Vienna Paris (Attorney Yellow-gu et al., Counsel for the defendant-appellant-appellee)

National Agricultural Cooperative Federation (Law Firm Yun, Attorneys Lee Dong-pon et al., Counsel for the plaintiff-appellant)

July 17, 2008

Seoul Central District Court Decision 2005Kahap53441 Decided January 26, 2007

1. The defendant's appeal and the request for return of provisional payment are all dismissed.

2. The appeal cost (including the application cost for the return of provisional payments) shall be borne by the Defendant.

1. Purport of claim

The defendant shall pay to the plaintiff 25,952,232.02 US dollars and 6% interest per annum from March 31, 2005 to July 13, 2005 and 20% interest per annum from the next day to the day of full payment.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

3. Purport of request for the return of provisional payments

The plaintiff shall pay to the defendant 35,031,958,12 US dollars and 20% interest per annum from March 12, 2007 to the day of full payment.

1. Quotation of judgment of the first instance;

The court's reasoning concerning this case is as follows, and the reasoning of the judgment of the court of first instance is the same as the part of the reasoning of the judgment of the court of first instance except for the dismissal or addition of a part of the reasoning of the judgment of the court of first instance. Thus, it is acceptable to accept this as

(a) No. 9 of the first instance court decision No. 9 of the Act No. 14 as “bill of lading”; No. 14 of the Act No. 14 as “Article 37 (Commercial Forwarding),” “Article 37 (Commercial Forwarding)” as “Article 37 (Commercial Forwarding)”; 2 of the Act No. 18 as “spambling”; 23th and 21th “spambling”; 25th and 13th “spambling capacity” as “assuming capacity and security of gas stations”; 30th and 13th and “the expiration of the seven banking days from the date following the receipt of documents” as “the expiration of the seven (7) week from the date of receipt of documents.”

B. On the last part of paragraph 2 of the part in the reasoning of the judgment of the first instance (as follows, No. 10 2), the following 2. Additional part of the judgment shall be added.

C. In the last part of the reasons for the judgment of the court of first instance (as follows, No. 19, No. 7), the following 2. Additional part of the judgment shall be added.

D. The part of the reasoning of the first instance judgment 2-1 (k) of 2-2 (k) evidence (as 24, 13, 14) added "A evidence, Eul evidence Nos. 18, Eul evidence No. 18, 26, 28, and 36, and the testimony of extreme Red Witness for the trial of the party (as 26, 17)" to the end of the facts of recognition under the same paragraph (as 26, 17) added the part described in paragraph (1) to the following 2-2 of the last sentence of paragraph (3) (as 29, 5, 30, 6) to the second sentence of paragraph (3) (as 29, 5, 30).

2. Additional determination

A. The legal meaning of the expression "where it is impossible to submit the original bill of lading at the time of purchase", which is an additional condition under the letter of credit of this case, refers to the case where the negotiating bank is unable to submit the original bill at the time of purchase despite the issuance of the bill of lading. Thus, the case where a letter of credit was issued for the purpose of self-financial services does not constitute the case where the original bill of lading cannot be submitted from the beginning because it was not issued for the purpose of self-financial services. On the other hand, in a credit transaction, banks have secured ultimate security by shipping documents such as the bill of lading, so if the additional condition on the letter of credit is stated, the additional condition should be strictly interpreted so as not to damage the function of the bill of lading. However, it cannot be deemed that the additional condition is limited to "where it is impossible to submit the original bill at the time of purchase" and it cannot be viewed as a waiver of the meaning of the bill of lading at the time of purchase, and therefore, the plaintiff asserts that it does not have any obligation to submit the bill of credit.

However, it is difficult to deem that the foregoing additional condition itself means the case where the negotiating bank confirms that it is impossible to submit an original bill of lading at the time of purchase of the negotiating bank even though the bill of lading was issued, as alleged by the Defendant, and that it imposes an obligation to verify whether the original bill of lading cannot be submitted or not, if not, the reasons therefor.

However, since the original letter of credit is a means created and developed to secure the certainty of payment in the export and import of the goods between the exporter and the importer, it is naturally premised on the transaction of the goods in the face of the documentary credit transaction, but if the documentary credit is abused the independence and abstractness of the documentary credit by fraudulent means such as using it for the purpose of financing, it can be refused to pay the documentary credit in accordance with the abuse of rights or the principle of private law, but the following is examined.

On the other hand, as alleged by the defendant, if the above additional conditions are submitted to the negotiating bank instead of a bill of lading, it is interpreted that the original bill of lading cannot be submitted, and if there is no reason, the defendant, the issuing bank of the letter of credit of this case, must stipulate the documents to be examined by the negotiating bank for its confirmation, but only requires only LOI issued by the beneficiary as a necessary document, and it cannot be examined solely by LOI. Thus, it constitutes the so-called non-documentary condition.

However, even if it is a non-documentary condition, it is necessary to completely and clearly state the content of the credit itself, and if the negotiating bank can easily confirm the fulfillment of the condition, the non-documentary condition is not desirable in light of the nature of the credit, but cannot be deemed null and void (see, e.g., Supreme Court Decisions 2000Da50299, May 28, 2002; 2001Da26828, Nov. 28, 2003). However, the above additional condition does not appear to be completely and clearly clear and it does not constitute a condition that the negotiating bank can easily confirm the fulfillment of the condition. Meanwhile, Article 13(c) of the Uniform Customs provides that "if a document that must be presented is explicitly stated, banks should not consider such condition unless it is presented, banks should not consider such condition."

Therefore, this part of the defendant's argument is without merit.

B. The defendant asserts that since the original conditions of the LOI was stipulated in the LOI's LOI's original LOI's designation as the defendant, even if LOI's submission is substituted for the bill of lading, the conditions of the LOI's LOI's credit are applied to LOI's LOI's receipt or the other party should be the defendant, but the submitted LOI's submission is written as BOI's receipter'

However, there is no ground to interpret that the conditions stipulated in the bill of lading can be replaced by LOI as a matter of course, on the ground that the above additional conditions provide that the original bill of lading may not be submitted, and that the letter of credit of this case only explicitly stated that the "LOI issued in the form of a beneficiary" and does not state that the receiver shall be the defendant, and thus, the receiver of LOI purchased by the plaintiff shall not be deemed to be in violation of the terms of the letter of credit.

Furthermore, according to Article 14 (d) and (e) of the Uniform Customs and Practice for Documentary Credits, the issuing bank shall specify and notify the bank that received shipping documents and sent documents from the following day to the 7th banking business day, and if the issuing bank fails to take such measures, the documents lose the right to assert that the documents do not coincide with the terms and conditions of the letter of credit. Thus, the defendant cannot assert that the defects of documents not notified to the plaintiff within the above period are grounds for rejection of payment, and there is no evidence to prove that the defendant notified the plaintiff of the fact that the consignee was not the defendant. Thus, this part of the argument is without merit.

C. (1) In the L/C transaction of petroleum, it is common practice to allow LOI in lieu of a bill of lading because there are many cases where a large number of intermediary sellers are involved in the L/C transaction of petroleum between the petroleum developer and the final importer and the seller of the final importer with respect to the petroleum for which the bill of lading has already been issued is more frequent than the period required for the final importer to reach the final importer.

On the other hand, the Plaintiff issued 42 L/C relating to the transaction related to P. B. L. L. L. L. L. L. L. L. L.C. 35 shipping documents related to L. L.C. from L. L. L. L.C.

(2) However, in order for the Defendant to refuse the Plaintiff’s claim for the payment of the letter of credit, it is insufficient to say that the instant transaction was made for financial purposes between Pull Petroleum, Boscecececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececeine and GNT. Furthermore, the Plaintiff, at the time of the negotiation of the instant letter of credit, knew that the instant transaction was made or should have sufficient reasons to suspect such fact at the time of the negotiation. As such, the Defendant’s argument that the governing law of the letter of credit was a type of tort, and thus, the governing law of the bank’s refusal to pay for the letter of credit does not constitute a tort. Thus, the issue of abuse of rights is not justified.

The plaintiff purchased 13 shipping documents related to the letter of credit of this case at one time equivalent to US$260,00,00 upon the defendant's request for deletion of additional conditions. The plaintiff visited Baul Petroleum prior to the plaintiff's commencement of transaction with Baul-N. D., the plaintiff and Borae-N. L.C. opened a letter of credit related to Baul Petroleum or purchased shipping documents on several occasions except for the letter of credit of this case. However, the above additional conditions cannot be accepted without the beneficiary's consent. Thus, the above additional conditions cannot be viewed as an abnormal purchasing act by disregarding the request for deletion and receiving shipping documents meeting the conditions under the letter of credit of this case and purchasing them. ② In the international trade of petroleum of Baul, there are many cases where the plaintiff requested LOI on behalf of the bill of lading, and ③ even if the plaintiff's employee visited Baul-si, the plaintiff did not have any other reason to open the letter of credit of credit of this case for the purpose of redemption among the plaintiff's trading broker's credit applicant's capability and redemption.

Therefore, the defendant's assertion that payment may be refused by the abuse of rights doctrine or the principle of fraudulent transaction is not reasonable.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified, and the judgment of the court of first instance is just, and the defendant's appeal and the request for return of provisional payment are dismissed as it is without merit. It is so decided as per Disposition.

Judges Choi Jae-in (Presiding Judge)