Suggested citations
AGLC4 | 대외경제계약법 2008 [Foreign Economic Contract Law of the Democratic People's Republic of Korea (2008)] [tr Daye Gang].
Bluebook | Daeoegyeongjegyeyagbeob 2008 [Foreign Economic Contract Law of the Democratic People's Republic of Korea (2008)] translated in Law and North Korea by Daye Gang, https://www.lawandnorthkorea.com/.
Adopted on February 22, Juche 84 (1995), as Decision No. 52 of the Standing Committee of the Supreme People’s Assembly
Amended and supplemented on February 26, Juche 88 (1999), as Directive No. 483 of the Presidium of the Supreme People’s Assembly
Amended and supplemented on August 19, Juche 97 (2008), as Directive No. 2842 of the Presidium of the Supreme People’s Assembly
CHAPTER I. BASICS OF FOREIGN ECONOMIC CONTRACT LAW
Article 1 (Objectives of Foreign Economic Contract Law)
The Foreign Economic Contract Law of the Democratic People’s Republic of Korea shall strictly adopt strict discipline and order in the entry into and fulfilment of foreign economic contracts to protect the rights and interests of contracting parties, and shall serve to expand and develop economic cooperation and exchange with many countries of the world.
Article 2 (Classification of foreign economic contracts)
Foreign economic contracts include contracts related to trade, investment, and labour.
Article 3 (Parties to foreign economic contracts)
Parties on our side of foreign economic contracts shall be given institutions, enterprises and organizations of the Republic.
Article 4 (Principle of entry into and fulfilment of foreign economic contracts)
The State shall keep the principles of equality, mutual benefit, and credibility in the entry into and fulfilment of foreign economic contracts.
Article 5 (Principle of respecting treaties and international customs)
The State shall respect treaties concluded with other countries and international customs related to foreign economy.
Article 6 (Principle of entering into and being responsible for contracts)
The State shall ensure that the parties to a foreign economic contract conclude contracts within the scope of their rights and abilities and must ensure that the given debtor takes responsibility for debts occurring in the process of fulfilling them.
Article 7 (Supervision and control institution for entry into and fulfilment of contracts)
Supervision and control for entry into and fulfilment of foreign economic contracts shall be done by the central trade guidance institution. According to the subject of the contract, the authorities concerned may also exercise supervision and control.
Article 8 (Subjects of regulation of Foreign Economic Contract Law)
The Foreign Economic Contract Law of the Democratic People’s Republic of Korea shall regulate the process and method of entry into and fulfilment of foreign economic contracts. Particulars not regulated in this law shall follow the given regulations of the Republic.
CHAPTER II. ENTRY INTO FOREIGN ECONOMIC CONTRACTS
Article 9 (Confirmation of scope of entry into contract and credit status)
Contracting parties must conclude contracts within the scope of the type of business, indicators, and amounts approved. In these cases, the other contracting party’s corporation registration, property, and credit status such as performance collateral, must be confirmed.
Article 10 (Entry into contract according to standard contracts)
Contracts shall be concluded according to standard contracts made by the central trade guidance institution. However, in cases where part of the content of the standard contract is sought to be decided differently, or there is no standard contract, the contracting parties may determine the content of the contract by agreement.
Article 11 (Subjects of approval of entry into the contract)
The entry into a contract related to establishing a foreign country investment enterprises inside an area of the Republic or investing in other countries, or contracts with a large trading sum or with significance to the State, shall receive the approval of the central trade guidance institution or the given institution. In these cases, the draft contract must be submitted to the central trade guidance institution or authorities concerned before the given contract is concluded, and agreement must be received.
Article 12 (Method of entry into contract)
Contracting parties must participate in entering into the contract. Depending on the case, a contract may also be entered into without the participation of the contracting parties by the method of one party offering and the other party agreeing.
Article 13 (Form of entry into contract)
Entry into a contract shall be done in writing. Contracts concluded using means of communications such as fax or electronic mail shall also be recognised as a contract in writing.
Article 14 (Legal effect of contracts)
Contracts shall have legal effect at the following time.
1. At the time the contracting parties mark the contract with their name by hand
2. At the time the condition precedent pointed out in the contract has arisen
3. For contracts that must be approved, when the authorities concerned have approved them
Article 15 (Authorization and commissioning of contracts)
Contracts may also be concluded by method of authorization or commission.
Article 16 (Legal effect of Appendix of contract and documents before contract)
Things such as product inventories and technical materials shall be attached as the Appendix to the contract. Documents from before the contract was concluded, such as agreements or communication exchange documents, shall not have legal effect from the time the contract was concluded.
Article 17 (Mark contracts with names by hand)
Representatives of the contracting parties, or their legal representatives, shall mark the contract with their names by hand.
Article 18 (Contracts that do not have legal effect)
Contracts that hinder the safety of the country or cause damage to its economic interests, or contracts concluded through deception or coercion, may not have legal effect.
CHAPTER III. FULFILMENT OF FOREIGN ECONOMIC CONTRACTS
Article 19 (Contract fulfilment period, duty to adhere to contract content)
Contracting parties must fulfil their contractual duties during the determined period. The contract content may not be changed to be fulfilled without the consent of the other contracting party.
Article 20 (Rights of contracting parties)
In cases where the other contracting party fulfils the contract differently to its content, a contracting party may reject it or demand specific performance, and may postpone the fulfilment of their own contractual duties.
Article 21 (Suspension of contract fulfilment for reasons beyond anyone’s control)
In cases where unavoidable reasons have occurred in the process of fulfilling the contract, such as natural disasters, blockades, or acute infectious disease outbreaks, a part or the whole of the fulfilment of contractual duties may be suspended. In these cases, the other contracting party shall soon be informed of the occurrence, content, and scope of the unavoidable reason, and a notarization document proving it must be submitted. Where contract fulfilment has been delayed due to unavoidable reasons, the contract shall be prolonged to the extent of that period.
Article 22 (Suspension of contract fulfilment due to fault of the other party)
In cases where a contract is unable to be executed due to reasons such as the other contracting party slowing down the performance of their contractual duties or lack the ability to fulfil their contract, contracting parties may suspend their fulfilment. In these cases, the other contracting party must be informed that the contract fulfilment is being suspended.
Article 23 (Fulfilment of suspended contractual duties)
Contracting parties where contract fulfilment had been suspended must continue the fulfilment of contractual duties once the reasons beyond anyone’s control have gone away or the contract fulfilment of the other contracting parties has been guaranteed.
Article 24 (Consent to fulfilment of contractual duties)
In cases where a contracting party who has not been able to fulfil their contractual duties seeks to continue to fulfil those duties, the consent of the other contracting party must be received.
Article 25 (Change of contract fulfilment period)
A contract fulfilment period may be increased or decreased by agreement of the contracting parties.
CHAPTER IV. TRANSFER, CHANGE, CANCELLATION OF FOREIGN ECONOMIC CONTRACTS
Article 26 (Transfer of contract)
Contracting parties may transfer a part or the whole of their contractual rights and duties to a third party after receiving the consent of the other contracting party. The transfer period of a contract shall be the left over period of the contract fulfilment period.
Article 27 (Change of contract content)
Contract content may be partly changed by agreement of the contracting parties. Change to contract content includes amendment, deletion, or supplementation.
Article 28 (Cases of cancellation of contract)
Contracts may be cancelled in the following cases.
1. In cases where a contract cannot be fulfilled within the determined time limit or its fulfilment is impossible
2. In cases where a contracting party declares that their fulfilment of contractual duties is being ceased or completely abandoned without a reason
3. In cases where the purpose of entering into the contract cannot be attained because of a breach of contract or large economic losses have been caused
4. In cases where a period to rectify non-fulfilment of a contract has been given but it has not been fulfilled in that period
5. In cases where an unavoidable reason continues for longer than the contract fulfillment period
6. In cases where a condition for cancellation determined in the contract has occurred
Article 29 (Scope of cancellation of contract)
A contract may be wholly or partly cancelled according to the degree to which the contract has been violated or not been able to be fulfilled. In these cases, the other contracting party must be informed in advance.
Article 30 (Recommendation about contract cancellation)
In cases where a given contract has not been fulfilled for more than 6 months from the time it came into legal effect, the institution that approved the contract may cancel that contract.
Article 31 (Legal effect of provisions of contract for damage compensation, settlement, dispute resolution)
In cases where a contract has been cancelled, the legal effect of provisions related to damage compensation, settlement, and dispute resolution shall not be lost.
Article 32 (Form and process of transfer, change, cancellation of contract)
Transfers, changes, and cancellations of contracts shall be done in writing. In cases where a contract is sought to be transferred, changed, or cancelled, the permission of the institution that approved that contract shall be received.
CHAPTER V. RESPONSIBILITY FOR AND DISPUTE RESOLUTION OF VIOLATIONS OF FOREIGN ECONOMIC CONTRACTS
Article 33 (Right to claim compensation and duty to compensate)
A contracting party that has violated a contract shall take responsibility for it. A contracting party that has been damaged by the breach of contract shall have a right to claim compensation and the contracting party that has caused the damage shall have a duty to compensate.
Article 34 (Cancellation charges or damage compensation)
A contracting party that has violated the contract shall pay cancellation charges as determined in the contract or must compensate the given damage. Damage compensation may be done in currency, goods, or property rights, or may be done by the method of eliminating the fault such as a price adjustment or paying from their own expenses.
Article 35 (Period of claim for damage compensation)
A claim for damage compensation shall be done during the period of claim for damage compensation determined in the contract. In cases where a period of claim for damage compensation is not determined in the contract, the treaty concluded with the given country shall be followed, and in cases where there is no such thing, it may be done during the civil statute of limitations period.
Article 36 (Period of claim for damage compensation for subjects of contracts where a warranty condition has been set)
A claim for damage compensation for the fault of a subject of a contract where a warranty condition has been set, shall be done during the warranty period or during a period determined in the contract. In cases where a fault in the subject of the contract has been discovered during the warranty period but it cannot be completely proven, the other contracting party must first be informed of those reasons and a claim for damage compensation may be made after fault has been proven. In cases where the period of proving the fault exceeds the period of warranty, the period of claim for damage compensation shall be prolonged for the period of proving the fault.
Article 37 (Raising claim for damage compensation document)
A contracting party seeking to receive damage compensation must submit a claim for damage compensation document to the other contracting party. The claim for damage compensation document shall state the contract number, subject of the contract, form and scope of the damage, basis of the claim of compensation, and requirements and conditions, and must attach the confirmation document or notarization document of the given Public Prosecutor institution.
Article 38 (Damage compensation and its rejection)
A contracting party who has received a claim for damage compensation document must compensate the damage to the other contracting party that has claimed damage compensation during the determined period, or must make a notification that the compensation is rejected. A claim for damage compensation shall be rejected in cases where the period for claim of compensation or civil statute of limitations period has passed, or the basis for claim of compensation is not clear or a requirement to demonstrate the fault was not complied with, or the subject of the contract with the fault has been disposed of at will.
Article 39 (Interest, arrears charges)
In cases where a contracting party has not paid things such as a deposit, damage compensation monies, or cancellation charges pointed out in the contract within the determined period, they must pay interest or arrears charges related to the number of days in arrears.
Article 40 (Waiver of liability for breach of contract)
In cases where a part or the whole of a contract was not able to be fulfilled due to unavoidable reasons or where reasons for waiver of liability have been regulated in a treaty concluded with a given country, they shall be exempt from responsibility for breach of contract.
Article 41 (Duty to prevent damage, damage that cannot be compensated)
A contracting party must prevent damage from being caused or increased in time. Damage created wilfully or negligently may not be compensated.
Article 42 (Dispute resolution)
Differences in opinion related to contracts shall be resolved by method of agreement. In cases where they cannot be resolved by method of agreement, they shall be resolved according to an arbitration process determined by the Democratic People’s Republic of Korea. According to the agreement of the parties, they may also be raised with an arbitral organ of a third country to be resolved.
Last updated 26 January 2021