Details of the duty of Good Faith of an executive of a financial institution and the criteria for determining whether the executive violates such duty.

Articles 382(2) and 399(1) of the Commercial Act; Article 681 of the Civil Act

Supreme Court Decision 2001Da52407 Decided June 14, 2002 (Gong2002Ha, 1650) Supreme Court Decision 2003Da7265 Decided July 25, 2003, Supreme Court Decision 2002Da60177 Decided March 26, 2004, Supreme Court Decision 2004Da19524 Decided August 20, 2004, Supreme Court Decision 2004Da8951 Decided January 14, 2005

Korea Bank (Law Firm Pung Law, Attorney Kim Chang-hoon, Counsel for the plaintiff-appellant)

Defendant (Law Firm Lins, Attorneys Park Jong-soo et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2004Na50169 decided May 11, 2005

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

An executive officer of a financial institution is obligated to perform his/her duties as an executive officer because he/she has faithfully performed his/her duties with respect to the financial institution to which he/she belongs. In cases where a financial institution is liable for damages due to negligence in performing its duties related to loans against an executive officer, it cannot be readily concluded that the judgment of the executive officer who issued the decision to grant a loan violates the duty of due care or good faith as a good manager even if the loan was found to be difficult to recover or impossible to recover. However, a reasonable executive officer of a financial institution, while conducting business judgment related to loans, failed to conduct a loan examination in good faith for the largest benefit of the company in accordance with appropriate procedures with reasonable information, or fulfilled his/her duty of due care or duty of due care as a good manager. Thus, the business judgment of the executive officer is beyond permissible scope of business judgment of the financial institution, and is not deemed to have fulfilled his/her duties with due care or duty of due care as a good manager. 205. 7. 205.

In light of the records, the court below's decision that the defendant's act is within the scope of discretion permitted for business judgment after considering the facts in the judgment of the court below with respect to Asung Engineering Co., Ltd., Eisung Engineering Co., Ltd., Eisung Co., Ltd., Eiification Co., Ltd., career industry and Eglipine Association, and to purchase foreign currency claims and foreign currency claims issued under Bakritho Guarantee is reasonable in accordance with the above legal principles, and there is no violation of the rules of evidence or failing to exhaust all necessary deliberations.

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.

Justices Kim Hwang-sik (Presiding Justice)