Limitation Period for Claim
Civil Claim
- A civil claim shall be time-barred if such claim is not issued within ten (10) years of the limitation period. (Article 162(1) of the Civil Act)
Commercial Claim
- Unless otherwise provided in the Commercial Act, a monetary claim arising out of a commercial transaction shall be time-barred if such claim is not issued within five (5) years. However, if a shorter period of limitation is provided by other statute, such provision shall apply. (Article 64 of the Commercial Act)
Claim for Interest Accrued for a Period of One Year or Less
- A claim for interest accrued for a period of one (1) year or less shall be time-barred if such claim is not issued within three (3) years. (Article 163 of the Civil Act)
· In terms of a claim for interest accrued for a period of one (1) year or less, it was held that the claim in question shall not be a claim regarding the repayment of loan for a period of one year or less but regarding any interest being accrued periodically in a year (e.g. monthly interest). (Supreme Court Decision, September 20, 1996,
96 Da 25302)
Limitation Period for Claim Established by Court's Judgment
- Limitation period for a claim established by court's judgment shall be ten (10) years, even where the limitation period for the original claim is shorter than ten (10) years. (Article 165(1) of the Civil Act)
- Limitation period for a claim established by bankruptcy proceedings, mediation in court, or any other alternative dispute resolution process with the same effect as a judgment shall be ten (10) years. (Article 165(2) of the Civil Act)
- In the case of an inchoate claim, of which the repayment was not yet due at the time of the judgment, the limitation period shall not be extended to ten (10) years even if the claim was established by such judgment. (Article 165(3) of the Civil Act)
Interrupting Limitation Period
Interrupting Limitation Period
- The creditor shall interrupt the limitation period before such period expires.
- The creditor may interrupt the limitation period by the following ways: issuing claim before the court, participating as a party to the bankruptcy proceedings, applying for a payment order, applying for court mediation, voluntarily appearing before the court, or applying for an attachment order or a provisional attachment order. In the case where the debtor acknowledges his or her debt, the limitation period shall be interrupted.
· Issuing Claim Before Court
√ The limitation period shall be interrupted if the creditor issues a claim before the court. However, this interruption shall not be applicable if the claim is dismissed, rejected or withdrawn by the court. (Article 170(1) of the Civil Act)
√ Although the claim issued by the creditor was dismissed, rejected or withdrawn (Article 170(1) of the Civil Act), the limitation period shall be deemed to have been interrupted as from the time when the initial proceedings were issued if one or more of the following circumstances arises within six (6) months as from such dismissal, rejection or withdrawal: (i) where the claim is reissued before the court, (ii) where the creditor participates as a party to the bankruptcy proceedings, (iii) where the creditor applies for a payment order, (iv) where the creditor applies for a court mediation, (v) where the creditor voluntarily appears before the court, or (vi) where the creditor applies an attachment order or a provisional attachment order. (Article 170(2) of the Civil Act)
· Participating as Party to Bankruptcy Proceedings
√ If the creditor participates as a party to bankruptcy proceedings, the limitation period shall be interrupted. However, if the creditor withdraws his or her participation or such participation is dismissed, the limitation period shall not be applicable. (Article 171 of the Civil Act)
※ "Participating as a party to bankruptcy proceedings" occurs when a bankruptcy creditor reports the matters regarding his or her right to claim to the court for the purpose of receiving any settlements or proceeds apportioned by the court. (Article 447 of the Debtor Rehabilitation and Bankruptcy Act)
· Applying for Repayment Order
√ If the creditor applies for a repayment order by way of taking a demanding procedure of repayment, the limitation period shall be interrupted. (Article 172 of the Civil Act)
※ A "repayment order" means a demanding procedure of repayment, which the creditor may simply and promptly take to exercise his or her right to claim for repayment without need to pursue a legal proceeding. (Article 462 of the Civil Procedure Act)
· Summons for Court Mediation
√ If the creditor applies for court mediation, the limitation period shall be interrupted. However, such interruption shall not be effective if the debtor does not appear after the creditor's application, or if the creditor does not issue a legal proceeding after failing to reach an agreement by way of such mediation. (Article 173 of the Civil Act)
※ "Summons for court mediation" occurs when the court summons a defendant in order to recommend resolving the dispute by way of court mediation under Article 385 of the Civil Procedure Act.
※ A "resolution by court mediation" shall take effect when the parties to the dispute agree to settle the dispute by mutual concession. (Article 731 of the Civil Act)
· Voluntary Appearance
√ If the parties to a court proceeding voluntarily appear before the court in a small claim case, the limitation period shall be interrupted. However, if the creditor does not issue a legal proceeding after failing to reach an agreement by way of court mediation, any interruption of the limitation period shall not take effect. (Article 173 of the Civil Act)
※ "Voluntary appearance" occurs when both parties voluntarily appear before the court in a small claim case, and plead for an action without issuing legal proceedings. (Article 5 of the Trial of Small Claims Act)
· Peremptory Notice
√ If a creditor issues a claim for repayment to the debtor, the limitation period shall be interrupted. A peremptory notice shall have no effect of interrupting the limitation period unless a demand by judicial proceedings, participation in bankruptcy proceedings, a summons for compromise or a voluntary appearance for the same purpose, an attachment, a provisional attachment or a provisional disposition is taken within six months. (Article 174 of the Civil Act)
· Attachment, Provisional Attachment, Provisional Disposition
√ An attachment, a provisional attachment, or a provisional disposition, shall have no effect of interrupting the limitation period if annulled on the application of the claimant or by reason of non-compliance with the law. (Article 175 of the Civil Act)
※ An "attachment" means a compulsory enforcement by an order of the court or by right of enforcement for a claimant's satisfaction.
※ A "provisional attachment" may be effected in order to preserve compulsory enforcement against the property of the debtor in respect of a monetary claim, or a claim convertible into money.
※ In a non-monetary claim, a "provisional disposition" may be ordered by the court. Under this order, the debtor must preserve his or her property as is it is, in order to protect the creditor's right against the property.
※ An attachment, a provisional attachment, or a provisional disposition, if not effected against the person in whose favor the limitation period is running, shall not have the effect of interrupting the limitation period unless and until such person has been notified thereof. For example, if a person who was not the debtor allowed a mortgage to be attached against his or her property for the benefit of the debtor, any interruption of the limitation period shall be subject to giving notice to the debtor of such mortgage. (Article 176 of the Civil Act)
· Acknowledgment of Debt
√ If the debtor acknowledges his or her debt and informs the creditor of such acknowledgement, the limitation period shall be interrupted.
※ In order to make an acknowledgement, having the effect of interrupting the limitation period, no capacity or authority for approval in respect of the rights of the other party is required. (Supreme Court Decision, March 10, 1970,
69 Da 401; Article 177 of the Civil Act)
※ An acknowledgement of debt may be done not only by an explicit approval but also by an act (e.g. payment of interest, making partial repayment, providing security for the debt).
Effect of Interrupting Limitation Period
- Where a limitation period is interrupted, the time passed until such interruption shall not be counted, and a new limitation period shall begin to run as from the time when the cause of such interruption has ceased to exist. (Article 178(1) of the Civil Act)
· In the case of a limitation period that was interrupted by a court claim, a new limitation period shall begin to run as from the time when the decision thereon becomes finally binding. (Article 178(2) of the Civil Act)
Useful Legal Information
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In the case of a Consumer Cash Loan Agreement, is the creditor able to exercise the right to be repaid even after a long time has passed since the repayment due date? A. A creditor's repayment claim based on a Consumer Cash Loan Agreement shall be time-barred if such claim is not issued within ten (10) years of the limitation period because such claim amounts to a civil claim (Article 162 of the Civil Act). The purpose of the limitation period is to protect social stability, which has long been maintained, and to exclude a person who makes it difficult for the evidences to be preserved by not exercising his or her right to legal remedy. This principle of law originates from a maxim of equity: "Equity aids the vigilant, not those who slumber on their rights." (Supreme Court Decision, November 6, 1976, 76 Da 148, Unanimous En Banc Decision) Nevertheless, if the debtor, without knowing the limitation period has expired, voluntarily repays the debt, such repayment shall not be construed as an unjust enrichment but as a discharge of his or her moral obligation. (Article 744 of the Civil Act)
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