Attorney Gyeong-tae et al., Counsel for the defendant

[Defendant-Appellant] Yang 1 and 2 others

Law Firm LLC (LLC)

[Defendant-Appellee] Plaintiff 1 and 1 other

The judgment of the first instance shall be revoked, and the case shall be remanded to the Busan District Court's Dong Branch.

1. Standard of determining international jurisdiction

Article 2(1) of the Private International Act provides, “Where a party to a dispute or a case in dispute is substantially related to the Republic of Korea, the court shall have the international jurisdiction in this case. In this case, the court shall comply with reasonable principles consistent with the ideology of allocation of international jurisdiction in determining the existence or absence of substantial relation.” The term “actual relation” refers to the relation between the party to the dispute or the case in dispute to the extent that it justify the exercise of jurisdiction by a court of the Republic of Korea. The determination shall conform to reasonable principles consistent with the ideology of allocation of international jurisdiction, such as equity, court’s propriety, speed and economy. Specifically, as well as personal interests, such as equity, convenience, predictability, and the appropriateness, speed and efficiency of the judgment, and effectiveness of the judgment, as well as the interests of the court or the State, such as the appropriateness, speed and efficiency of the judgment, shall also be taken into account. Whether there is a need to protect any of the interests of various national jurisdiction in individual cases (see Supreme Court Decisions 2002Da5978, Jan. 27, 2005; 2013Meu2526, Jun. 2137, 2019).

Article 2(2) of the Private International Act provides, “The court shall judge the existence of international jurisdiction in consideration of the provisions of domestic law, and shall take into account the special nature of the international jurisdiction in light of the purport of the provision of paragraph (1),” and presents the provisions of jurisdiction in domestic law in a specific standard or method of determining the substantive relationship as prescribed in paragraph (1). Therefore, the provisions of the Civil Procedure Act serve as the most important standard for determining the international jurisdiction. However, since the provisions of jurisdiction concerning judicial matters established from a domestic point of view, it is also necessary to revise and apply the provisions in accordance with the ideology of the allocation of international jurisdiction in consideration of the special nature of international jurisdiction (see Supreme Court Decision 201

Article 2 of the Civil Procedure Act provides, “The lawsuit shall be subject to the jurisdiction of the court in the location of the defendant’s general forum,” and Article 5(1) main text of the Civil Procedure Act provides, “The general forum of a corporation, other association or foundation shall be determined at the location of its main office or business office.” This is because allowing the plaintiff to bring a lawsuit to a court in which the defendant’s main office or business office is located to the court in the jurisdiction accords with the fairness of the parties. As such, international jurisdiction also serves as an important element of consideration as the place of business relationship. Considering the special jurisdiction in international jurisdiction is for the recognition of the State’s jurisdiction that is substantially related to the disputed case. On the other hand, considering the special jurisdiction of the place of property in Article 11 of the Civil Procedure Act is for the recognition of the State’s jurisdiction that is substantially related to the disputed case. If the plaintiff has filed a lawsuit against the defendant at the time of filing a lawsuit against the Korean court in the Republic of Korea and obtains a favorable judgment, the invalidation of the trial can be acknowledged in terms of party rights

Furthermore, predictability should be determined on the basis of whether the defendant could have reasonably predicted the filing of a lawsuit at the court in the jurisdiction of the jurisdiction because of a significant relationship between the defendant and the jurisdiction.

If a corporate defendant has its principal office or place of business in the Republic of Korea and conducts its business activities, it can be easily predicted that the defendant will file a lawsuit against the defendant in the Republic of Korea.

International jurisdiction is not exclusive jurisdiction, but it may exist concurrently. The courts of other countries are more convenient than the courts of the Republic of Korea in terms of geography, language, communication convenience, application and interpretation of law, etc. The jurisdiction of the courts of the Republic of Korea should not be readily denied (see Supreme Court Decision 2016Da33752, supra).

2. Facts

The facts according to the judgment of the court of first instance cited by the court below are as follows:

A. The plaintiffs are Chinese companies whose head office is located in the People's Republic of China (hereinafter "China"), and the defendant is the Korean company that has its head office in Busan Metropolitan City Busan Metropolitan City in Korea.

B. The Defendant invested USD 500,000, and established the △△ Electronic Co., Ltd. (hereinafter referred to as the “△△ Electronic”) in China under the Chinese law on September 29, 2000. At present, the Defendant currently holds 100% of the shares of △△ Electronic Co., Ltd.

C. The plaintiffs asserted that they should be jointly and severally liable for the obligation to pay the unpaid goods pursuant to the Chinese Company Law (referred to as the "Law of the People's Republic of Korea"), and that the defendant filed a lawsuit against the defendant seeking the payment of the goods with a Korean court. The defendant asserts that the lawsuit of this case is unlawful because there is no international jurisdiction jurisdiction in the Korean court.

3. Appropriateness of the lower judgment

A. The lower court denied the international jurisdiction of the Republic of Korea court on the instant case for the following reasons.

The instant case is held jointly and severally liable under the Chinese Company Act on the ground that the Plaintiffs were unable to receive the price even though they supplied goods according to each of the instant goods supply contracts entered into with △ electronic. Thus, the primary dispute is the existence and amount of the unpaid obligation to the Plaintiffs in △ electronic.

The Plaintiffs, both the parties to each of the goods supply contracts of this case and Dol electronic are China, which has its head office in China. The conclusion of the contract, supply of goods, and payment of the price are conducted in China. The relevant documents are prepared in the Chinese language, and the most important evidence methods necessary for deliberation are prepared in China, and it is difficult to recognize a special court of the Republic of Korea Civil Procedure

Considering these circumstances, it is difficult to recognize that the dispute of this case and the parties to this case and the parties to this case have substantial relations with the private sector.

With respect to a dispute arising from a commodity supply contract between the plaintiffs who have no substantial relations with the Republic of Korea and the △ electronic, it may infringe upon the predictability of the parties to recognize international jurisdiction in the Korean court on the sole basis of the contingency that the shareholders of △ electronic are the Republic of Korea company and their principal offices are private countries.

B. However, examining the above facts and records in light of the legal principles as seen earlier, it is sufficient to view the Plaintiffs’ instant lawsuit as having substantial relations with the Republic of Korea.

The reasons are as follows.

In order to recognize the international jurisdiction of the Republic of Korea, there is a substantial relationship between the court of the Republic of Korea and the parties to the pertinent lawsuit, or the disputed case. The Plaintiffs are seeking the payment of the unpaid goods under the instant goods supply contract between △△ Electronic, and the location of the Defendant’s general forum in the Republic of Korea is the location of the main office of the Republic of Korea. Even if △ electronic, which is the debtor, is a Chinese corporation, and is China, the instant dispute and the parties are not irrelevant to the Republic of Korea. In particular, considering the convenience of the Defendant’s lawsuit and the guarantee of the Defendant’s right to defense, etc.

Meanwhile, even if the burden of proving the claim for the payment of goods, which is the case in which the dispute in this case occurred, is the plaintiffs, and the defendant needs to collect materials necessary for the defense in China, the defendant is a parent company holding the 100% shares of 100% shares of △ Electronic, which is a subsidiary company, and there is no big difficulty in securing materials, etc. or understanding facts about the obligation for the payment of the goods of △ Electronic, which is the subsidiary company. In addition, since the defendant conducts business in the Republic of Korea with the main office in the Republic of Korea, it cannot

The Plaintiffs, when proceeding in the Republic of Korea in a lawsuit for the payment of the price for goods arising from the transaction of goods in China, are suffering from geographical and verbal inconvenience in the collection and submission of evidence and the performance of the lawsuit. Nevertheless, the Plaintiffs expressed their intent to have them proceed to a trial in the Republic of Korea upon taking advantage of their geographical and verbal disadvantages in relation to the implementation of the lawsuit, and thus, such intent should also be respected.

The predictability ought to be determined on the basis of whether the Defendant could have reasonably predicted the filing of a lawsuit at the court in the jurisdiction of the competent court. It is difficult to deem that the Defendant, a shareholder of the △ Electronic, was unable to predict the fact that the Defendant, who is the one of the shareholders of the △ Electronic, could bring an action in relation to the liability for the payment of the goods at the Korean court with his principal office, in the event that the △ Electronic, fails to properly perform

In accordance with each of the instant goods supply contracts made in China, the existence of the obligation to pay the unpaid goods and the examination of the amount thereof may be conducted through the investigation of receipts, confirmations, etc., and, if the proof is insufficient, the lawsuit in this case ought to be returned to the disadvantage of the plaintiffs filed with the Korean court. Considering these circumstances, the examination of evidence in this case is not necessarily required in China. If the defendant's property is in favor of the plaintiffs in the Republic of Korea, the recognition of the international jurisdiction of the Korean court in terms of the party's remedy for infringement of rights or the effectiveness of the judgment is consistent

Furthermore, the Plaintiffs asserted that the governing law applicable to the instant case is China law. However, the question is whether the governing law is appropriate to resolve a dispute in accordance with the order of a country’s substantive law. On the other hand, the issue is whether to recognize jurisdiction in the court of a country in light of the parties’ equity, propriety of trial, prompt and economic aspects, etc. regarding the dispute over international jurisdiction, and these two are governed by different ideas. The international jurisdiction cannot be determined only in accordance with the governing law. Thus, even if the governing law of the instant legal relationship is China company law, such circumstance alone does not deny the substantive relationship between the instant lawsuit and the Korean court (see Supreme Court Decision 2017Meu12552, supra).

C. Nevertheless, the first instance court and the lower court denied the international jurisdiction of the Republic of Korea court on the grounds that the plaintiffs’ lawsuit in this case was not practically related to the Republic of Korea. The lower court erred by misapprehending the legal doctrine on international jurisdiction, thereby adversely affecting the conclusion of the judgment.

4. Conclusion

The plaintiffs' appeals are with merit, and the judgment of the court of first instance is reversed. Since this case is sufficient for the Supreme Court to directly judge, the judgment of the court of first instance shall be revoked, and the case shall be remanded to the court of first instance for further proceedings and determination in accordance with Article 425 and the main sentence of Article 418 of the Civil Procedure Act. It is so decided as per Disposition by the assent

Justices Kim Jae-sik in charge

Justices Min Min-young

Justices Noh Tae-ok