In a case where the court, upon receipt of an application for commencement of composition procedures, prohibits the debtor from repaying his obligation to the creditor as a preservative measure under Article 20 (1) of the former Composition Act before the decision is made, whether it is also prohibited for the creditor to exercise his right to termination due to delay of performance (negative)

Article 20 (1) of the former Composition Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005) (see current Article 43 (1) of the Debtor Rehabilitation and Bankruptcy Act)

Korea Fire and Marine Insurance Co., Ltd. (Law Firm Cheonghae, Attorneys Seo-ho et al., Counsel for the plaintiff-appellant)

Government Nature Co., Ltd. (Attorney Jeong Byung-hee et al., Counsel for the defendant-appellant)

Busan High Court Decision 2006Na8016 decided January 10, 2007

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

The grounds of appeal are examined.

Even if the court which received an application for the commencement of composition procedures prohibits the debtor from repaying his obligations to the creditor as a preservative measure under Article 20 (1) of the former Composition Act before making a decision, such disposition is effective only on the debtor in principle, so it is prohibited that the debtor's repayment at will is prohibited, and it is not prohibited from exercising the debtor's right of termination due to delay of performance.

In light of the records, the decision of the court below is just in holding that the insurance contract of this case was lawfully terminated by the plaintiff's notice of termination due to delay of payment of premiums, and there is no error of law which affected the conclusion of the judgment by misunderstanding of facts against the rules of evidence or misunderstanding of legal principles as to composition law, or misunderstanding of legal principles as to declaration of termination of insurance contract under English law

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 Young-ran (Presiding Justice)