[2] In case where a garnishee under an order of seizure or provisional seizure of a claim has a opposing claim against a garnishee, the requirements to oppose the creditor of provisional seizure by offsetting

[3] Even if the legal relationship on the requirements and effects of a set-off among claims containing foreign elements is interpreted and applied in accordance with the governing law of a set-off, the case where whether a garnishee under a provisional seizure order or a seizure order against a debtor can oppose the creditor of a provisional seizure by having a counterclaim against the debtor should be determined pursuant to the Civil Execution Act, etc.

[2] In light of the purpose and function of the offset system, and the interests of the parties concerned where a debtor’s claim has been seized, in case where a garnishee under the Civil Execution Act has an opposing claim against a seizure obligor under an order of seizure or provisional seizure (hereinafter referred to as “order of seizure”) and where both opposing claims have been due at the time when the provisional seizure takes effect, or where both opposing claims have not arrived at the time when the provisional seizure takes effect, if they have not arrived at the same time as or earlier than the due date of the provisional seizure claim (i.e., the corresponding claim), it may be set up against the creditor of the provisional seizure.

[3] Even if the legal relations concerning the requirements and effects of a set-off among claims containing foreign elements are interpreted and applied pursuant to the law governing a set-off, in cases where a creditor executes a claim by obtaining a provisional seizure order or a seizure order and a collection order under the Civil Execution Act of the Republic of Korea, the issue of whether a garnishee under a provisional seizure order or a seizure order with an opposing claim against a debtor may set-off and set-off against a creditor who has a provisional seizure or seizure order is related to the validity of a provisional seizure or seizure of a claim, which is an execution procedure, and thus, barring any special circumstance, it is in principle determined pursuant to the Civil Execution Act, etc.

1. Regarding ground of appeal No. 1

The English legal offset system has an ordinary set-off and an equitable set-off. Among them, the common law offset relaxs the requirements of offset compared to the equitable offset, such as not requiring the relation between the two claims, but it is interpreted that the common law offset has the procedural legal nature in that it can only be exercised as a defense of lawsuit. However, the common law offset also has the substantive legal nature in that both claims are extinguished from the equal amount of claims by exercising the right of offset. Therefore, the common law offset can be applied as the governing law with regard to the requirements and effects of offset.

For the reasons indicated in its holding, the lower court determined that, on the grounds indicated in its reasoning, both the automatic claim and the passive claim asserted by the Defendant as the counterclaim occurred in the time charter with the English law as the governing law, set-off, in principle, shall be governed by the governing law of the claim itself, and set-off under the English common law as the governing law

Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and the evidence duly admitted, the lower court did not err by misapprehending the legal doctrine on the governing law regarding the requirements for offsetting, contrary to what is alleged in the grounds of appeal.

2. As to the grounds of appeal Nos. 2 through 5

In light of the purpose and function of a set-off system, the interests of the relevant parties in cases where a debtor’s claim is seized, etc., in cases where a garnishee under the Civil Execution Act, who has been subject to a seizure order or a provisional seizure order (hereinafter referred to as “order of seizure”) has an opposing claim against a debtor, if both opposing claims at the time of the provisional seizure takes effect, or if both opposing claims have become due at the time of the provisional seizure, or if the maturity of the opposing claim (Automatic claim) has not yet arrived at the same time as or earlier than the maturity of the claims subject to provisional seizure (see Supreme Court en banc Decision 2011Da4521, Feb. 16, 2012).

In addition, even if the legal relationship on the requirements and effects of a set-off among claims containing foreign elements is interpreted and applied pursuant to the law governing a set-off, in cases where a creditor executes a claim by accepting a provisional seizure order or a seizure order and a collection order under the Civil Execution Act of the Republic of Korea, the issue of whether a garnishee under a provisional seizure order or a seizure order with an opposing claim against a debtor can oppose a creditor of a provisional seizure or a seizure order is related to the validity of a provisional seizure or a seizure order, which is an execution procedure, and thus, barring any special circumstance, it is in principle determined pursuant to the Civil Execution Act, etc. of the Republic of Korea, and

On the grounds indicated in its reasoning, the lower court determined that (1) at the time when the Defendant expressed his/her intention of offsetting the unpaid charterage and damage claim (hereinafter “the instant automatic claim”) against the Defendant against the Defendant on December 15, 2011, and the instant provisional seizure claim (hereinafter “instant passive claim”) which is a rehabilitation claim against the Defendant, all of the instant automatic claims and passive claims are judicial final and conclusive and are in a set-off position, and accordingly, determined that the Plaintiff satisfies the requirements of offset. (2) In this case, where the Plaintiff was ordered to order provisional seizure and seizure of the instant passive claims under the Civil Execution Act and to collect the collection amount against the Defendant, who is the third obligor, based on such order, upon receiving a collection order, the Plaintiff’s claim against the Defendant, the aforementioned provisional seizure claim should be determined in accordance with the Civil Execution Act of the Republic of Korea, which is the governing law of offset, and in light of the above legal principles, the Defendant’s claim against the Defendant at the time of the instant provisional seizure should be offset against the Defendant.

Examining the reasoning of the lower judgment in light of the aforementioned legal principles, although the part of the lower judgment’s reasoning was partially inappropriate, the lower court’s conclusion that did not accept the Plaintiff’s claim for collection of the debt amount on December 15, 201, deeming that the debt amount of the instant case was extinguished by set-off against the Defendant on December 15, 2011, is acceptable as it is in accordance with the aforementioned legal doctrine. Therefore, contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine regarding the governing law regarding foreign set-off and provisional attachment, the requirements and effect of set-off in common law, the principle of the ipso facto Act, the principle of the suspension of the Bankruptcy Act, and

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim So-young (Presiding Justice)