Seoul Guarantee Insurance Co., Ltd. (Attorney Choi Sung-sung, Counsel for defendant-appellant)

Republic of Korea (Jurisdiction: Air Force Headquarters (Attorney Kim Dong-jin et al., Counsel for the defendant-appellant)

Bluan Co., Ltd. and six others (Law Firm LLC, Attorneys Cho Young-chul et al., Counsel for the defendant-appellant)

January 9, 2014

1. Defendant Blue Co., Ltd., Defendant 2 (Non-party 1), and Defendant 3 (Non-party 2) jointly and severally pay to the Plaintiff 54,849,013 won and 54,840,000 won, 15% per annum from June 1, 2012 to September 13, 2012, and 20% per annum from the next day to the day of full payment.

2. The plaintiff's respective claims against the defendant 4 (the original trial: the defendant 1), the defendant 5 (the original trial: the defendant 2), the defendant 6 (the defendant 3) and the defendant 7 (the original trial: the defendant 4) are dismissed.

3. Of the costs of lawsuit, the part arising between the Plaintiff, Defendant Blue, Defendant 2, and Defendant 3 is assessed against the Plaintiff, respectively, and the part arising between the Plaintiff, Defendant 4, Defendant 5, Defendant 6, and Defendant 7 is assessed against the Plaintiff.

3. Paragraph 1 can be provisionally executed.

The Defendants shall jointly and severally pay the amount specified in paragraph (1) of this Article.

1. Facts of recognition;

The following facts are not disputed between the parties, or may be acknowledged by Gap, taking into account each description of evidence of subparagraphs 1 through 7, 1 through 3, 14, 15, 18, and 21 (including paper numbers; hereinafter the same shall apply) and the whole purport of each pleading:

A. Defendant Blue Co., Ltd. (hereinafter “Defendant Blue”) concluded a performance guarantee insurance contract (hereinafter “each of the instant performance guarantee insurance contracts”) with the Plaintiff Company for the purpose of guaranteeing the payment of the contract deposit (hereinafter “each of the instant supply contracts”) with the Plaintiff Company, the Plaintiff’s Intervenor, and the Plaintiff, for the purpose of concluding the outsourcing maintenance supply contract for KF-16 gaseous components, non-destructive testing equipment LPX-160 et al. (hereinafter “instant supply contract”).

The cover period of the purchase of an insurance policy under the name of the prime contract as of May 20, 201, which is included in the main contract date in the main text, 1.5.20,000 won from May 20, 2011 to September 30, 2012, 6.6 billion won from May 30, 2011 to September 30, 2012, 1,530,000 won from May 24, 2011 to May 24, 2011 to July 6, 2011, 18,000 won from July 6, 2011 to September 40, 2012, and Class F-4,000 won from July 30, 201 to September 30, 201, and Class 3,000 won from September 1, 201 to September 20, 2011.

B. On May 201, prior to the conclusion of each of the instant performance guarantee contracts, Defendant Blue entered into an agreement on guarantee transactions (hereinafter “the instant guarantee agreement”) with the Plaintiff Company for the coverage period of the maximum trading period between May 17, 2011 and May 16, 201, including the maximum trading amount of KRW 6 billion between the Plaintiff Company and the Plaintiff Company, KRW 1) and the maximum trading period between May 17, 2011 and May 16, 2012. Defendant Blue established the guarantee limit agreement between January 1, 2011 and December 31, 2015 (i.e., the instant guarantee limit agreement). The said guarantee limit agreement determines that Defendant Blue and its guarantor pay insurance proceeds immediately, but the Plaintiff Company’s delayed payment rate calculated by adding the insurance proceeds to the maximum indemnity rate set by the Plaintiff Company within the scope of overdue interest rate set by the Banking Act from the day following the payment date to the full payment date.

In addition, Defendant 2, Defendant 3, Defendant 4, Defendant 5, Defendant 6, and Defendant 7, respectively, jointly and severally guaranteed the liability for reimbursement of Defendant Blue under the instant guarantee limit agreement.

C. After that, the Plaintiff’s Intervenor, the insured of each performance guarantee insurance contract of this case, filed a claim with the Plaintiff Company for payment of insurance proceeds on or around April 20, 2012 on the ground that the insured event occurred due to Defendant Blue’s failure to perform the duty under each of the supply contracts of this case. On or around May 30, 2012, the Plaintiff Company paid to the Plaintiff’s Intervenor KRW 5,484,00 (=610,00 + KRW 1530,00 + KRW 18,80,000 + KRW 17,90,000). However, the Defendants did not fully pay the Plaintiff Company’s insurance proceeds, and the maximum overdue interest rate from commercial bank’s general loan to May 31, 2012 is 15% per annum, and the total amount of the Plaintiff Company’s insurance proceeds to 31,201,000 won per annum 31,000.

D. Meanwhile, Article 19 or 20 of the terms and conditions of the contract attached to each of the instant supply contracts provides that "the head of the Gun of the NA may pay advance payment to the defendant Blololololololololololololololololololololololololololololololololololololololololololololololololololololololololololololololololololololololololololololololololololololololololostst" under Article 40(1)14 of the Enforcement Decree of the Management of the National Funds Act (Presidential Decree No. 21973, Jan. 1, 201). Article 26 of the Management of the National Funds Act provides that "the payment of advance payment shall not exceed 70% of the contract amount" under Article 40(1)10 of the Enforcement Decree of the Management of the National Funds Act shall be made at least 300% of the contract amount.

E. After that, at the time of the claim for the payment of the insurance money under the instant performance guarantee insurance contract, the Plaintiff notified the Plaintiff Company that he terminated each of the instant supply contracts on the grounds that the Defendant Blue filed a request for a revised contract with the Plaintiff on the following grounds: (a) the suspension of funding at Air Force Headquarters (unpaid) and the inspection by the Board of Audit and Inspection, etc. for 12 items among the 13 items subject to maintenance; (b) the refusal of performance and the disclosure of performance intent only for only one of the 13 items subject to maintenance; and (c) the contact was interrupted due to the failure to reply to any reply

F. Meanwhile, at the time of concluding each of the instant supply contracts with Defendant Blue Air Force Headquarters (the Republic of Korea), Defendant Blue entered into a goods supply contract with the Defense Acquisition Program Administration for the maintenance, etc. of aircraft components. Defendant Blue has been declared final and conclusive on December 3, 2013 on the grounds that the Seoul Central District Court 2012Gahap61341, filed a lawsuit against the Republic of Korea for the confirmation of existence of the obligation on the ground that Clue did not have any obligation to pay the contract deposit, on the ground that Clue did not have any obligation to pay the contract deposit, and that the said judgment became final and conclusive on the 21st of the same month.

2. Determination on the cause of the claim

According to the above facts, the Defendants are the primary debtor or joint and several surety under the guarantee limit agreement of this case and each performance guarantee insurance contract concluded pursuant thereto, and are jointly and severally liable to repay the Plaintiff’s obligation for indemnity to the Plaintiff Company. The principal amount of Defendant Blue’s obligation for indemnity is KRW 5,484,00,000,000 and damages for delay until May 31, 2012 are KRW 9,013. Thus, barring any special circumstance, the Defendants jointly and severally liable to pay to the Plaintiff damages for delay calculated at the annual rate of KRW 54,849,013 and KRW 5,484,00,00,000 from June 1, 2012 to September 13, 2012, which is the date of final delivery to the Defendants’ complaint of this case.

3. Judgment on the defendants' assertion

A. The defendants' assertion

As to this, the Defendants asserted that the Defendants are not liable for compensation since the Air Force Headquarters was unable to unilaterally terminate each of the above supply contracts, and accordingly, the insured events stipulated in the performance guarantee insurance contract cannot be deemed to have occurred, and ② even if the Defendants jointly and severally guaranteed the guarantee limit agreement of this case among the limitations in the status of executives of Defendant Bluish, they lost their status as executive officers by withdrawing them, and the Defendants notified the Plaintiff Company of the termination of the joint and several guarantee contract of this case before the instant lawsuit was filed.

(b) Markets:

(1) As to the allegation that the termination of each of the instant supply contracts by the Air Force Headquarters is improper

However, as seen in the above facts, Article 19 or 20 of the Contract Special Conditions attached to each of the supply contracts of this case provides that the Air Force Headquarters may pay the advance payment according to certain requirements and procedures, so it can be clearly known that the advance payment depends on the discretion of the Air Force Headquarters. Although there is a provision that "the advance payment shall be made within 14 days from the date of receiving the advance payment claim from the contracting party" under Article 40 of the Enforcement Decree of the Management of the National Funds Act and Article 34 of the Government Tender and Contract Enforcement Act, where the special conditions of the above contract are cited, it is merely a determination of the advance payment method only under the premise that the advance payment is determined, and thus, it cannot be recognized solely with the above provision (the related decision of this case also stated in the same purport). Accordingly, even if the Air Force Headquarters did not pay the advance payment to the defendant Blu, the defendants' failure to pay each of the above insurance accidents under the above contract cannot be justified.

(2) As to the claim on the termination of a joint and several surety contract by Defendant 4, Defendant 5, Defendant 6, and Defendant 7

If a person who has become a guarantor for the company's obligations arising from the continuous transaction between the company and a third party inevitably retires from the position of a director, it constitutes a case where the situation at the time of the establishment of the guarantee agreement takes place, and thus, the guarantee amount and the guarantee period under the guarantee agreement are limited, even if the guarantee amount and the guarantee period under the guarantee agreement are limited, it does not affect the occurrence of the above guarantee right. Meanwhile, if the guarantor of the guarantee agreement continues to perform the guarantee obligation under the guarantee agreement, the guarantor of the guarantee contract must have the right to terminate the guarantee agreement just in light of the ground for recognizing the right to terminate the contract as change of circumstances (see, e.g., Supreme Court Decisions 2002Da1673, May 31, 2002; 98Da11826, Jun. 26, 1998).

According to the health stand, Eul evidence No. 39 and the purport of the whole oral argument as to the instant case, Defendant 4, Defendant 5, Defendant 6, and Defendant 7, who were inside directors, auditors, or employees of Defendant B Blue, sent to the Plaintiff Company a certificate of content to the effect that the Plaintiff Company requested the termination of the joint and several surety insurance contract for which the surety insurance policy was issued, including the guarantee limit agreement in this case, on or around February 2, 2012, on the ground that Dong Blue retired from Defendant Blue on or around January 31, 2012. Each of the above contents evidence can be acknowledged as having been delivered to the Plaintiff Company around February 3, 2012, and since the Plaintiff Blue’s Intervenor, who was the insured, requested the payment of the insurance proceeds to the Plaintiff Company for reasons of the occurrence of the insurance accident after February 20, 2012, the Defendants’ assertion that the above Defendants were exempted from the guarantee guarantee limit prior to the termination of the insurance contract in this case’s agreement and its indemnity.

Therefore, the plaintiff's respective claims against the defendant 4, 5, 6, and 7 are without merit.

4. Conclusion

If so, the plaintiff's claims against the defendant Blue, defendant 2, and defendant 3 are justified. Each claims against the defendant 4, defendant 5, defendant 6, and defendant 7 are dismissed as it is without merit. It is so decided as per Disposition.

Judges Jeong-ho

Note 1) The term “limit Trading Period” means the period during which the Guarantee Insurance Contract can be concluded (see Article 2(2) of the Guarantee Limit Agreement).

2) “The insurance period of each guarantee insurance contract” refers to the scope to which the insurance period of each guarantee insurance contract can be determined for each case to be concluded during the limit of transaction (see Article 2(3) of the instant guarantee limit agreement).