SOUTH KOREA Law and Practice Contributed by: Byung Chang Lee, DR & AJU LLC
1.7 Prevention of Defendants Dissipating or Secreting Assets Application for Preliminary Measures Typically, the victim of fraud can prevent a debtor defendant from transferring or dissipating assets by filing an application for preliminary measures. Basically, there are two types of preliminary measures. If the creditor has a monetary claim against the defendant, the creditor can file an application for a preliminary attachment order on a specific asset owned by the defendant debt - or. The target should be specific assets, so this may be a bank account, receivables, leasehold deposit or real estate in the name of the debtor defendant. If the creditor does not have a monetary claim but has a specific right provoked by a fraudu - lent act (which, for example, may be the right to transfer the title on the real estate), the creditor can file an application for a preliminary injunction order preventing the debtor from transferring the assets. In addition to the preliminary injunc - tion for prohibition of disposition as previously described, an application for preliminary injunc - tion that determines a temporary status is also possible. The Relevant Court Fees The relevant court fees include a stamp fee and service fee, which are a relatively small amount compared to the fees required for filing a main lawsuit and are not geared towards the claim amount. However, the creditor is required to pay the deposit amount according to the court’s order, which is proportional to the claim amount. The deposit amount depends on both the claim amount and the assets to be attached or injunc - ted. Typically, the deposit amount ranges from a tenth to two fifths of the claim amount, and the court
can ask the creditor to deposit cash or to submit an insurance policy that guarantees repayment of the deposit amount. When the creditor needs to attach to the bank account in the name of a debtor, the court generally stipulates a deposit of 40% of the claim amount, half of which is payable as cash and the other half as a payment guarantee. There is no special rule or standard on how much of an amount of money or bond should be deposited. It depends on the judge and is determined case by case. Sanctions for Non-compliance by the Defendant If the defendant does not follow the court’s freez - ing order, the creditor can disregard the former disposition by the defendant. For example, if the creditor has received a preliminary injunc - tion order from the court prohibiting the sale of specific property in the name of the defendant, and the defendant has tried to sell the property to a third party, the creditor can argue that there is no title transfer between the defendant and the third party; and if the creditor finally wins the main lawsuit against the defendant, they can enforce on that asset even though the title has already been transferred to the third party. If the debtor disposes of the property to a third party after the registration of the provisional pro - hibition of disposition is made, the act of dis - position in violation of the provisional measure is effective between the debtor and the third party; however, they cannot oppose provisional measures in favour of the creditor (Supreme Court 2004da13601 Decision). In Korea, this is called the relative effect of preliminary injunc - tion, because the debtor cannot argue against the effectiveness of the transfer to the creditor.
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