A Study on the Legal Issues of the South-North Equity Joint Venture Enterprise in Kaesong
Authors:   Wonkwang University Legal Research Institute has, Kim Jinmok 
Published: July 2023

In 2010, with the implementation of the May 24th measures, inter-Korean economic cooperation was suspended in all areas except the Kaesong Industrial Complex. Then, in 2016, with the closure of the Kaesong Industrial Complex, all inter-Korean economic cooperation came to a halt. The joint venture enterprises in inter-Korean economic cooperation were mainly concentrated in the Pyongyang region. However, there was a case of inter-Korean economic cooperation in the form of a joint venture enterprise outside the Kaesong Industrial Complex that could be accessed using the entry and exit procedures of the Kaesong Industrial Complex. South-North Equity Joint Venture Enterprise in Kaesong can utilize the industrial, transportation, and transit facilities of the Kaesong Industrial Complex and has the advantage of active participation by North Korea, which holds shares. In the Equity Joint Venture Act, it is necessary to clarify the criteria for setting land usage fees, ease the all-out agreement system, and ensure education for workers. In addition, it is necessary to fairly define subsequent procedures in cases where consultation is impossible. Under the North-South Economic Cooperation Act, it is necessary to simplify the North's project approval process and stipulate that the North should manage its property in good faith, at least to a minimum extent, in special circumstances. The law on the development of inter-Korean relations needs to clearly define the special relationship between North and South Korea and elevate the legal status of the inter-Korean agreements to the level of general treaties. The law on inter-Korean exchange and cooperation should clearly stipulate in writing the procedures for obtaining North Korean visit approvals and for importing and exporting goods, and should minimize the time required for these processes. The agreement on investment protection between North and South Korea should specify in detail the abnormal issues that impede economic cooperation and provide for step-by-step investment protection accordingly. Regarding the agreement on the resolution of commercial disputes between North and South Korea, the follow-up procedures of the agreement should be promptly carried out, and the establishment of a governing law that applies to both North and South Korea is necessary. The inter-Korean agreement went through the legislative approval process outlined in Article 60, Paragraph 1 of the Constitution, thereby establishing its legal validity. However, due to North Korea's non-compliance, it has become practically ineffective. However, as North Korea has not explicitly rejected the validity of the agreement, it is not advisable to disregard the agreement and its provisions in preparation for future inter-Korean cooperation. North Korea has been attempting to improve its external economy through scientific and technological exchanges, economic development zones, and other means since the 2010s. However, the situation has worsened due to North Korea's nuclear tests leading to U.S. sanctions and the impact of COVID-19. Due to COVID-19, there have been zero exchanges of people between North and South Korea for a period of two years starting from 2021. In the current tense situation of strained inter-Korean relations, inter-Korean economic cooperation should be carried out flexibly and adaptively, taking into account the interests of both North and South Korea and contributing to their reunification, in accordance with the dynamics of inter-Korean and international relations.