Background
Where a party loses at first instance, the other side can move immediately to "provisional execution" (compulsory execution before the judgment becomes final). When our client received a first instance judgment with a declaration of provisional execution ordering payment of approximately KRW 900 million, our client had to deposit the same amount with the court to prevent execution. The first instance judgment was later set aside on appeal and final victory was confirmed by the Supreme Court — but the interest lost while a large sum was tied up for about a year remained a problem. Changchun represented this client.
The Issue — After Winning, Who Bears the Loss on Money Tied Up by Provisional Execution?
The key question was whether the loss caused by the deposit made to prevent provisional execution — the "difference" between the statutory interest rate and the deposit interest actually received — could be recovered from the other side.
How Changchun Helped
Changchun (attorney Donghwan Shin) ① made clear the no-fault liability under which a provisional execution creditor must compensate for loss, without intent or negligence, once the declaration of provisional execution loses effect through variation of the judgment on the merits (Civil Procedure Act art. 215(2)); ② established causation, in that once the other side obtained an execution clause immediately after the first instance judgment, our client's choice to avoid execution by deposit was reasonable by ordinary standards; and ③ calculated and claimed as the real loss the difference between the civil statutory interest rate (5% per annum) on the deposited amount and the deposit interest actually received.
The court accepted Changchun's arguments and allowed the damages claim in full (judgment for our client). The case recovered "the loss on money tied up along the way despite winning," and made clear the no-fault liability of a provisional execution creditor. (Outcomes may differ depending on the facts of each matter.)