Plaintiff (Law Firm, Kim & Lee, Attorneys Kang Yong-ok et al., Counsel for the plaintiff-appellant)

Defendant Co., Ltd. (Attorney Hwang Jong-sung et al., Counsel for the defendant-appellant)

April 19, 2007

Seoul Central District Court Decision 2004Gahap4480, 26398 (Counterclaim) Decided April 7, 2006

1. Of the judgment of the court of first instance, the part against the Defendant (Counterclaim Plaintiff) corresponding to the money ordered to be paid below shall be revoked.

2. The plaintiff (Counterclaim defendant) shall pay to the defendant (Counterclaim plaintiff) the amount of USD 6,061,151.98 and 6% per annum from December 17, 2003 to June 28, 2007, and 20% per annum from June 29, 2007 to the date of full payment.

3. Upon filing an application for the return of provisional payment, the Plaintiff (Counterclaim Defendant) shall pay to the Defendant (Counterclaim Plaintiff) the amount of USD 4,265,676.49 and 5% per annum from May 11, 2006 to June 28, 2007; and 20% per annum from June 29, 2007 to the full payment date.

4. The plaintiff (Counterclaim defendant)'s main claim and the remaining appeals by the defendant (Counterclaim plaintiff) are dismissed, respectively.

5. The total cost of the lawsuit and the cost of filing an application for the return of the provisional payment shall be borne by the Plaintiff (Counterclaim Defendant).

1. Purport of claim

In this lawsuit: The defendant (the title of the counterclaim is omitted; hereinafter the title of the counterclaim is omitted) paid 2,901,225.95 US dollars to the plaintiff (the counterclaim defendant; hereinafter the title of the counterclaim is omitted) and 6% per annum from October 18, 2003 to the service date of the complaint of this case, and 20% per annum from the next day to the full payment date, and there is no obligation to pay 6,061,15.98 US dollars for the letter of credit between the plaintiff and the defendant as to the letter of credit No. 4 to 9.

Counterclaim: The plaintiff shall pay to the defendant 6,061,151.98 US dollars and 6% per annum from December 17, 2003 to the service date of the counterclaim of this case, and 20% per annum from the next day to the full payment date.

2. Purport of appeal

The judgment of the first instance court is revoked. All of the plaintiff's claims are dismissed. The plaintiff shall pay to the defendant 6,061,151.98 US dollars and 6% per annum from December 17, 2003 to the service date of the counterclaim of this case, and 20% per annum from the next day to the full payment date.

3. Purport of request for the return of provisional payments;

The plaintiff shall pay to the defendant 4,265,676.49 US dollars and 5% per annum from May 11, 2006 to the date of the pronouncement of this case, and 20% per annum from the next day to the date of full payment.

1. Basic facts

The following facts are not disputed between the parties, or can be acknowledged in full view of the purport of the entire pleadings in the statement in Gap evidence Nos. 1 through 9.

(a) refusing to issue a credit and to pay the amount;

(1) When importing oil (oil) from Nonparty 2 Co., Ltd., the Plaintiff opened an irrevocable letter of credit (hereinafter “each of the instant letters of credit”) as indicated in the separate sheet with Nonparty 1 Co., Ltd., from September 26, 2003 to October 14, 2003, with the request of Nonparty 1 Co., Ltd. to establish the Plaintiff’s bank, Defendant negotiating bank, each amount of USD 800,000, and beneficiary as Nonparty 2 Co., Ltd.

(2) The defendant purchased each of the credit of this case and necessary documents from the non-party 2 corporation in sequence and claimed the amount of the credit stated in the separate sheet negotiation column to the plaintiff on October 14, 2003, and the letter of credit of this case Nos. 4 through 9 arrive at each of the plaintiff on December 16, 2003. The plaintiff refused to pay the letter of credit of this case Nos. 1, 2, and 3 as to the letter of credit of this case on October 23, 2003 on the ground that the contents of the documents necessary for the claim for payment of the letter of credit of this case are inconsistent with the conditions of each of the letter of credit of this case. On December 24, 2003, the defendant sent each of the defective notices (hereinafter "the letter of this case") to the defendant on December 24, 2003.

(3) Of the grounds asserted by the Plaintiff as the grounds inconsistent with the instant defect notification, the main contents are as follows.

1. As to each of the credit amounts in excess of the limit (as to each of the credit in this case)

2. The quantities stated in the commercial invoice are different from those stated in the seller's order of taking out (as to the letter of credit No. 1 and No. 2 of this case).

3. The description of the goods stated in the seller's order of shipment is different from that of the letter of credit and the commercial invoice (as to the letter of credit Nos. 1, 2 and 3 of this case).

④ The date of taking out indicated in the seller’s order is earlier than the Defendant’s confirmation date (as to the letter of credit Nos. 4 through 9 of this case).

5. That an amendment was made by someone else on a copy of the seller’s order of taking out. Accordingly, such order does not satisfy the conditions required in the document. The description of the goods stated in the seller’s order of taking out does not differ from that in the letter of credit and the commercial invoice (as to the letter of credit No. 4 to 9).

(3) However, with respect to the instant L/C Nos. 1, 2, and 3, the Plaintiff’s Hong Kong subsidiaries, who was authorized by the Plaintiff to make advance payment of each of the instant L/C, paid USD 2,901, 225.95 to the Defendant on October 17, 2003, prior to the Plaintiff’s refusal notification.

(4) On October 21, 2003, the Plaintiff withdrawn the Plaintiff’s right to receive advance payment to the Plaintiff’s Hong Kong subsidiaries, and did not pay for the credit Nos. 4 through 9.

(5) Meanwhile, the non-party 1 corporation, which requested the Plaintiff to issue each of the instant L/C, was bankrupt on October 22, 2003.

B. Conditions of each of the Credit of this case

The main conditions stipulated in each of the instant letters of credit are as follows:

○ Credit Amount: US$ 800,000 (32B)

○ excessive or excessive rates: 10/10 (39A)

○ Additional Conditions

- Quantity and 10 per cent of the amount of credit (47A)

- Price: The value of the U.S. dollars on the invoice quantities shall be the amount calculated by adding the premium of USD 4.39 (1, 2 and 3)/3.38 (4 through 9 letters of credit) to the average price publicly announced as the estimate of USD 4.5% of fuel oil in the Asia, the Asia, Pacific, and the Asia, the United Kingdom of America, under paragraph 1, 2, and 3 of this Article, on the condition of delivery (CFR) of Korea, and the amount calculated by adding the premium of USD 4.39 (1, 2, 3 L/C)/3.38 (4 to 9 letters of credit) to the letter of credit.

- Documents required at the time of purchase in sight: the commercial invoice of the seller, the standard quantity report by the independent authorized person, a copy of the seller's order of removal of the goods to the non-party 1 corporation, a copy of the bill of lading (Provided, That the copies of each of the above documents can be accepted by teles/urfs, 47A/A).

- The amount of the credit automatically increases or decreases without additional amendments to the terms and conditions of the credit (47A/E) so that any increase or decrease under the price clause may be accepted.

- The date of release must be the same as the date on which the seller accepts the contents of the credit (47A/H).

C. Contents of the Uniform Credit Regulations

As a commercial law, the main provisions of the Uniform Regulations of the 5th Amendment of the International Commercial Conference, which apply to the transactional relationship related to the letter of credit, are as follows: (a) the Uniform Regulations of the letter of credit, 193 Draft, 193 Draft, 193 Draft, 500; hereinafter referred to as the "Rules of the Uniform Regulations of the letter of credit"):

○ With respect to the basis documents that must be presented in compliance with the terms and conditions, banks may consider such conditions as not stated and disregard them if they do not specify them (Article XIII(c)).

○ Upon receipt of a document, the issuing bank must examine the document solely on the basis of the document, whether the document conforms to the terms and conditions of the credit. If the document is not in compliance with the terms and conditions of the credit, banks may refuse to accept the document (Article XIV(b)).

○ If the issuing bank has decided to refuse a document, it must notify, without delay, a telegraph or any other prompt method if it is unable to use the document by the closing time of the 7 banking business day counting from the date following the date of receipt of the document (Article 14(d)(i)). In giving such notice, the bank shall specify all the defects which it would have refused the document (Article 14(d)(ii). In such a case, the issuing bank shall have the right to demand the bank from which the document was sent to return interest on all compensation already performed (Article 14(c)).

○ The description of the goods under the commercial invoice must conform to the description of the goods under the Credit. However, all other documents may be expressed in general terms not inconsistent with the description of the Credit (Article 37(c)).

2. The party's assertion as to the principal lawsuit and counterclaim;

A. The plaintiff's assertion

In this lawsuit, there is a defect that the contents of the documents required for the claim for the payment of the price of each of the credit of this case do not coincide with the conditions of each of the credit of this case, and the plaintiff has notified the defendant within a lawful period of time, and thus, pursuant to Article 14 (b), (d), (i) and (iii) of the Uniform Credit Rules, the defendant is obligated to pay to the plaintiff the amount of the credit of this case 2,901,225.95 dollars and interest thereon, which had already been paid to the plaintiff as unjust enrichment return, and there is no obligation between the plaintiff and the defendant for the credit of this case 4 to 9, the sum of the amount of the credit of this case 4 to 9,061,151.98 dollars.

B. Defendant’s assertion

The Plaintiff’s assertion seeking the return of the L/C amount Nos. 1, 2, and 3 of this case is without merit, and the Plaintiff, as a counterclaim, is obliged to pay USD 6,061, 151.98 of the total amount of the L/C amount Nos. 4 through 9 of this case and interest thereon to the Defendant.

3. Determination as to the existence of defects in documents necessary for the request for payment of the L/C price

A. Determination on the assertion that the credit amount exceeded the limit

(1) The plaintiff's assertion

The amount of each letter of credit of this case may be automatically increased or decreased pursuant to the price clause, but its scope is limited to 10%. The amount of each letter of credit of this case purchased and sent by the defendant to the plaintiff is in violation of the terms and conditions of each letter of credit of this case (39A, 47A) in excess of 10% of the amount of the letter of credit as stated in the column for the purchase price in the separate sheet. Since the plaintiff notified the defendant of the above defects, it is not obliged to pay the amount of each letter of credit

(2) Determination

The purport of each of the credit of this case is that the amount of the credit of this case is US$80,00 and the amount and 10% of the amount of the credit is allowed, and that the amount of the goods in the invoice purchased by the defendant exceeds 10% of the above amount, as seen earlier, the amount of each of the credit of this case is stipulated in the price clauses (47A) and the price clauses (47A), and the amount of the credit of this case automatically increases or decreases (47A/E) without additional amendments to the conditions of the credit so as to accept any increase or decrease under the price clauses (47A/E), considering the circumstances in which the price of the goods at the time of each of the credit of this case cannot be specified, even if the amount of each of the credit of this case exceeds 10% of the amount of the credit of this case according to changes in the price of the goods at the time of each of the credit of this case, it shall be deemed that the amount of each of the credit of this case is limited to 10% of the amount of each of the credit of this case.

Therefore, the plaintiff's assertion that the defendant's negotiation exceeds the limit of the amount of the credit stipulated in each of the credit of this case is without merit.

B. Determination of the inconsistency in the description of the product

(1) The plaintiff's assertion

The description of the goods stated in each of the instant L/C and the documents required for claiming the payment of the price for each of the instant L/C are inconsistent or inconsistent with each other, and the description of the goods stated in the commercial invoice is inconsistent or inconsistent with each other, and the Plaintiff did not have a duty to pay the price for each of the instant L/C to the Defendant, as the Plaintiff notified the Defendant of such defect.

(2) Determination

(A) A description of the product in a copy of each of the instant L/C and written order

According to Gap evidence Nos. 1, 8, and 9 (including various numbers), the product specifications (45A) of each of the instant letters of credit are as follows: "gasil 26,00 BL, + / 10 PCT, ororgin TR." In the case of the instant letter of credit No. 4, "gasil 26,00 BL, + / 10 PCT, ororin Jap," and in the case of the instant letter of credit Nos. 5 through 9, the product specifications (45A) of each of the instant letters of credit are as follows: "No. 27,00 BL, / 10 PC, / 10 PC, or uin, 00, 000, 000 / 300 of the goods stated in the original text of the instant letter of order sent by the defendant to the plaintiff," and the product description "No. 30,0430 of the goods to be removed.40.4.

(B) The validity of partial deletion of a copy of each of the instant order Nos. 4 through 9

Since the Defendant deleted the parts of each of the above 4 to 9 orders sent to the Plaintiff, “Koran” and “0.043% Sulhur,” the Defendant alleged that the product description of each of the above orders should take into account only the portion “gail, excluding the above deleted parts,” in determining whether the product description of each of the above orders is identical with the letter of credit or the invoice and each of the above orders, but the copy refers to the document that copied the original as it is on the premise of the existence of the original. As seen earlier, the deletion line is not valid only for the portion of the original written order, without legitimate modification to the original written order, sent by Nonparty 2 to Nonparty 3. Therefore, in determining the conformity of the product description, the product description of each of the above orders shall be deemed to be the original written statement that did not take into account the deletion line.

(C) Whether a copy of each of the instant order Nos. 4 through 9 has the state and regularity

The Plaintiff asserts that the Plaintiff’s refusal to purchase each of the above documents is lawful, on the ground that even though the parts of “Koran” and “0.043% Sulphur” were deleted and revised, there is no evidence to acknowledge that there was no signature or seal of Nonparty 2, the legitimate holder of the right to prepare, and that such revision was duly made. Accordingly, the above written order for release does not have the regularness and state of the document, and therefore, the Plaintiff’s refusal to purchase each of the above documents is lawful.

A copy of each order of release from 4 to 9 of this case, the crossing appears to be deleted from "Koran" and "0.043% Sulhur" as seen earlier, and there is no signature or seal from that part. However, when considering the overall purport of pleadings in each of the entries in 4 to 9 of evidence Nos. 8 and 9, the copy of the above order of release from each of the above is prepared under the title of the order of release from the document form of the non-party 2 corporation, and a copy of the original which is the author's signature and the defendant's signature and confirmation are copied on the bottom, and it can be recognized that the crossing line was made to the effect that it was deleted from the original part of "0.043% Sulhur", but it is difficult to view that the original copy of each order of release from each of the above parts has regularness and status, and it is difficult to view that each of the above orders of removal from each of the above parts did not have any modification or omission in the contents of the order itself.

Therefore, we cannot accept the plaintiff's above argument.

(D) Whether each of the instant orders should be treated equally with the invoice

The Plaintiff asserts that the Plaintiff’s refusal of payment of the price of the letter of credit is lawful, inasmuch as the goods are specified only by the order of release in accordance with Article 37(c) of the Uniform Customs and Practice for Documentary Credits (UCP 37(c). Therefore, the Plaintiff asserts that the Plaintiff’s refusal of payment of the price of the letter of credit is lawful, inasmuch as the product description of each of the instant order of release does not coincide with the product description of each of the instant letters of credit.

However, solely on the fact that the goods, which are the object of the letter of credit, are specified only by the relevant shipping order, the principle of strict rule required for the commercial shipping stipulated in Article 37 (c) of the Uniform Customs and Practice for Documentary Credits cannot be applied by treating each of the instant shipping orders in the same way as the commercial shipping order (in addition, each of the instant L/C provides separate commercial shipping notes in addition to the copy of each of the instant shipping orders). The Plaintiff’s argument cannot be accepted.

(E) Whether the indication of the description of the goods in the copy of each order of release of this case is inconsistent with the letter of credit

According to the facts acknowledged above, the meaning of the product description of each of the instant L/C is "Sesofin Twan or Japan," but it cannot be interpreted "Korega," which is stated in the product description of each of the instant L/C, as "Korea transit," and "0.043% Sulhur" under each of the instant L/C, is not indicated in the product description of each of the instant L/C and invoice, but it is an indication of the quality of transit.

Therefore, it is reasonable to deem that the description of the goods in the written order for release of each of the above cases was indicated as a general term that is not inconsistent with the description of the goods of each of the instant letters of credit. Therefore, the Plaintiff’s assertion that it is impossible to pay the letter of credit because the product description of each of the instant letters of credit and the written order are inconsistent with each of the goods description of each of the instant letters of credit is not sufficient (According to the aforementioned description No. 15-1 and No. 2, in the sales contract between the non-party 1 and the non-party 2, there is no indication of origin as to the subject matter under the sales contract between the non-party 1 corporation and the non-party 2 corporation, and rather, it is recognized that the subject matter of the sale was indicated as “Ke Bank 0.043% Sulhur” as the product description of each of the instant written order for release.

(f) Whether the omission of a mark of origin constitutes grounds for refusal to pay the credit

The plaintiff asserts that the plaintiff's refusal to pay for the letter of credit is legitimate on the ground that the country of origin "" is inconsistent with the description of goods on the copy of each of the orders for release of this case, if the country of origin "" is not interpreted "in the end," but omitted from the description of goods on the copy of each of the orders for release of this case. In addition, since the indication of origin is clearly stipulated on the terms of the letter of credit by the agreement of the parties, it cannot be deemed as a non-documentary condition. Therefore, since the description of goods on each of the letters of credit of this case and the description of goods on each of the

As seen earlier, “Koregail” in each of the instant shipping orders cannot be deemed to be “the country of origin” through Korea, and therefore, it shall be deemed that each of the instant shipping orders did not indicate the origin in the product specifications of each of the instant shipping orders. However, unless each of the instant letters of credit does not require documents to prove the origin, the indication of origin pursuant to Article 13(c) of the Uniform Credit Rules is not the subject of examination of each of the instant letters of credit, and it cannot be deemed that there was an agreement between the parties to the trade on the condition of the letter of credit merely because the country of origin is indicated in the product specifications of each of the instant letters of credit and invoices (as seen earlier, there is no indication of origin in the oil sales contract between Nonparty 2 corporation and the other death). The Plaintiff’s assertion that each of the instant letters of credit was lawful due to the omission of the origin indication in the product specifications of each of the instant shipping orders and the omission of payment for each of the instant letters of credit is inconsistent with the product specifications of each of the letters of credit.

(G) Whether the letter of credit was legitimate due to the inconsistency between the description of the goods in the commercial invoice and the description of the goods in the commercial invoice or the omission of the description of the goods in the commercial invoice on the letter of credit Nos. 1 and 3

The Plaintiff asserts that the product description was omitted in each commercial invoice for the letter of credit Nos. 1 and 3, and that the letter of credit Nos. 1 and 3 and the product description of the commercial invoice do not coincide with that of the letter of credit No. 1 and 3, thus, the Plaintiff may refuse to pay the price of each letter

If an issuing bank, which was presented a letter of credit and its related documents from the negotiating bank, refuses to pay the amount of the letter of credit on the ground of defects in the letter of credit and its related documents, the issuing bank shall notify the negotiating bank of all the grounds for rejection within the period stipulated in Article 14(d) of the Uniform Customs and Practice for Documentary Credits, unless otherwise agreed, and shall not refuse to pay the letter of credit by asserting new defects which have not been initially stated after the expiration of the period. As seen earlier, the Plaintiff notified the defective notice of this case that “the specifications of the goods stated in the letter of delivery are different from those in the letter of credit and the letter of commercial invoice.” However, the contents of the notice are merely different from the description of the goods stated in the letter of credit or the letter of commercial invoice, not that the description of the goods in the letter of commercial invoice is omitted or that the description of the goods in the letter

Therefore, the plaintiff's refusal to pay the price for the defective documents related to the letter of credit Nos. 1 and 3 of this case cannot be deemed to have been notified to the defendant of the above reasons. Thus, the plaintiff's above assertion is without merit without further review.

(H) Whether the refusal of payment on the letter of credit is legitimate on the ground of the difference between the quantity of the goods as stated in the copy of the order of removal Nos. 1 and 2 in the commercial invoice and the quantity of the goods

The plaintiff asserts that the plaintiff's refusal to pay the letter of credit on the ground that the quantity of the goods stated in the letter of order for release Nos. 1 and 2 does not coincide with the quantity of the goods stated in the letter of order for shipment, and that the refusal to pay the letter of credit is lawful. Accordingly, the defendant asserted that the copy of the letter of order for removal (No. 8-1) of the plaintiff's assertion was the related documents of the letter of credit No. 2, and the copy of the letter of order for removal (No. 8-2) alleged by the plaintiff was the related documents of the letter of credit No. 1 of this case, which were the documents of the letter of order No. 8-2, which were presented

On October 14, 203, the defendant stated the above 1, 6, and 8's 1 and 2's statements on the letter of credit and sent them to the plaintiff simultaneously with separate bags by each credit. Among the documents related to the credit of this case 1, the commercial invoice stated "26, 70 BS/3, 471, 272 MTS" as 27, 383 BS or 3, 613.58's statements on the letter of credit of this case were stated as Gap's 200's 9's 2.7's 9's 2.7's 9's 2.7's 9's 9's 2.7's 9's 20's 9's 2.7's 9's 20's 9's 7.7's 27's 9's 20's 27's 2.7's 7's 's 27's 's 9's 2's 's 2'.

C. Determination as to the legitimacy of refusing payment of the L/C on the ground of a discrepancy between the date of release and the date of approval of the L/C by the seller

(1) The plaintiff's assertion

In the case of the letter of credit Nos. 4 to 9, "the date of removal shall be the same as the date on which the seller approves the contents of the letter of credit (47A/H). Therefore, in order for the seller to approve the contents of the letter of credit, the seller is unable to approve the conditions of the letter of credit before the buyer is notified of the arrival of the letter of credit from the negotiating bank. The letter of order for shipping out of the letter of credit was issued on the day or the following day, and considering the interval between the issue date of the letter of credit and the issue date of the letter of credit, the non-party 2 corporation is clear that the letter of credit was issued from 4 to 9 of this case and it was issued before recognizing the contents of the letter of credit and approving it, and thus, the refusal of the letter of credit No. 4 to 9 of this case is legitimate.

(2) Determination

According to Gap evidence Nos. 1-4 through 9 and Gap evidence No. 8-4 through 9, it is found that the issuance date of the letter of credit Nos. 4 through 9 or the following date is issued, but it is insufficient to recognize that the non-party No. 2 was not the same as the approval date of the contents of the letter of credit, and there is no other evidence to prove otherwise.

In addition, according to Gap evidence No. 3-4 through No. 9, the plaintiff notified of the defect in the above letter of credit, and the plaintiff merely stated that "the date of release specified in the seller's letter of order is earlier than the date of confirmation of the defendant," and did not state that the date of release is different from the date of the seller's approval of the terms of the letter of credit. Thus, even if the seller was notified by the defendant after the defendant confirmed that the letter of credit was issued by the defendant, and approved the conditions after the date of confirmation of the defendant, it is difficult to view the above defect notification as a defect notification specifying the specific reasons for

Therefore, the plaintiff's above assertion is without merit.

D. Determination on the amount of counterclaim claim

Therefore, the Plaintiff is obliged to pay to the Defendant 6,061,151.98 US dollars 6,061 and 151.98 of the total amount of the L/C of this case from No. 4 to 9, and to pay 6% per annum under the Commercial Act from December 17, 2003 to June 28, 2007, which is the date of this decision, to dispute about the existence or scope of the Plaintiff’s liability to pay the above L/C amount from December 17, 2003 to the date of full payment.

4. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and the defendant's counterclaim is justified within the above scope of recognition, and the judgment of the court of first instance which has different conclusions is unfair, and it is revoked by accepting part of the defendant's appeal.

Meanwhile, the fact that the defendant paid USD 4,265,676.49 to the plaintiff on May 11, 2006 by the judgment of the first instance court of provisional execution to the plaintiff does not conflict between the parties, and since the judgment of the first instance was revoked at the trial and the provisional execution declaration of the first instance became null and void due to this judgment, the plaintiff is obligated to pay to the defendant the amount at each rate of 20% per annum as stipulated in the Civil Act from May 11, 2006, which is the date of the receipt of the provisional payment, to the plaintiff from May 28, 2007, to June 28, 2007, as it is deemed reasonable for the plaintiff to resist the existence and scope of the obligation to return the provisional payment.

Judges Choi Jae-in (Presiding Judge) Kim Dong-dong,