It is indeed rare, if not entirely against protocol, for foreign ambassadors to visit the chairman of the judiciary committee of the legislature of a receiving state regarding a pending legislation. Ordinarily, one would expect foreign envoys to deliver their views and comments through the diplomatic channels or through other counterparts in the executive branch.

This rare incident happened last Friday when the ambassadors of the United States and a few members of the European Union paid a visit to the chairman of the Legislation and Judiciary Committee of the National Assembly to raise their concerns over the proposed amendment of the Foreign Legal Consultant Act -- which seeks to implement Korea’s commitment under its free trade agreements with the U.S. and the EU, among others.

After the visit, the chairman suspended the remaining process at the committee, asking for a further review of the compatibility of the new legislation with the two FTAs.

Under the proposed amendment prepared by the Justice Ministry, new requirements will be imposed on joint venture law firms involving overseas companies. Examples of the new requirements include restriction of a foreign law firm’s ownership of a JV at 49 percent and a requirement of “good standing” practice record of more than three years in respective jurisdictions.

It has been pointed out that these restrictions tend to create a favorable business environment for Korean law firms and put their foreign counterparts in a disadvantageous position. And reportedly, that was the main point raised during the ambassadors’ meeting with the Judiciary Committee chairman on Jan. 8.

Treaty interpretation is always complex and complicated. To make it simple, one cardinal rule to interpret a treaty provision is to read and apply it as it is written down. The texts are presumed to reflect the parties’ true intent when they are negotiated, and so the texts should overrule unless and until the parties amend the treaty provisions.

So, whether Korea can adopt such restrictive measures as envisioned in the FLC Act should be determined by what the relevant provisions actually state. How a particular measure would now affect the market or the players in the market is an important factor, but it is usually unable to overcome the text of a treaty.

In plain reading, the two treaties stipulate, in pertinent part, that Korea preserves the right to adopt specific regulation of joint law firms. They are arguably phrased as open-ended provisions which are then interpreted to mean that the authorities of contracting parties are accorded the right to adopt specific ways of regulation. As long as the texts are straightforward, it is difficult to sustain a claim that exercising the right under a treaty leads to its violation merely because of favorable or unfavorable business conditions.

To be blunt, an FTA is a package deal: the purpose of any free trade deal is to find an equilibrium of the entire interests of the contracting parties, which would mean that give-and-take has inevitably taken place in individual sectors. Viewed under this general scheme of an FTA, the fact that one particular sector can be favorable or unfavorable to a party, even if true, does not necessarily mean that a particular provision should be interpreted one way or another, or that any violation has taken place. Only the terms of the text should control.

Points raised so far refer to the “spirit” of the FTAs rather than “provisions” of the agreements. In a sense, the reference to the spirit may indicate that the texts themselves do not necessarily support such points. The spirit of the agreement is important and meaningful, but it cannot replace the specific language in the texts. The ongoing debates on the FLC Act are an important precursor of sometimes different understandings of FTA contracting parties and of how such differences can be resolved.

By Lee Jae-min

Lee Jae-min is an associate professor of law at Seoul National University. -- Ed.