This is a case commentary on a matter in which Atlas Legal secured cancellation of a provisional attachment over a third-party court deposit after the principal proceedings conclusively established that no preserved right existed against the depositor under South Korean law.
Case Overview
Company A deposited a total of KRW 92 million with a South Korean court on behalf of Church E to secure a stay of compulsory execution. By making this deposit, Company A acquired the status of a non-recourse mortgagor. Creditor B obtained a provisional attachment over Company A’s right to withdraw those funds and then attempted a direct damages claim against Company A in the principal proceedings. The South Korean court dismissed that claim, and the dismissal became final.
Provisional Attachment Cancellation Based on Changed Circumstances — Article 288(1) of the Civil Execution Act
A provisional attachment (가압류) freezes a debtor’s assets in advance of a principal judgment. Under Article 288(1) of the Civil Execution Act of South Korea, a court may cancel a provisional attachment when circumstances have materially changed — including where it becomes clear that the preserved right never existed in the first place. A final dismissal judgment in the principal proceedings constitutes decisive evidence of that non-existence and removes the legal foundation for maintaining the attachment.
Liability Limits of a Non-Recourse Mortgagor — Capped at the Deposited Amount
A non-recourse mortgagor (물상보증인) under South Korean law bears no personal obligation and is liable only to the extent of the security it has provided. Company A deposited KRW 38 million specifically for B, and its exposure to B was therefore capped at exactly that amount. The creditor cannot acquire a damages claim against the non-recourse mortgagor beyond the deposited amount.
Limits of the Pledge Analogy — No Direct Claim Under Article 353 of the Civil Act
A creditor holding security deposited for a stay of enforcement acquires rights equivalent to those of a pledgee, but the object of that pledge is the deposit money itself — not an underlying receivable. For B to exercise a direct claim against Company A under Article 353 of the Civil Act, Company A would need to be the obligor of the pledged receivable; it is not. The court further held that the obligation to provide security to a court is an indirect duty (책무, Obliegenheit), meaning even joint assumption of the obligation does not entitle the opposing party to demand performance or damages.
The Court’s Decision to Cancel the Provisional Attachment
The Incheon District Court accepted Company A’s application on 15 December 2023 and cancelled both the provisional attachment order and the correction order obtained by B. The court held that because Company A bore only limited in rem liability as a non-recourse mortgagor, B had never acquired a preserved right — namely a damages claim — against Company A in the first place. B’s arguments based on a separate collection order (against Church E) and an alleged right to an additional KRW 8 million based on a subsequent share determination were both rejected.
Legal Expertise
Atlas Legal, based in Incheon Songdo, South Korea, handles complex civil enforcement disputes including provisional attachment and injunction proceedings. Our team advises on the legal status of third-party depositors, the liability limits of non-recourse mortgagors, and the grounds for cancelling conservatory measures under South Korean law — from the initial assessment through to the final court decision.