[1] Whether the original effect of foreign reorganization proceedings on the property located in the Republic of Korea under the territorial principle of the former Company Reorganization Act (negative)

[2] The legal nature and effect of "decision to approve foreign bankruptcy procedures" under the Debtor Rehabilitation and Bankruptcy Act

[3] The legal nature of "decision on assistance" under the Debtor Rehabilitation and Bankruptcy Act

[4] The method of determining whether a foreign court's immunity judgment, etc. conducted in foreign bankruptcy procedures under the Debtor Rehabilitation and Bankruptcy Act is approved

[5] The case where the recognition of a foreign court's exemption judgment, etc. is against the good morals and other social order of the Republic of Korea

[6] The case holding that the approval order of the rehabilitation plan of the above US Bankruptcy Court cannot be approved because it does not meet the requirements of Article 217 subparagraph 3 of the Civil Procedure Act, since it constitutes a case where domestic creditors' rights are considerably infringed unfairly and its specific result is contrary to good morals and other social order in Korea

[1] Article 4 (2) of the former Company Reorganization Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005) provides that "the principle of continuous taxation" shall apply to the effect of reorganization proceedings commenced in a foreign country. Thus, aside from whether a debtor's administrator appointed by the commencement of reorganization proceedings in a foreign country is entitled to acquire the right to manage and dispose of the debtor's property in the Republic of Korea pursuant to the law of the foreign country, special measures may be taken under the bankruptcy procedure to preserve and recover the debtor's or bankrupt foundation's property, such as adjusting the interests of creditors and shareholders, and the original effect of foreign reorganization proceedings granted to maintain and reconstruct the business shall not extend to the debtor's domestic property within the Republic of Korea. Accordingly, when a creditor exercises his right or realizes the debtor's domestic property for which reorganization proceedings commenced in a foreign country, the effect of alteration of rights or exemption from the effect of a change in rights pursuant to the approval of a foreign reorganization procedure without being prohibited and restricted by the original effect of the foreign reorganization proceedings.

[2] Unlike the "approval of a foreign judgment" under Article 217 of the Civil Procedure Act, the "approval of a foreign bankruptcy procedure" under the Debtor Rehabilitation and Bankruptcy Act does not approve the "foreign court's "judgment" but approves the "foreign bankruptcy procedure". The legal effect of the approval is to confirm that the foreign bankruptcy procedure satisfies the eligibility to render a decision to support, and it does not directly expand the effect of the foreign bankruptcy procedure within the Republic of Korea or have the same effect as the bankruptcy procedure commenced in the Republic of Korea.

[3] The "support decision" under the Debtor Rehabilitation and Bankruptcy Act means the procedural support that the representative of the foreign bankruptcy procedure shall preserve and secure the financial resources for dividend and repayment necessary for the foreign bankruptcy procedure in the Republic of Korea, and establish the distribution and repayment plan or implement the plan based on the same, such as the suspension of a lawsuit against the debtor's business and property under way in the Republic of Korea, compulsory execution, auction for the exercise of security right, prohibition or suspension of preservation procedure, prohibition of repayment of the debtor's property, prohibition of disposal of the debtor's property, etc., and the foreign court shall not directly modify or extinguish the obligations or responsibilities, such as a decision of immunity or authorization of the rehabilitation plan made in the foreign bankruptcy procedure in the foreign bankruptcy procedure (hereinafter "foreign court's judgment of immunity, etc."), or not the procedure to substantially alter or extinguish the creditor's rights

[4] The discharge judgment, etc. of a foreign court is related to the existence of a claim or executory power under substantive law. The effect arising therefrom is simple and meaningful. Dispute surrounding approval of the discharge judgment, etc. is reasonable to be resolved individually through attack and defense between the relevant debtor and creditor in the performance lawsuit, compulsory execution procedure, bankruptcy procedure, etc. filed on the basis of a claim that becomes the object of discharge, etc. In this respect, although the discharge judgment, etc. was conducted as part of the foreign bankruptcy procedure, the approval of the discharge judgment, etc. of the foreign court does not differ from the approval of the general foreign judgment as provided in Article 217 of the Civil Procedure Act even if it was conducted as part of the foreign bankruptcy procedure. Accordingly, it is reasonable to judge individually whether the discharge judgment, etc. satisfies the requirements for approval as provided in Article 217 of the Civil Procedure Act, and it is not determined by the approval procedure or support procedure of the Debtor Rehabilitation and Bankruptcy Act.

[5] In order to approve a foreign court's discharge judgment, etc., it must satisfy the requirements that the recognition of the effect of the discharge judgment, etc. does not violate good morals and other social order of the Republic of Korea (Article 217 subparagraph 3 of the Civil Procedure Act). Here, cases contrary to good morals and other social order of the Republic of Korea includes not only cases where the establishment procedure of the discharge judgment, etc. of a foreign court is contrary to good customs and other social order, such as the infringement of legitimate participation right of a domestic creditor in the foreign bankruptcy procedure, etc., but also cases where the contents of the discharge judgment, etc. of a foreign court violate good customs and other social order, but also cases where the foreign court's discharge judgment, etc. are recognized in the Republic of Korea as a discharge judgment, etc., which

[6] The case holding that the approval order of rehabilitation plan of the bankruptcy court of the United States can not be approved because it does not meet the requirements of Article 217 subparagraph 3 of the Civil Procedure Act because it is against the good customs and other social order of the Republic of Korea, since it constitutes a case where the provisional seizure of the domestic property owned by the debtor and the collection of the claim is considerably infringed upon the rights of the domestic creditor who did not participate in the rehabilitation procedure of the US Bankruptcy Court without participating in the rehabilitation procedure of the former Company Reorganization Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005) and its specific result is against the good customs and other social order of the Republic of Korea

[1] Article 4 (2) of the former Company Reorganization Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005) / [2] Articles 628 subparagraph 3 and 636 (1) of the Debtor Rehabilitation and Bankruptcy Act, Article 217 of the Civil Procedure Act / [3] Articles 628 subparagraph 3 and 636 (1) of the Debtor Rehabilitation and Bankruptcy Act, Article 636 (1) of the Civil Procedure Act / [4] Articles 628 subparagraph 3 and 636 (1) of the Debtor Rehabilitation and Bankruptcy Act, Article 217 of the Civil Procedure Act / [5] Article 628 subparagraph 3 and Article 636 (1) of the Debtor Rehabilitation and Bankruptcy Act, Article 217 subparagraph 3 of the Civil Procedure Act / [6] Article 217 subparagraph 2 of the former Company Reorganization Act (Act No. 7428 of March 31, 2005, Article 286 of the Debtor Rehabilitation and Bankruptcy Act)

[1] Supreme Court Decision 2006Da28782 decided Apr. 23, 2009 (Gong2009Sang, 720)

Appellant (Law Firm, Kim & Lee, Attorneys Ba-young et al., Counsel for the plaintiff-appellant)

The other party to the bankruptcy trustee, who is a party to the high agreement lawsuit;

Seoul High Court Order 2008Ra1524 dated August 28, 2009

The reappeal is dismissed.

The grounds of reappeal are examined.

1. As to the first ground for reappeal

A. The internal effect of the rehabilitation plan approval order of a foreign court under the territorial principle

(1) Article 4(2) of the former Company Reorganization Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation Act, Act No. 7428 of March 31, 2005) provides that the effect of the reorganization proceedings commenced in a foreign country shall be subject to the so-called "definite principle" as to the validity of the reorganization proceedings commenced in that foreign country. Thus, apart from whether the debtor's custodian, who was appointed after the commencement of the reorganization proceedings in a foreign country, may acquire the right to manage and dispose of the debtor's property in the Republic of Korea under the laws of that country, he/she may take special measures under the bankruptcy procedure to preserve and recover the debtor's or the bankrupt foundation's property, such as coordinating the interests of creditors and shareholders, and promoting the maintenance and reorganization of business through the reorganization plan, the original effect of the foreign reorganization proceedings granted in order to coordinate the interests of creditors and shareholders, and thus, it shall not affect the assets located in the Republic of Korea. Accordingly, when a creditor exercises his/her right or realizes the debtor's property located in the foreign country, the effect of the reorganization proceedings shall not be subject to the foreign approval.

(2) According to the reasoning of the order of the court below, on February 9, 2004, the re-appellant applied for rehabilitation procedures (hereinafter "US rehabilitation procedures") based on Chapter 11 of the US Federal Bankruptcy Act to the Central Bankruptcy Court of California support (hereinafter "U.S. Bankruptcy Court"). The re-appellant submitted the creditors list pursuant to Article 521 of the US Federal Bankruptcy Act and entered Gohap Co., Ltd.'s damage claim against the re-appellant as the disputed claim against Gohap (hereinafter "Gohap"), but Gohap did not report the claim by August 16, 2004, which is the reporting period set by the US Bankruptcy Court. The re-appellant submitted the revised rehabilitation plan on March 16, 2005 to the 3rd National Bankruptcy Court of Korea (hereinafter "U.S. Bankruptcy Court"). The revised rehabilitation plan on March 16, 2005 and the revised rehabilitation plan on April 26, 2005, 193

(3) Examining this in light of the above legal principles, Article 1141 of the U.S. Federal Bankruptcy Act provides that when a rehabilitation plan is authorized, the debtor shall be exempted from all claims arising at the same time prior to the date of authorization, except as otherwise provided in the rehabilitation plan or the approval decision, etc., and thus, the damage claim against the re-appellant, which was not otherwise stipulated in the rehabilitation plan, etc. approved by the US Bankruptcy Court, shall be deemed to have been discharged in whole by the US Bankruptcy Court's approval plan of this case. However, under the territorial principle of the former Company Reorganization Act, the effect of the exemption pursuant to the rehabilitation plan of this case by the US Bankruptcy Court's approval plan of this case shall be the total damage claim against the re-appellant for the damage claim against the re-appellant, in order to realize and

Therefore, we cannot accept the allegation in the ground of reappeal to the purport that the court below erred by misapprehending the legal principles as to the territorialism principle under Article 4(2) of the former Company Reorganization Act and the recognition of foreign judgments under Article 217 of the Civil Procedure Act. The Supreme Court Decision 2000Da64359 Decided April 25, 2003, which is invoked in the ground of reappeal, concerns whether the bankruptcy trustee appointed in the foreign bankruptcy procedure under the former Bankruptcy Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation Act, Act No. 7428 of March 31, 2005), has the right to manage and dispose of the domestic property owned by the bankrupt, and thus, cannot be invoked in the instant case different from the issue.

B. Method of approving the rehabilitation plan approval plan of a foreign court after the Debtor Rehabilitation Act enters into force

(1) Article 628 Subparag. 3 of the Debtor Rehabilitation Act provides that “approval of foreign bankruptcy procedures” shall be granted for the foreign bankruptcy procedures within the Republic of Korea. Article 636(1) of the same Act provides that foreign bankruptcy procedures may be supported by individual support decision to protect the debtor’s business and assets or creditors’ interests at the same time as the approval of the foreign bankruptcy procedures is granted or after the approval is granted so that foreign bankruptcy procedures can be rendered in the Republic of Korea. This takes account of the fact that it is inappropriate for a foreign court to automatically affect the foreign bankruptcy procedures in the Republic of Korea according to the method of approval of foreign judgments dealing with legal relations between specific parties, even though the foreign bankruptcy procedures entail various effects and effect on multiple interested parties, the pertinent foreign court’s approval of the foreign bankruptcy procedures under the Debtor Rehabilitation Act shall not be “approval of foreign court,” unlike the “foreign judgment’s approval” under Article 217 of the Civil Procedure Act, but shall not directly approve the foreign court’s rehabilitation procedures, such as the discontinuation or suspension of the debtor’s business and its effectiveness in the foreign bankruptcy procedures.

The first judgment, etc. of a foreign court is related to the existence of a claim or executory power under substantive law, and the effect arising therefrom is simple and meaningful. Any dispute surrounding approval of a discharge judgment, etc. shall be resolved individually through attack and defense between the relevant debtor and creditor in the performance lawsuit, compulsory execution procedure or bankruptcy procedure, etc. filed on the basis of a claim subject to discharge, etc. Therefore, although the discharge judgment, etc. is performed on the part of a foreign bankruptcy procedure, the approval of a discharge judgment, etc. of a foreign court does not coincide with the approval of a general foreign judgment as stipulated in Article 217 of the Civil Procedure Act even if it is performed on the part of a foreign bankruptcy procedure.

Therefore, it is reasonable to individually determine whether to approve a foreign court's immunity judgment, etc. conducted in the foreign bankruptcy procedure under the Debtor Rehabilitation Act, by examining whether the exemption judgment, etc. satisfies the requirements for approval under Article 217 of the Civil Procedure Act, and whether to approve it shall not be determined by the approval procedure or support procedure under the Debtor Rehabilitation Act.

(2) Examining the reasoning of the order of the court below in light of the above legal principles, on the premise that the exemption pursuant to the rehabilitation plan approval order of the US Bankruptcy Court is effective in the Republic of Korea of the applicant, who is a bankruptcy trustee, upon the decision of approval and support under the Debtor Rehabilitation Act, may exercise rights in the Republic of Korea of the applicant, and thus, the effect of exemption cannot be deemed to affect the applicant unless the court of the Republic of Korea has issued a decision of assistance that extends the effect of the above exemption to the re-appellant in Korea. The court below erred by misapprehending the legal nature and effect of the approval and support order of the Debtor Rehabilitation Act and the legal principles as to the approval of foreign judgments under Article 217 of the Civil Procedure Act. However, the court below's error that the court below's judgment

C. Whether the requirements for public order and good morals stipulated in Article 217 subparag. 3 of the Civil Procedure Act are met

(1) In order to approve a foreign court's discharge judgment, etc., it must satisfy the requirements that the recognition of the effect of the discharge judgment, etc. does not violate good morals and other social order of the Republic of Korea (Article 217 subparagraph 3 of the Civil Procedure Act). Here, cases contrary to good morals and other social order of the Republic of Korea, include not only cases where the establishment procedure of the discharge judgment, etc. of a foreign court is contrary to good customs and other social order, such as infringement of legitimate participation right of a domestic creditor in the foreign bankruptcy procedure, but also cases where the contents of the discharge judgment, etc. of a foreign court violate good customs and other social order, but also cases where the foreign court's discharge judgment, etc. are recognized in Korea as a discharge judgment, etc. of a foreign court's discharge judgment, etc.,

(2) According to the reasoning of the order of the court below, on July 19, 200, Gohap cancelled the execution of the second provisional attachment on 19, 200, 2 billion won among the damage claims against the re-appellant as preserved bond (hereinafter "first provisional attachment"), and on March 14, 2003, the second provisional attachment on the commercial building of this case (hereinafter "the second provisional attachment"), which was owned by the re-appellant. On April 30, 200, the re-appellant deposited the amount of KRW 2 billion in the first provisional attachment on 200,000,000 won, and revoked the first provisional attachment on 200,000,000 won again on May 8, 2007, and the first provisional attachment was revoked on 200,000,000,0000 won which was preserved through the first and second provisional attachment on 205,000,0000,000 won, which was revoked on 16,5, 16.

(3) We examine the above facts in light of the legal principles as seen earlier. Under the former Company Reorganization Act of Korea where the US Bankruptcy Court commenced the rehabilitation procedure of this case and took prompt care until the rehabilitation plan of this case was approved, the effect of prohibition and restriction of creditor's exercise of rights pursuant to the commencement of rehabilitation procedure of this case and exemption pursuant to the rehabilitation plan of this case does not affect the exercise of rights to the commercial buildings and factories of this case in Korea owned by the re-appellant. The representative of the rehabilitation procedure of this case could not assert that the commercial buildings of this case and factories of this case or provisional seizure release release deposit money of this case were incorporated into the bankruptcy foundation of the US rehabilitation procedure of this case. Since the bankruptcy procedure of this case was enforced on April 1, 2006, the provisional seizure order of this case would not be deemed to have been part in the rehabilitation procedure of this case, and the provisional seizure order of this case would not have any transitional provision of this case since the rehabilitation procedure of this case would not have been approved by the court of bankruptcy of this case, which would be unfairly in violation of the principle of the rehabilitation plan of the US rehabilitation plan of this case.

The judgment of the court below to the same purport is just and acceptable, and there is no error in the misapprehension of legal principles or omission of judgment as to the recognition of foreign judgments under Article 217 of the Civil Procedure Act as otherwise alleged in the grounds of reappeal.

2. As to the second ground for reappeal

According to the reasoning of the order of the court below, if the exemption effect according to the rehabilitation plan approval plan of this case by the US Bankruptcy Court is deemed to affect the unity in Korea, the court below held that it is difficult to approve the above exemption judgment because it unfairly infringes on the existing rights that were contrary to the domestic judicial order and the aggregate of them, and thus, it is difficult to approve the above exemption judgment. The court below did not determine that the procedure for approving and supporting the Debtor Rehabilitation Act of this case, which was issued by the US Bankruptcy Court, cannot be applied to the US rehabilitation procedure of this case for which the former Company Reorganization Act was decided to

On a different premise, we cannot accept the allegation in the grounds of reappeal purporting that the lower court erred by misapprehending the legal doctrine on the scope of timely application of approval procedure under the Debtor Rehabilitation Act.

3. Conclusion

Therefore, the reappeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Shin Young-chul (Presiding Justice)