2011D 82815 Judgment of execution (principal suit)

2011AD 111416 (Counterclaim) Confirmation of the existence of an obligation

A Company A

Attorney Hong-soo et al., Counsel for the defendant-appellant

Attorney Lee Jae-won

B A.

Law Firm LLC, Attorney Park Jae-soo

Attorney Ma Sung-woo, Lee Ji-hun, Park Jin-chul, and Park Hyun-chul

July 12, 2012

September 27, 2012

1. The defendant (Counterclaim plaintiff) shall dismiss the counterclaim;

2. The plaintiff (Counterclaim defendant)'s main claim is dismissed.

In this lawsuit: The defendant can execute an arbitral award with respect to the arbitrator C (C, CBE, QC, SBS), D and E (E, QC) on April 18, 201 with respect to the case of the International Court of Arbitration of the International Chamber of Commerce and Industry (hereinafter referred to as the "ICC International Court of Arbitration") between the plaintiff (Counterclaim; hereinafter referred to as the "Plaintiff") and the defendant (Counterclaim; hereinafter referred to as the "Defendant"). The defendant can execute the arbitral award with respect to the amount of USD 32,601,248 borne by the plaintiff, the attorney fee borne by the plaintiff, USD 1,097,476.76 and USD 2,152,46,230 from the date of service of each of the above arbitral awards to the plaintiff to the date of repayment, and the next day from the date of service of the complaint to the date of next day of 201:40% from the date of service of each of the above amounts to the plaintiff.

Counterclaim: The defendant's case number 16061/CYK Arbitration Tribunal against the plaintiff is 32,601,248 U.S. dollars based on the defendant's arbitral award, attorney fees borne by the plaintiff, 1,097,476.76 U.S. dollars and 2,152,446,230 won, and 2,152,446,230 won, and 2,152,46,230 won of the plaintiff's stock transaction of F Co., Ltd. (hereinafter referred to as "F"), and there is no obligation for the defendant to pay expenses that the defendant should share

1. Facts of recognition;

A. On December 27, 1999, the Defendant was established as a subsidiary of G 100% for the acquisition and disposal of non-performing assets of financial institutions (the trade name at the time of its establishment). The Plaintiff invested 50% of the non-performing assets of financial institutions purchased from the Defendant in Korea by the Defendant, and invested 50% of each of the Defendant and the Defendant were established in accordance with the laws and regulations of Ba community, and J Co., Ltd (hereinafter referred to as “J”) is an asset management company acting on behalf of the Plaintiff.

B. According to an asset-backed securitization plan submitted by the Plaintiff to the Financial Supervisory Service on October 25, 2000 and the Financial Supervisory Service, the Plaintiff may issue stocks and bonds to raise funds for purchase of non-performing assets, pay dividends, the principal and interest of bonds through the management and disposal of purchased non-performing assets, and, if real estate provided as security for non-performing assets exists, collect bonds by means of acquisition and development through court auction, etc. and disposal to a third party.

C. The Plaintiff issued shares worth KRW 30.8 billion and bonds worth KRW 184.1 billion in accordance with the asset-backed securitization plan on Dec. 2, 2000. The Defendant and I acquired 50% of the shares and bonds respectively, thereby becoming shareholders and creditors against the Plaintiff, thereby sharing the investment profits and expenses incurred from the management and disposal of the Plaintiff’s non-performing assets.

D. On December 19, 200, the plaintiff, the defendant, and I entered into an agreement with the shareholders as follows (hereinafter "the agreement between the shareholders of this case" and Article 10 of the agreement between the shareholders of this case "the arbitration clause of this case").

Article 5 Distribution Shareholders shall make the Plaintiff distribute dividends equivalent to money held commercially, reasonable, and adequate, in accordance with the circumstances and conditions of common share and applicable law, at least by the end of the third calendar month and at least by the end of the third calendar month, all actual procedures from the reorganization and disposal of the instant loan claims, the actual operating expenses of the Plaintiff, and in each case, at least by the third calendar month.

Article 10 Governing Law; Dispute Resolution; (a) Waiver of immunity; and the rights and obligations of shareholders under this Agreement and this Agreement shall be governed by the law of jurisdiction over the establishment of the plaintiff and interpreted accordingly; provided that the first agent reasonably acceptable by the defendant shall provide the defendant with his opinion that the provisions of this Agreement can be enforced within the jurisdiction above, with the form and content that the defendant can reasonably accept and to the defendant.

(b) The parties to this Agreement shall attempt to resolve in good faith any dispute, debate or claim (each "Dispute") arising from or in connection with the interpretation or application of the provisions of this Agreement or in connection with the determination of any matter to which the objective decision under this Agreement is applied.

(c) If the dispute is unable to be settled by the parties in accordance with Article X(b) or any other provision of this Agreement, such dispute shall be settled by arbitration in accordance with the Arbitration Rules of the International Chamber of Commerce and Industry. Arbitration shall be the sole judicial decision for the settlement of the dispute as above and the award pronounced shall be final and binding. The ruling on the award may be submitted by any court with jurisdiction.

(d) The proceedings of arbitration under section 10 (c) of this Agreement are as follows:

i) The number of arbitrators shall be three, one of whom shall be the defendant, and the other one shall be appointed by the defendant, and the third arbitrator shall, if possible, be appointed by the parties’ mutual agreement within 30 days after the second arbitrator is appointed, and thereafter, by the mutual agreement of the two arbitrators selected within 45 days after the second arbitrator is appointed and thereafter by the management authority.

E. The Plaintiff acquired a L Terminal site (hereinafter “instant site”) as collateral for the claim against K Co., Ltd., a non-performing non-performing assets purchased, and disposed of the specific use area from the existing quasi-industrial area to the residential area, and acquired the instant site in the court auction, etc. over 73.7 billion won in 2003, and conducted the management and sale of the instant site through M&A, a company established separately from J (hereinafter “M”).

F. The Plaintiff colored the buyer of the instant site, and sold the instant site at KRW 135 billion on March 29, 2004 to F for the new construction and sub-construction of an apartment in the instant site, and the Plaintiff decided to complete the alteration of the specific use area. F decided to lend 11 billion won to M with the cost of transferring the existing personal facilities in the instant site, and first selected N Co., Ltd., a related company of KRW 1,35 billion.

G. However, when the change of use of the instant site continues to be delayed prior to the change of use, the Plaintiff entered into a contract to modify the real estate trade contract with the Plaintiff to cancel the sales contract or request redemption, and completed the registration of transfer of ownership in the future with respect to the instant site after completing the change of use by November 30, 2004, if the change of use was made after receiving the partial purchase price from F, the Plaintiff would settle the purchase price again. However, if the change of use is completed by May 30, 2005, and the change of use is finally decided not to be completed by the end of the change of use until May 30, 2005, or if the change of use is not completed by 90 days or more from the above

H. Moreover, in order to raise the above purchase price of KRW 110 billion, F was loaned KRW 15.0 billion from O Bank and P, and N jointly guaranteed this loan obligation, and the Plaintiff was to bear part of interest and financial costs on this loan obligation.

I. On December 1, 2004, in preparation for the following cases: (a) the Plaintiff notified the Defendant of the details and contents of the above modified contract, and paid the settlement money to F after receiving the payment from F in advance; or (b) the change of the purpose of use for the instant land was nonexistent; and (c) the Plaintiff shall comply with the repurchase: (a) deposit the advance payment to the Defendant into the Plaintiff’s Eck account; (b) when the change of the purpose of use is completed after the establishment of the pledge right; and (c) when the sales contract becomes final and conclusive, payment of the advance payment to the Defendant; and (b) when the payment of the advance payment or repurchase is made after making the advance payment to the

(j) On December 8, 2004, the Defendant selected the second method, and requested the Plaintiff to pay advance payment, and promised to return the amount to the Plaintiff in the case of the payment or repurchase of advance payment (hereinafter “instant promise”).

4. The above amount that the Defendant is scheduled to receive from the Plaintiff is the financial resources for the sales price to be sold and received by the Plaintiff pursuant to the sales contract concluded with F and M. The Defendant is well aware of the circumstances that the above sales price may be refunded to the purchaser under the above sales contract due to the settlement of the sales price pursuant to the above sales contract, the cancellation or repurchase of the contract due to the nonperformance of the obligation under the above sales contract, etc.

6. Accordingly, in the event that the Plaintiff paid KRW 50.2 billion to the Defendant and then returned all or part of the above sales price to the buyer under the above sales contract pursuant to paragraph (4) above, upon the Plaintiff’s request for return, the Defendant promises to refund, in foreign currency, the equivalent amount of the above sales price to be paid in full or in part (excluding the withholding amount for interest on Q debentures in KRW 50.2 billion, to the extent of the amount actually received by the Defendant excluding the withholding amount for interest on Q debentures), within two weeks from the date of the request without any objection.

(k) On December 10, 2004, the Plaintiff paid to the Defendant KRW 21,404,651,51,510 as dividends, and KRW 28,795,348,490 as the principal and interest of bonds (hereinafter referred to as “advance-paid purchase amount”) on December 10, 204. The Plaintiff refused an application for approval to change the use of the instant site on December 28, 2004, notified the Defendant on December 31, 2004 that there was a possibility of paying or repurchase the settlement amount, and the Plaintiff notified the Defendant on December 31, 2004, after re-revision the terms and conditions of the sales contract with F to reduce the purchase amount to KRW 103,00,000,000 and did not change the purpose of use by the extended due date while extending the due date for change of use.

(m) On May 21, 2007, the Plaintiff demanded the return of the purchase price in advance to the Defendant on May 21, 2007, on the following grounds: (a) the change of the use of the instant site was not made; (b) the recognition of the change of the purpose of use is difficult; and (c) F is unlikely to repay the loan until maturity; and (d) the ownership of the instant site offered as security for F’s loan obligations is expected to be transferred to a third party and thus it is difficult to maintain the sales contract as it is; and (b) the Defendant

n. As the change in the use of the instant site is difficult, the Plaintiff, while seeking a variety of measures, decided to sell F’s shares in the name of M by acquiring the ownership of the instant site. On June 8, 2007, the Plaintiff opened a board of directors and approved such measures. The Defendant notified the Plaintiff that he was unable to attend the board of directors and was unable to accept disadvantageous matters due to lack of information on the agenda of the board of directors and lack of interpretation preparation. The Defendant did not attend the board of directors, and the Defendant’s two directors did not participate in the board of directors.

(o) The Plaintiff, under M’s name, intended to borrow USD 16.5 million from M in order to acquire the F shares in the total amount of KRW 12 billion and to raise the said share purchase price, and had I offset the Plaintiff’s claim for the return of dividends.

In addition, the Plaintiff disposed of the instant site, settled the F and the purchase price, and repaid the F’s existing loan obligations with the sale price of the instant site, and the Plaintiff would bear the expenses incurred in the process of the said sale.

(p) Accordingly, the Defendant requested the Plaintiff to explain the reasons why the acquisition of the instant site by acquiring F shares was adopted, even though the acquisition did not have been scheduled in the initial sales contract, and requested the Plaintiff to provide the evidentiary materials and information before the suspension of the sale of the instant site and the supply of information.

However, on October 22, 2007, the Plaintiff notified the Defendant of all the process among them, and responded that F's repayment of loan obligations was imminent, so it is difficult to suspend the sale procedure unless there is any other alternative, and sent relevant data on October 25, 2007.

On October 26, 2007, the defendant sent a reply to the effect that since the resolution of the board of directors of the plaintiff that approved the acquisition of the instant site by acquiring the F’s shares was null and void because it failed to meet the special resolution requirement and received sufficient data related to F’s purchase of shares, the defendant should confirm the infringement of rights as the shareholder suffered by the plaintiff.

Moreover. M sold F shares in KRW 160 billion to R Co., Ltd. (hereinafter “R”) on November 1, 2007, and decided to pay the purchase-price in cash and take over KRW 159 billion out of F’s remaining loan obligations in KRW 181 billion.

In addition, the remainder of F's remaining loans of KRW 22 billion was leased from M&A, and the plaintiff was responsible for payment.

(r) On November 6, 2007, the Plaintiff notified the Defendant of the sale of F-stocksR and demanded the Defendant to present his opinion on the distribution and settlement of final losses, and the Defendant, on November 1, 2007, even though the circumstances among them were unilaterally promoted by the Plaintiff, there was no specific explanation or data provision, and the purchase of F-stocks is a transaction of a different structure, and the Defendant is a public fund recovery agency, and the Defendant is the public fund recovery agency, and demanded that the sale of F-stocks should be immediately suspended.

(s) On June 2, 2008, the Plaintiff demanded the return of the R in 33,352,241.06 (which applied the exchange rate of 1,031.40 won on May 30, 2008) equivalent to each of the costs and other expenses incurred in the purchase of F shares and the sale of R to the Defendant. The Defendant refused the Plaintiff’s request for return, demanded the return of the land in this case to be inspected during the purchase, repurchase, and re-sale process.

(t) On January 16, 2009, the Plaintiff filed an application for arbitration with the ICC (Case No. 16061/CYK), and on April 3, 2009, the Defendant filed an objection to jurisdiction, but the ICC has continued to conduct arbitration in accordance with Article 6(2) of the ICC Arbitration Rules on April 16, 2009.

(u) The ICC Tribunal appointed C on behalf of the Plaintiff as an arbitrator, confirmed E as an arbitrator the Defendant’s appointment, and the presiding arbitrator was appointed as D under the joint name of the said arbitrator.

v. In the above arbitral proceedings, the Defendant was dissatisfied with the premise that the ICC arbitral tribunal did not have jurisdiction over the instant dispute and that the conditions for return under the instant commitment were not satisfied. However, on April 18, 2011, the Defendant was issued an arbitral award to compensate the Plaintiff for USD 32,601,248, and USD 1,097,476, 476.76, and USD 2,152,446,230 (hereinafter “instant arbitral award”).

[Ground of recognition] Facts without dispute, Gap evidence 1 through 3, Gap evidence 5, 6, 15, 16, 18, 19, Eul evidence 1 through 10, Eul evidence 14 through 19, Eul evidence 21 and 23 evidence 23 (including separate numbers, if any) and the purport of the whole pleadings

2. The summary of the assertion. The Plaintiff seek for the enforcement of money and interest or damages for delay determined by the Defendant to be paid to the Plaintiff in the instant arbitral award pursuant to Article 39 of the Arbitration Act and Article 3 of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

In regard to this, the Defendant asserted that the instant dispute is beyond the subject matter of arbitration stipulated in the instant arbitration clause and without jurisdiction of the ICC, and that the composition of the arbitral tribunal of this case is unlawful, and that the enforcement of the instant arbitral award should be denied on the ground that the enforcement of the instant arbitral award is contrary to the public order of the Republic of Korea, and that the Defendant sought confirmation of the non-existence of the Defendant’s obligation of payment

3. Whether the counterclaim is lawful;

First of all, as to the legitimacy of a counterclaim, the arbitral award has the same effect as the final and conclusive judgment of the court between both parties (Article 35 of the Arbitration Act), and any objection to an arbitral award can only be filed by means of filing a lawsuit for the revocation of an arbitral award with the court (Article 36(1) of the Arbitration Act). In order to deny the validity of a counterclaim of the defendant as it substantially objects to the arbitral award of this case, a lawsuit for the revocation of an arbitral award should be filed, and a lawsuit for the confirmation of the existence of the existence of an obligation is not allowed in violation of res judicata. Thus, the counterclaim of this case

4. Whether the enforcement of the instant arbitral award is contrary to the public order and order

A. Violation of the Asset-Backed Securitization Act

1) According to Article 22 of the Asset-Backed Securitization Act, a special purpose company’s business is limited to certain acts pursuant to the asset-backed securitization plan. (1) Its purport is to prevent a special purpose company from performing any business other than normal asset-backed securitization-related business in accordance with the asset-backed securitization plan that conforms with the purpose of the establishment of the special purpose company, thereby expectationing to operate the securitization assets according to the plan and preventing risks unforeseeable to investors in the asset-backed securities. In light of the legislative purpose of the Asset-Backed Securitization Act and other provisions, Article 22 of the Asset-Backed Securitization Act, which limits the business of the special purpose company to certain acts in accordance with the asset-backed securitization plan, is not a simple regulation,

2) However, according to the Plaintiff’s asset-backed securitization plan, where the Plaintiff collects claims through the sale of mortgaged real estate, only a direct sale plan is planned after acquiring the ownership of real estate through the court auction to sell them to a third party, and there is no plan to indirectly acquire the ownership of real estate by acquiring the shares of the company that owned the real estate already sold by the Plaintiff and sell them after acquiring the ownership of real estate. The Plaintiff may borrow funds exceptionally only when necessary for the redemption of asset-backed securities,

3) However, according to the above facts, the Plaintiff, after selling the instant site to F, violated the method of sale of real estate as stipulated in the asset-backed securitization plan by indirectly acquiring the ownership of the instant site by acquiring F’s shares and selling it to R to a third party, even if it was possible to invalidate and restore the use of the instant site after the sale of the instant site to F.

Furthermore, in the process of acquiring F shares in M’s name, the Plaintiff was not only liable for F’s borrowings from I in order to raise the purchase price of shares, but also borne F’s loan obligations remaining after being appropriated as sales price in the process of selling F’s shares after acquisition of R. This indirect liability method constitutes a direct act of borrowing funds. As such, the method of borrowing funds in accordance with an asset-backed securitization plan is practically a direct act of borrowing funds, it is difficult to view that it is not only a violation of the methods of borrowing funds, but also an act incidental to the management,

4) Therefore, the Plaintiff’s act of selling the instant land indirectly in violation of the method of selling real estate under the Asset-Backed Securitization Act and the asset-backed securitization plan and the purpose of lending the loan, and of making the Plaintiff’s act of ultimately bearing the debt of M and F in the said process is null and void in violation of Article 22 of the Asset-Backed Securitization Act, which causes the Plaintiff’s loss

B. Consideration of other circumstances

The circumstances of the violation of the Asset-Backed Securitization Act are as follows: (i) three of the five directors of the Plaintiff under the agreement between the shareholders of this case, namely, ① three of the five directors of the Plaintiff, and the remaining two directors of the Plaintiff, were composed of the Defendant director and actually managed the Plaintiff; (ii) the Plaintiff, on June 8, 2007, who decided to sell the land of this case after indirectly acquiring the ownership of the land of this case, notified the board of directors of the Plaintiff’s refusal to attend the board of directors on the ground of lack of information on agenda and lack of preparation for interpretation; (iii) without the attendance of two directors of the Defendant, the board of directors was resolved; and (iv) the Defendant continuously raised an objection to the Plaintiff’s acquisition of the FF shares and the suspension of the process of requesting the Plaintiff to provide related data; (iii) the Defendant continuously demanded the Plaintiff to comply with the asset-backed securitization plan, while the Plaintiff did not accept it; and (v) the Plaintiff’s demand for the sale of the land of this case was made in violation of the asset-backed securitization plan.

In full view of the above circumstances, if the arbitral award in this case is recognized, it shall be deemed that the specific result has reached such an extent that it cannot be socially acceptable against the good morals and other social order of the Republic of Korea. Therefore, the enforcement of the arbitral award in this case shall be refused without the need to consider other reasons for enforcement asserted by the Defendant.

5. Claim for damages for delay

The Plaintiff seeks damages for delay after the delivery of the instant arbitral award, based on the Japanese law or Korean law, on the money determined to be borne by the Defendant to the Plaintiff in the instant arbitral award.

However, since damages for delay are paid along with the original obligation as compensation for delay of the obligation, it shall be determined by the governing law governing the original obligation (see, e.g., Supreme Court Decision 95Da34395, May 9, 1997). According to the community law, which is the governing law of this case, the interest or delay damages shall not occur, regardless of the scope thereof, the place of arbitration shall be the place of arbitration. Thus, the Plaintiff’s above assertion is without merit.

6. Conclusion

Therefore, the defendant's counterclaim is inappropriate, and the plaintiff's claim of the principal lawsuit is dismissed as it is without merit. It is so decided as per Disposition.

The presiding judge and the highest judge;

Judge Seo-ho

Judges Cho Jae-sung

(i) Article 22 (Business);

(1) A special purpose company shall carry out the following business activities in accordance with an asset-backed securitization plan:

1. Transfer of securitization assets to another trust business entity or entrustment to another trust business entity;

2. Management, operation and disposal of securitization assets;

3. Issuance and redemption of asset-backed securities;

4. Conclusion of contracts necessary for the execution of an asset-backed securitization plan;

5. Temporary borrowing of funds necessary for redemption, etc. of asset-backed securities;

6. Investment of surplus funds;

7. Other business activities incidental to those mentioned in subparagraphs 1 through 6.

2) The Plaintiff is limited to the beneficiary under Article 22 of the Asset-Backed Securitization Act, but the Plaintiff is an asset securitization company.

not a foreign corporation which specializes in asset-backed securitization, but merely bears limited obligations to borrow funds under the above provision.

However, according to Article 2 subparagraph 1 (a) of the same Act, the act is defined as an act of asset-backed securitization.

As a person includes a foreign corporation specialized in asset-backed securitization in a special purpose company, and the special purpose company and its assets

Since a foreign corporation specialized in securitization is essentially bound by an asset-backed securitization plan, a foreign corporation is identical.

The above argument is without merit.