Republic of Korea (Law Firm Namsan, Attorneys Hah Ho-ho et al., Counsel for the defendant-appellant)

Korean Bank (Law Firm Square, Attorneys Gyeong-chul et al., Counsel for the plaintiff-appellant)

March 21, 2013

Seoul Central District Court Decision 2011Gahap69126 Decided July 6, 2012

1. The plaintiff's appeal is dismissed.

2. The costs of appeal shall be borne by the Plaintiff.

The judgment of the court of first instance is revoked. The defendant shall pay to the plaintiff 3,597,98.21 US dollars, 729,125,849 United States dollars, and 20% interest per annum from the day following the day of delivery of a copy of the complaint of this case to the day of full payment.

1. Basic facts

A. Quotation of the first instance judgment

The reasoning for this part of the court's explanation is as stated in Paragraph 1 of Article 420 of the Civil Procedure Act, except for the case where the evidence No. 16 through No. 18 of A is used after the evidence No. 6-1 through No. 11 of A. 10 of the judgment of the court of first instance, since the part of Paragraph 1 of Article 420 of the Civil Procedure Act is the same.

B. Parts used for repair;

(2) On April 26, 2011, the head of Seocho District Tax Office: (a) in arrears with the national tax in this case by the due date; (b) in accordance with Article 41 Section 1 of the National Tax Collection Act, attached the amount until the amount reaches 136,767,872,790 out of the deposit claim against the Defendant’s head office (hereinafter “Seizure of the instant deposit claim against the Defendant’s head office”); and (c) thereafter, attached the amount until the amount reaches 136,767,872,790 out of the deposit claim claim against the Defendant Hong Kong branch (hereinafter “Attachment of the deposit claim against the Defendant Hong Kong branch”); (c) around that time, the Plaintiff sent the attachment notice to the Defendant’s head office and Hong Kong branch by mail; and (d) sent the attachment notice to the Defendant Hong Kong branch by international mail on April 27, 2011.

2. The parties' assertion

A. The plaintiff's assertion

The director of the Seocho District Tax Office attached each of the deposit claims against the Defendant’s principal office and the Defendant Hong Kong branch due to the disposition on default against the CCCS, and the Defendant cannot oppose the Plaintiff by the payment of the instant deposit claims against the CCC. Thus, the Defendant, the Defendant, as the Defendant, is obligated to pay the instant deposit and its delay damages to the Plaintiff, who is the collection right holder, pursuant to Article 41(2) of the National Tax Collection Act.

B. Defendant’s assertion

(1) The Plaintiff did not verify the objective fact of the CCCS’s evasion in the course of the disposition on default on the instant deposit, and did not seize the instant deposit without going through the demanding procedure. Therefore, the instant attachment has no effect.

(2) Since the instant deposit claim is a property outside the territory of the Republic of Korea, it cannot be subject to seizure under the National Tax Collection Act. The Plaintiff sent the instant attachment notice as well as domestic property without seeking cooperation or consent from the Hong Kong Government. As such, the attachment procedure of the instant deposit claim against the Defendant Hong Kong Branch is not unlawful and invalid. In addition, under the Hong Kong Act, the instant deposit obligor is only the Defendant Hong Kong Branch, an independent entity, and the attachment of the instant deposit claim against the Defendant’s headquarters is not the Defendant, and thus, it is not effective as the attachment of the deposit claim against the Defendant Hong Kong Branch.

(3) Even if the seizure of this case is valid, the defendant's return of this case's deposit is not a voluntary payment but a compulsory payment under the order of the Hong Kong court. Thus, the defendant may oppose the plaintiff due to the fact of return of the deposit of this case.

3. Determination

A. Determination as to whether a disposition on default complies with the formal procedures of the disposition on default

The reasoning for this part of the court's explanation is the same as that for the corresponding part of the judgment of the court of first instance, and thus, it is accepted by the main text of Article 420 of the Civil Procedure Act.

B. Determination on the validity of the instant attachment

Since the seizure of this case was conducted by dividing the seizure of deposit claims against the defendant's head office and the deposit claims against the defendant's Hong Kong branch, the effect of the seizure is examined by each seizure.

(1) Effect of seizure of deposit claims against the defendant's headquarters

(A) First of all, the fact that there was no deposit account in the Defendant’s headquarters with which CCCS was the deposit owner does not conflict between the parties, and thus, the seizure of the deposit claim against the Defendant’s headquarters does not take effect as seizure of the account with which the deposit store was limited to the Defendant’s headquarters.

(B) However, as seen above, at the time of the seizure of the deposit claim against the Defendant’s headquarters, CCCS existed in the Defendant Hong Kong branch, and the deposit of this case was deposited in the account. As such, whether the above deposit claim against the Defendant’s headquarters was seized by the seizure of the deposit claim against the Defendant’s headquarters, i.e., whether the seizure of the deposit claim against the Defendant’s headquarters was specific enough to seize the deposit claim against the Defendant Hong Kong branch.

In full view of the purport of evidence Nos. 4-1, 2, and 24 as a whole, ① The notice of seizure of the deposit claim against the defendant's head office of this case (Evidence No. 4-1) is written only as the deposit claim against the "head office", and there is no indication that the claim to be attached is a deposit claim against the Hong Kong branch, and there is no statement or statement to specify that it is a deposit claim against the defendant's Hong Kong branch. ② Thus, the plaintiff prepared a separate notice of seizure of the deposit claim (Evidence No. 4-2) to the defendant's head office to the Hong Kong branch by international mail, ③ It is difficult for the head office and branch office to legally identical right without the indication in the indication column of the deposit claim, so it is difficult for the defendant's deposit claim to be attached to the domestic account of the defendant's head office of Hong Kong branch without the entry of the foreign exchange claim of this case into the domestic account No. 2, including the domestic bank's deposit claim of this case.

(2) Effect of seizure of deposit claims against Defendant Hong Kong Branch

(A) Generally recognized international law has the same effect as domestic law (Article 6(1) of the Constitution of the Republic of Korea), and it is reasonable to view that the Plaintiff’s right to collect delinquent taxes on Defendant Hong Kong branch of this case is limited to property within the territory, etc. of the Republic of Korea, and the Plaintiff’s right to collect delinquent taxes on Defendant Hong Kong branch of this case is limited to a property within the territory, etc. of the Republic of Korea. Therefore, it is reasonable to view that the Plaintiff’s right to collect delinquent taxes on Defendant Hong Kong branch of this case constitutes a property within the territory, etc. of the Republic of Korea subject to the Plaintiff’s right to exercise the Plaintiff’s right to collect delinquent taxes.

(B) The Plaintiff asserts to the effect that since Defendant Hong Kong Branch is the same subject of rights as that of the Defendant, the instant deposit claim deposited at Defendant Hong Kong Branch should be deemed as property located in the territory, etc. of the Republic of Korea.

However, the general rules of the National Tax Collection Act provides that the property subject to seizure should be the property located within the area where this Act takes effect as above, and Article 5 of the Inheritance Tax and Gift Tax Act shall apply mutatis mutandis to the determination of its location. Article 5 (1) 8 of the Inheritance Tax and Gift Tax Act provides that financial assets other than money trust handled by the trust business subject to the Financial Investment Services and Capital Markets Act shall be the location of inherited property, and Article 5 (1) 8 of the Inheritance Tax and Gift Tax Act provides that the location of the business place of the financial institution dealing with such property shall be the location of inherited property, even if the general rules of the National Tax Collection Act are merely administrative rules and it is difficult to recognize the legal nature of the above property location, in light of the legislative intent and form of Article 5 of the Inheritance Tax and Gift Tax Act that sets the criteria for determining the location of the property of this case, (3) since all deposit transactions in the account of the basic terms and conditions of the defendant's deposit transactions shall be deemed to have been separated from the head office and/or foreign bank account of Hong Kong, the Hong Kong Hong Kong.

4. Conclusion

Therefore, the plaintiff's claim of this case based on the premise that the seizure of this case is valid is dismissed as it is without merit, and the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.

Judges Yoon Jin (Presiding Judge)

(2) Upon receipt of the notification under paragraph (1), the head of a tax office shall subrogate the obligee who is a delinquent taxpayer to the extent of the delinquent amount.

Note 2) General Rule 24-0.41, 2