[2] Legal nature of Article 17 of the former Financial Investment Services and Capital Markets Act prohibiting a discretionary investment business that does not engage in a financial investment business (=regulation provision)

[3] In a case where a creditor claims foreign currency claims which are monetary claims designated in a foreign currency by converting them into Korean currency (=the time of closing argument in the court of fact-finding)

[2] Article 17 of the former Financial Investment Services and Capital Markets Act (amended by Act No. 11828, May 28, 2013) prohibits a discretionary investment business which has not been registered. The purpose of prohibiting a discretionary investment business is to protect investors who are customers and foster their financial investment business in a sound manner. Thus, it cannot be deemed that a discretionary investment contract, which was concluded in violation of the above provision, has considerably anti-sociality and anti-divity to the extent that it should not be denied even its judicial effect, and it cannot be deemed that the legislative purpose can only be achieved only if it is denied its judicial effect. Rather, if the above provision is deemed an effective provision and the act in violation is uniformly null and void, it would result in an unfair result that would seriously undermine legal stability with the trading partner. Thus, the above provision is not a mandatory provision, but a regulatory provision.

[3] Where a creditor claims foreign currency claims which are monetary claims designated in a foreign currency into Korean currency by exercising his/her right to substitute benefit, when the court orders the debtor to perform the obligation, the foreign exchange rate at the time of closing argument of the fact-finding court nearest in the event the debtor performs the obligation in reality shall be calculated as the standard time of converting the foreign currency

1. As to the ground of appeal on the plaintiff's primary claim

A. As to the validity of an agreement on discretionary investment business concluded without registration of discretionary investment business among Chapter 5 of the Grounds for Appeal

In a case where a contract or other juristic act under a private law is performed in violation of a specific legal provision prohibiting a certain act, whether the juristic act is null and void, or whether the court refuses assistance in the realization of the contents of the juristic act or restricts its effect with any other content, it is determined by any interpretation of the provisions of the law, as part of the wide sense of the relevant legal provision. Therefore, if there is a express provision on such point, it shall be followed as a matter of course, and if there is no such a provision, it shall be decided by the examination of whether the invalidation or restriction of effect of the juristic act against it is required in light of the purpose and meaning of the prohibition provision (see Supreme Court Decision 2008Da75119, Dec. 23, 2010, etc.).

Article 17 of the former Financial Investment Services and Capital Markets Act (amended by Act No. 11828, May 28, 2013; hereinafter “Capital Markets Act”) prohibits a discretionary investment business that does not register the financial investment business is intended to protect investors who are customers and foster the financial investment business in a sound manner. Thus, it cannot be deemed that a discretionary investment contract, which was concluded in violation of the above provision, has a considerably anti-social and anti-divity to the extent that it should not be denied even its judicial effect, and only if it denies its judicial effect, the legislative purpose can not be deemed to be achieved. Rather, if the above provision is deemed as an effective provision and uniformly null and void, it would result in an unfair result that would seriously undermine legal stability between the trading partner and the trading partner. Thus, the above provision is not a mandatory provision.

In the same regard, the lower court rejected the Plaintiff’s assertion that the instant agreement was null and void as an unregistered business activity prohibited by the Capital Markets Act, on the grounds that it did not deny the judicial effect of a discretionary investment contract between the unregistered business operator and the investor, in addition to punishing the unregistered business operator of the discretionary investment business.

In light of the above legal principles and records, the court below is just in rejecting the Plaintiff’s claim for restitution of unjust enrichment on the premise that the agreement in this case was null and void as it was unregistered business conduct prohibited by the Capital Markets Act. In so doing, contrary to what is alleged in the grounds of appeal, the court below did not err by misapprehending

B. As to the remainder of the grounds of appeal No. 5

According to Article 8(1), (5), and (6) of the Financial Investment Services and Capital Markets Act, the lower court rejected the Plaintiff’s assertion that the instant agreement is in violation of Article 98-2 of the Financial Investment Services and Capital Markets Act and thus null and void, on the ground that an investment advisory business entity or a discretionary investment business entity subject to Article 98-2, which prohibits investment advisory activities related to investment advisory or an act of receiving contingent remuneration that is linked to the performance of discretionary investment property, is registered with the Financial Services Commission, and thus, is not subject to Article 98-2.

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court’s conclusion that the instant agreement cannot be deemed null and void, contrary to what is alleged in the grounds of appeal, did not err by misapprehending the legal doctrine on the validity

C. Regarding ground of appeal No. 1

The lower court rejected the claim for restitution of unjust enrichment against the money received in excess of the agreement for profit-sharing on the premise that there exists an agreement between the Plaintiff and the Defendant on the apportionment of losses arising from discretionary investment at the time of conclusion of the instant agreement, but it cannot be deemed that the agreement was concluded at the time of conclusion of the instant agreement.

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, such determination by the lower court is justifiable, and contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine or omitting judgment

2. As to the ground of appeal on the plaintiff's first preliminary claim

A. As to the grounds of appeal Nos. 2, 3, and 4

The gist of the allegation in the grounds of appeal in this part is that there was an agreement between the Plaintiff and the Defendant on the apportionment of losses on February 2012, 2012, which was at the time of the conclusion of the instant agreement, and the instant agreement was an unfair contract, and there was an agreement with the effect that at the time of the agreement on the apportionment of losses, there was an agreement to compensate for 50% of losses as to the transaction in the account of the Yujin Investment Futures Co., Ltd. at the time of the instant agreement on the apportionment of losses around March 2014. However, this is nothing

Furthermore, even if examining the record, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal doctrine on the interpretation of unfair juristic acts and agreements, or omitting judgment, which affected the conclusion of the judgment.

B. Regarding ground of appeal No. 6

1) In cases where a creditor claims for foreign currency claims which are monetary claims designated in a foreign currency into Korean currency by exercising the right to substitute payment, when the court orders the debtor to perform the said claims, the foreign exchange rate at the time of closing argument of the fact-finding court nearest in the event the debtor performs the claims in reality shall be the base time for converting foreign currency into Korean currency (see, e.g., Supreme Court en banc Decision 90Da2147, Mar. 12, 191; Supreme Court Decision 2015Da5397, Jun. 23, 2016).

2) On March 4, 2014, the lower court held that: (a) on the premise that the Defendant is obligated to pay USD 164,543.04 remaining US$ 90,00 ($254,543.04 - USD 90,000), excluding US$ 254,543.04 which the Plaintiff was the person who was the person who was deducted among the Plaintiff’s losses to the account of the new financial investment company and the account of the Han Investment Securities Co., Ltd., Ltd., in accordance with the loss apportionment agreement with the Plaintiff around March 2014; (b) on the premise that the Defendant was obligated to pay the amount of Korean won which the Defendant is obligated to bear by the Defendant as of July 4, 2014, using US$164,543.04 as of July 4, 2014, US$ 16,689,689,4,54,304,709) x KRW 14,79409).

3) However, even according to the reasoning of the lower judgment, it is clear that the amount of the claim for loss contribution to each of the above accounts, which the Plaintiff seeks to pay to the Defendant according to the above loss apportionment agreement, is the foreign currency claim designated in US US US dollars, and the Plaintiff claims the amount converted into Korean currency. In light of the above legal principles, the lower court should order the payment of the amount converted into Korean currency based on the foreign exchange rate at the time of the closing of argument in the lower court as of USD 164,

4) Nevertheless, the lower court determined that the Defendant is liable to pay the amount converted into the exchange rate at the time of the occurrence of losses on account of the closing of transaction in each of the above accounts. In so determining, the lower court erred by misapprehending the legal doctrine on the base point of time for converting foreign currency claims into Korean currency, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds of appeal on

3. As to the Defendant’s ground of appeal

The gist of the Defendant’s argument in the grounds of appeal is that the parties to the instant agreement are not the Defendant, but the investment advisory company established and operated by the Defendant to Singapore, and the instant agreement is not a comprehensive investment delegation contract, and there was no agreement between the Defendant and the Plaintiff on the apportionment of losses around March 2014. However, this is merely an error of the lower court’s selection of evidence or fact-finding, which is the fact-finding court’s exclusive right

Furthermore, even if examining the record, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal doctrine on discretionary investment under the Capital Markets Act, without exhaust all necessary deliberations in its judgment related to this part.

4. Conclusion

Therefore, as long as the plaintiff's appeal as to the first preliminary claim is accepted, it is not necessary to examine the plaintiff's remaining grounds of appeal as to the first preliminary claim and the plaintiff's appeal as to the second preliminary claim. Of the judgment below, the part against the plaintiff as to the first preliminary claim and the second preliminary claim are reversed, and the part concerning the second preliminary claim are remanded to the court below for a new trial and determination. The plaintiff's appeal as to the first preliminary claim and the defendant's appeal are all dismissed. It is so decided as per Disposition by the assent

Justices Kwon Soon-il (Presiding Justice)