has the right to choose their legal counsel, and that choice can include family members or a representative from work (Criminal Procedure Law, article 108), as well as the freedom to waive their right to council (Criminal Procedure Law, article 109). The right to choose one’s lawyer is directly related to one’s basic freedoms. In the case of the two American reporters, Laura Ling retained council, while Euna Lee chose not to be represented or give any statement.

The North Korean Central Court sentenced Lee and Ling to ten years of reform through labour for ‘Korean Nation Antagonism Crime’ (Criminal Law, article 69) and an additional four years for illegally crossing into the country (Criminal Law, article 233). However, in the North, in the case of multiple charges, the sentence for the more minor charge is halved, then added to the sentence of the more serious offence, meaning a 12-year sentence for the two reporters. This sentence was to begin within 10 days of the verdict. North Korean law dictates that reform through labour be carried out in reform institution (Judicial Conduct Law, article 25). When a defendant is sentenced, they are to be sent to a reform institution within 10 days, along with a copy of the court’s decision, detention orders, and all other relevant paperwork (judicial conduct law, article 33). This, in a nutshell, is the North Korean legal system, from arrest to starting to serve a sentence.

Kim Jong Il’s Power of Pardon and the Release of U.S. Journalists

When North Korea released the two U.S. reporters, the government claimed to do so based on its “humanitarian and peace-loving policy,” and stated that former President Clinton’s visit deepened understanding and helped to build trust between Washington and Pyongyang. This was an interesting use of Kim Jong Il’s power of pardon. It appears that last April, at the first session of the 12th Supreme People’s Assembly, there was a constitutional revision that transferred the ability to grant pardons from the SPA Presidium to the Chairman of the National Defense Commission (NDC). According to a ‘report’ of Clinton’s visit released by North Korean authorities on August 5, “In accordance with the Socialist Constitution Article 103, pardon is granted to two U.S. reporters sentenced to reform through labour; the Chairman of the National Defense Commission of the Democratic People’s Republic of Korea passed down the order for [their] release.”

After the previous constitutional revision, coinciding with the launch of the Kim Jong Il regime in September 1998, article 103 clause 5 specified the duties and powers of the chairman of the NDC, but there was no mention of the ability to pardon. However, article 110, clause 17, which defines the duties and powers of the SPA Presidium, states that it “exercises the right to grant general amnesties or special pardon.” In the past, when pardons were granted on national holidays or in conjunction with other important events, they were done so in the name of the SPA Presidium. North Korea has yet to publicize what constitutional changes were made in April, but with the release of the two Americans in the name of Kim Jong Il, it can be seen that the ability to grant general amnesty has been transferred to the NDC chairman. Earlier, on May 22, the Japanese newspaper Nikkei (日本經濟新聞) quoted members of a delegation from the Economic Research Institute for North East Asia (ERINA) as saying that their North Korean counterparts had explained that the power to ratify and nullify treaties, to grant amnesty, and to issue announcements in times of emergency had been transferred to the chairman of the NDC.

After 142 days, Euna Lee and Laura Ling have finally returned to their families.


DPRK statute smorgasbord

Wednesday, September 3rd, 2008

On this page, I will keep a list of DPRK statutes and summaries:

1. Foreign Investment Law
2. Free Economic and Trade Zone Law
3. Equity Joint Venture Law
4. Contractual Joint Venture Law
5. Foreign Enterprises Law
6. Taxation of Foreign Invested Enterprises
7. Relevant Labor Laws
8. Leasing Land 
9. Dispute Resolution
10. Domestic Sales Tax Regulations
11. Manufacturing & Export Operations
12. External Economic Arbitration Law
13. Commercial Joint Venture Law
14. Constitutions (x2)
15. Customs Law
16. Law on Economic Plans
17. Fisheries Law
18. Foreigners in FEZs
19. Intellectual Property

Click “read the rest of this entry” below to see summaries and statute text.



Working as a Lawyer in Pyongyang

Sunday, July 27th, 2008

Brendan Carr over at Korea Law Blog dug up some information on law firms operating in the DPRK.  All the information he posts is worth reading, but here are some highlights:

[T]he prospect of working as a foreign lawyer in Pyongyang has been on my list since I’ve been a lawyer.

Michael Hay, a foreign legal consultant in Seoul since 1990, actually did this—striking out from “Big Four” firm Bae, Kim, & Lee in 2001 [domain lapsed] to focus on being a full-time North Korea consultant. He established KoreaStrategic Inc. as a consultancy (its domain lapsed in June 2006, though), then with a splash announced the formation of Hay, Kalb & Associates as the first foreign/North Korean joint venture law firm in Pyongyang. The Hay, Kalb website, too, disappeared sometime in 2005, and I lost touch with Mike Hay around the same time. I remain curious to know about his adventure up North; I’m sure it’s been fascinating. However, he was always extremely tight-lipped about what he was doing there. Other than that he was focusing on North Korea “full-time, all the time” it was hard to get any specifics out of him.

There are two other law firms advertising their services and office presence in North Korea: Italy’s Birindelli e Associati (now Chiomenti after being acquired) and Singapore’s Kelvin Chia Partnership

But today I found that the International Financial Law Review’s IFLR Legalwire, to which I hadn’t previously subscribed, recently (May 2008) reported on Birindelli partner Sara Marchetta’s experiences in Pyongyang. It’s fascinating stuff, published in two parts—go read Part 1 and Part 2. The article gave the impression that Hay, Kalb was still trading, which is promising, but Marchetta says that Birindelli kept no expatriate lawyer there year-round, because there were only four or five clients a year needing legal services, mostly in resource-extraction and processing ventures.

From Marchetta’s interview, I thought the following observations were worth noting:

Obtaining copies of laws: 

The first issue is looking for legal resources  – the law- as it is extremely complicated to get them.  Even if you are a law firm and have people who are well-connected, its still a very long process to get a copy of a law.  Even if the law has already been enacted and should be public, you still need special permission.  If the law has not yet officially been translated into English, then you need to obtain special permission to get it and translate it.

The second thing is that the intended implementation of the law in a western sense does not exist.  Especially when you go out of Pyongyang and Kaesong [North Korea’s special economic zone], everything is pretty much left up to political decision: whether you can stay here or there, what you do and cannot do…

Just to give you an example: in terms of a corporate tax, you go to a place, make an investment and you pay a corporate tax even if you don’t profit.  It’s sort of a tax for being there.  Corporate tax ends up being interpreted as a presence tax , which is paid independently of whether you make profits or not.  In a few cases, we did find this type of interpretation, which is obviously extremely bizarre.    So it is really a matter of general legal culture – which is totally lacking – and education of the administrative middle to low levels.

Does [this environment] hinder getting things done?  Yes and no. Yes in the sense that getting a deal done takes more time because you do not have all of the information available at the beginning.  No in the sense that once there is the intention of getting the deal done, there is a lot of facilitation from the bureaucratic and governmental point of view.  If they say yes, its basically yes and it will happen.

How big is your office in Pyongyang:

It is currently staffed with two people.  We have no expatriates.  It is a joint venture as we are there in cooperation with a DPRK government entity called the Korean Justice Committee [KJC].  It is equivalent to the Chinese Ministry of Justice.

Are your lawyers at the office North Koreans?

Yes, they are North Korean lawyers. One of them is a pure lawyer, the other one is more someone who is well-connected in the government and has also PR and English capabilities.  One side has the legal knowledge, and on the other side, fluent in English that they use to work with foreigners.

Does your JV status with the KJC give you an advantage over foreign firms?

As a matter of fact, from an operational point of view: yes.  From the client’s point of view, I don’t know.  I have no idea.  I don’t think this is something that is hindering the expansion of our client base in Pyongyang, but I am not sure if it enhancing it.

What types of clients do you serve?

We serve companies looking at setting up a presence in the DPRK.  These are large companies that deal with natural resources, like mining or consumer goods, and most of them have already a presence in China.

What are teh key sectors of Work?

Well we deal with mining projects.  This means that yo go there, you test the product and if it’s okay then you give the technology to be extracted in a proper way.  You do part of the processing of the mineral and export it.  This is one deal.  On the other side, before advising on an investment we advise our clients on precessing contracts.  Obviously this can be done not just for mining, but for shoes, clothes, and any other product that can be exported.  The deal structure is basically these two.

Looking forward, is there enough going on to fairly classify the DPRK as an “emerging market”?

Not in terms of a domestic market.  I don’t think that the domestic market is going to develop very much, but the DPRK is a good place for processing contracts.  I mean, you send raw materials and they send back the finished product.  There is also a strong market for natural resources and low-to-medium technology projects.  There, you can produce basic chemicals, basic pharmaceutical products and some consumer goods.  The Chinese are doing clothing here, doing shoes, and a lot of other things.

Do you predict enough work growth to expand?

Not for the time being for a number of reasons.  One, we do not see an increase in DPRK-related work.  We have two, three, four, maximum five clients a year and that’s basically it.  So this is the main reason.  Then you have always the political issue.  It’s always there.  The political wind is really swinging a lot and it changes by the season and is very much affected by the situation of the six-party talks.  So for the time being, we are looking at what is happening and we are doing what we can do, but we do not have plans to enlarge our presence in the DPRK for the time being.