[1] Where a branch of a bank, which is a juristic person, has designated a branch located in another country as a negotiating bank when issuing a credit, whether the branch located in that other country can be deemed as the act of payment of shipping documents and purchase price under the negotiating bank’s position (negative)

[2] In a case where the repayment of the amount of the credit by the issuing bank of the letter of credit is refused and the payment by the payer is refused on the bill of exchange, whether the negotiating bank can exercise its right of recourse against the issuer or endorser of the bill of credit, regardless of whether the refusal by the issuing bank is justified (affirmative)

[3] Whether shipping documents as well as bills of exchange shall be presented in order to have a legitimate presentation of payment, which is a requirement for filing a bill of exchange issued in a documentary credit transaction (negative)

[1] Where a branch of a bank which is a juristic person has designated another branch in another country as a negotiating bank in the course of opening a credit, each of the acts of opening the credit and the acts of negotiating shipping documents and bills of exchange in another country shall be deemed to belong to the bank as the same juristic person. However, in light of the practice of credit transaction where the principal office or branch of a bank becomes the issuing bank of credit and the branch of the bank in another country is designated as a separate trading entity such as the advising bank, confirming bank, and negotiating bank (this is referred to in the proviso of Article 2 of the Uniform Customs and Practice for Documentary Credits and Practice for Documentary Credits and Practice for Documentary Credits and Practice for Documentary Credits, the branch of a bank in one country is deemed to be another bank for the purpose of this rule." In light of the interpretation and application of the Uniform Customs and Practice for Documentary Credits, it cannot be deemed that the bank's act of paying the shipping documents and bills of exchange as the negotiating bank's position in the position of issuing bank, or its legal effect by the issuing bank's act of paying the purchase.

[2] In the documentary credit transaction, the legal nature of the documentary draft issued by the beneficiary by the beneficiary as the payer does not differ from the ordinary bill of exchange. In this case, the legal relationship under the Bills of Exchange and Promissory Notes Act exists separately from the legal relationship based on the letter of credit. Therefore, in a case where the negotiating bank, which purchased shipping documents and bills of exchange, refuses to reimburse the amount of the letter of credit by the issuing bank and refuses to pay by the payer on the bill of exchange, barring special circumstances, the issuing bank may exercise its right to recourse against the drawer or endorser of the relevant bill of exchange pursuant to the Bills of Exchange and Promissory Notes Act, regardless of whether the refusal by

[3] Even if the bill of exchange was issued and delivered in the documentary credit transaction with the shipping documents and the applicant as the payer, the presentation of the shipping documents does not constitute a legal requirement under the Bills of Exchange and Promissory Notes Act, and thus, the negotiating bank, the holder of the bill of exchange, presented the bill to the drawee on the bill of exchange, and the presentation of the bill does not constitute an unlawful presentation of the bill of exchange or a failure to meet the requirements under the Bills of Exchange and Promissory Notes Act.

[1] Articles 1 and 10 of the Uniform Customs and Practice for Documentary Credits (1983.4 amended) and Article 2 of the Uniform Customs and Practice for Documentary Credits (5th amended) / [2] Article 43 of the Bills of Exchange and Promissory Notes Act / [3] Articles 38 and 43 of the Bills of Exchange

크레디아 그리콜 엥도수에즈 은행 (소송대리인 변호사 이재후 외 3인)

Industrial Bank of Korea (Attorney Lee Jung-won, Counsel for defendant-appellant)

Seoul High Court Decision 96Na32289 delivered on August 12, 1997

The judgment below is reversed and the case is remanded to Seoul High Court.

We examine the grounds of appeal.

1. According to the reasoning of the lower judgment, the lower court recognized and determined as follows.

A. Facts found by the court below

On March 10, 1993, the Hong Kong branch of the Plaintiff bank, a corporation established under the French Company Act (hereinafter referred to as the “ Hong Kong branch”) requested the issuance of an irrevocable credit from the Lepaker Hong Kong Hong Kong Lt. (hereinafter referred to as the “Lpirirco”) located in Hong Kong. On the same day, the Plaintiff bank issued three copies of the bill of exchange, commercial invoice and package specifications issued in sight, two copies of the original bill of lading (traditional), two copies of the bill of lading, certificate of origin, certificate of origin signed by the applicant, and the Hong Kong branch, which is the issuing bank, may be used by the bank’s negotiation, and the bank (hereinafter referred to as the “Seoul L/C”) was unable to apply the 4th amendment of the Uniform Customs and Practice for Documentary Credits, and notified the beneficiary of the 4th amendment to the letter of credit of this case (hereinafter referred to as the “the bank”).

On April 8, 1993, the defendant purchased the bill of exchange in the amount of 396,182,167 Won at the face value of 50,00 U.S. dollars at Seoul, and requested re-purchase of shipping documents and bill of exchange at the Seoul Branch on the same day. The Seoul Branch re-purchaseed the bill of exchange in the amount of 49,90 U.S. dollars from the defendant and paid that amount to the defendant on the 12th of the same month. The non-party corporation, the representative director of the non-party corporation, purchased the bill of exchange in the amount of 396,182,167 U.S. dollars at the face value of 500,000 U.S. dollars at the issue of this case (the commercial invoice, packing statement, insurance policy, bill of lading, certificate of origin, inspection certificate etc.): the non-party corporation purchased the bill of exchange at the request of this case; the non-party corporation purchased the bill of exchange in the letter of credit and its signature.

On the other hand, on April 9, 1993, the Seoul Branch sent shipping documents and bills of exchange bought by the Defendant to Hong Kong Branch, the issuing bank, and sought reimbursement of the purchase amount. On the 15th of the same month, the Hong Kong Branch, among shipping documents, the number of containers indicated in the certificate of origin is different from the number indicated in the commercial invoice, packing schedule, and bill of lading. The duplicate of the insurance policy was modified without authority, and the part of the signature of the certificate was forged, refused to pay the purchase amount, and returned shipping documents and bills of exchange to the Seoul Branch at that time.

When the issuing bank refuses to repay the letter of credit as above, on December 7, 1993, the Hong Kong, which was the place of payment on the bill of exchange, presented the payment to Leptirco, the payer (at that time shipping documents were not presented together), and Leptirco refused to pay the bill of exchange on the ground of a disagreement in shipping documents, the Seoul branch made the procedure of preserving the right of recourse on December 8 of the same year by preparing a certificate of non-payment in accordance with the Hong Kong law.

B. The judgment of the court below

The court below rejected the plaintiff's argument that since the plaintiff's Seoul Branch refused to pay a bill of exchange purchased from the defendant, the defendant as an endorser of the bill of exchange is obligated to respond to the plaintiff's lawsuit as follows.

(1) The instant L/C is a so-called negotiating limit credit which limits the Hong Kong branch, the issuing bank, to the Seoul Branch, the advising bank, the bank of which can negotiate shipping documents and bills of exchange from the beneficiary. If the issuing bank and the negotiating bank are the branches of the same legal entity, it is reasonable to view that the Seoul Branch may actually intervene in the parties under the instant L/C by negotiating as the negotiating bank, separate from the issuing bank.

However, the effect of a legal act by a branch of a juristic person in our private law belongs to a juristic person to which the branch belongs, and it is not recognized that it belongs to the branch separately. Thus, the act by the Hong Kong branch to issue a letter of credit under the basic principles of this law is the same as the act by the Plaintiff bank itself, and the act by the Seoul branch to purchase a bill of exchange along with the shipping documents of this case and to pay the price shall be regarded as the payment by the Hong Kong branch, which is the issuing bank.

On the other hand, when the L/C issuing bank pays once it has paid the price, it shall not exercise the right of recourse against the negotiating requesting bank, beneficiary, etc. (see Article 10 of the Uniform Customs and Practice for Documentary Credits 4, see Article 10 of the Uniform Customs and Practice for Documentary Credits ), and as seen above, the Seoul Branch re-purchases shipping documents and bills of exchange from the Defendant bank and pays the price is the same as the payment by the issuing bank. Thus,

(2) Even though purchasing a bill of exchange cannot be deemed as the payment by the issuing bank of the letter of credit, a negotiating bank that purchased shipping documents and a bill of exchange may exercise its right of recourse against the negotiating bank or the beneficiary pursuant to the Bills of Exchange and Promissory Notes Act in addition to exercising the right of recourse against the issuing bank based on legal relations under the letter of credit where payment by the drawee is refused. However, the negotiating party can exercise its right of recourse against the endorser in the event of refusal of payment. However, the negotiating party’s right of recourse against the issuing bank shall be limited to the case where it is refused to claim for the letter of credit or the claim for reimbursement against the issuing bank and the ground for refusal of payment is justified.

However, in this case, the Seoul Branch, as a negotiating bank under the L/C, has the right to demand reimbursement of the L/C amount against the Hong Kong Branch, which is the issuing bank, and on the other hand, it is recognized that the refusal of reimbursement of the purchase amount at the Hong Kong Branch is unfair, the Plaintiff cannot

(3) Even if the plaintiff can exercise the right of recourse under the Bills of Exchange and Promissory Notes Act, regardless of whether the reason for refusal to pay the letter of credit by the issuing bank is justified, the bill of exchange and shipping documents in the L/C transaction where the bill of exchange was issued under the L/C cannot be purchased, sold, accepted, or presented for payment separately. Thus, the presentation for payment of the bill of exchange must be made together with the shipping documents required under the L/C, and the plaintiff merely presented for payment, but did not present for payment along with the shipping documents. Thus, the plaintiff cannot acquire the right of recourse under the Bills of Exchange and Promissory Notes Act.

2. The judgment of this Court

A. As to the first ground for appeal

According to Article 10 of the Uniform Customs and Practice for Documentary Credits, which applies to the parties to the credit transaction of this case, the issuing bank cannot exercise its right of recourse against the issuer or bona fide holder of the bill of exchange, where the issuing bank presented documents meeting the conditions of the credit, and pays the bill to the beneficiary. If a branch of a corporate bank designates another branch in the other country as the negotiating bank while issuing the credit, it is reasonable that each of the acts of issuing the credit of one branch in the other country's country's country's country's country's country's country's country's country's country's country's country's country's country's legal effect of negotiating shipping documents and bill's negotiation act belongs to the same juristic person. However, in the past's country's office or branch's country's country's country's country's country's country's country's country's country's country's country's other transaction's country's country's country's country's country's country's country's country's country's other country's country's country's country's country's country.

Nevertheless, the court below held that, on the premise that the payment of the shipping documents of this case and the purchase price of bill of exchange against the defendant at Seoul Branch is considered as the payment by the issuing bank of this case, as long as the plaintiff who is the issuing bank pays once the purchase price, the court below erred by misapprehending the legal principles on the purchase of the negotiating bank and the payment by the issuing bank, and thus, there is a ground of appeal on this point.

B. Regarding ground of appeal No. 2

In the documentary credit transaction, the legal nature of the documentary draft issued by the beneficiary by the beneficiary as the payer does not differ from the ordinary bill of exchange. In this case, the legal relationship under the Bills of Exchange and Promissory Notes Act exists separately from the legal relationship based on the letter of credit. Accordingly, the negotiating bank, which purchased shipping documents and bills of exchange, may exercise its right of recourse against the issuer or endorser of the bill of exchange pursuant to the Bills of Exchange and Promissory Notes Act, barring special circumstances, in a case where the bank refuses to pay the amount of the letter of credit by the issuing bank or refuses to pay by the payer on the bill of exchange.

Therefore, the court below erred in the misapprehension of legal principles as to the right of recourse against the defendant, who is the endorser, on the ground that the refusal to repay the amount of the letter of credit to the Seoul Branch, which is the negotiating bank of the Hong Kong Branch, is not justified. The court below erred in the misapprehension of legal principles as to the right of recourse against the bill of exchange. The ground of appeal pointing this out has merit.

C. Regarding ground of appeal No. 3

Even if the bill of exchange was issued and delivered in the documentary credit transaction with the shipping documents and the applicant as the payer, the presentation of the shipping documents does not constitute a legal requirement for presentation of payment or recourse under the Bills of Exchange and Promissory Notes Act, and thus, the negotiating bank, the holder of the bill of exchange, presented the bill to the drawee on the bill of exchange, and did not present the shipping documents, cannot be deemed unlawful for the sole reason that the presentation of the bill of exchange was unlawful or that the presentation of the

Nevertheless, the court below held that the Plaintiff could not acquire the right of recourse under the Bills of Exchange and Promissory Notes Act solely on the ground that the Plaintiff, who purchased and possessed the bill of exchange and shipping documents of this case, presented only the bill of exchange to Lirirco, the payer on the bill of exchange, and did not present shipping documents together, the presentation of the bill of exchange is unlawful. The Plaintiff committed an error of law by misapprehending the legal principles on the presentation of payment, which is a requirement for filing a bill of exchange, and there is also reason for appeal as to

3. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee In-hee (Presiding Justice)