Purpose of Procedure for Payment Demand
Purpose and Advantages of the Payment Demand Procedure
- The "payment demand procedure" is one of the primary civil dispute resolution processes involving the court, alongside litigation and mediation procedures. It has the following advantages (refer to the Korea Court’s Electronic Civil Petition Center - Payment Demand Procedure):
· The court issues a payment order based solely on a document review.
· It provides a swift solution to disputes.
· The various costs paid by the creditor to the court are economical.
· Once the payment order is confirmed, it has the same effect as a final judgment.
※ For detailed information on the payment demand procedure, you can refer to the <Korea Court’s Electronic Civil Petition Center - Payment Demand Procedure>.
Advantages of Procedure for Payment Demand
- It is more advantageous for the creditor to take procedure for payment demand rather than to take civil litigation procedure because in the procedure for payment demand, (i) the parties are not required to appear before the court; (ii) the parties do not need to hold any pleadings; and (iii) the fee for the revenue stamp is inexpensive. Accordingly, the procedure for payment demand is simpler, more expeditious and more economical than the civil litigation procedure.
Application for Payment Order
Requirements for Payment Order
- An application for a payment order shall be based on a claim in relation to a fixed amount of money, its substitute, or other negotiable security. (Article 462 of the Civil Procedure Act)
- The applicant shall be the creditor who has the repayment claim. (Article 462 of the Civil Procedure Act)
- The payment order shall be limited to where a service may be effected in the Republic of Korea save as to such service by public notice. (Article 462 of the Civil Procedure Act)
Court Having Jurisdiction
- Procedural matters in relation to a payment demand and the payment order shall be under the exclusive jurisdiction of one of the following courts. (Article 463 of the Civil Procedure Act)
·The District Court in the location of the debtor's registered address (Articles 463 and 3 of the Civil Procedure Act)
·The debtor's workplace (Article 7 of the Civil Procedure Act)
·The debtor's place of abode or place of obligation performance (Article 8 of the Civil Procedure Act)
·The place where the relevant bills or checks were used as payment method(s) (Article 9 of the Civil Procedure Act)
·The office or business place (Article 12 of the Civil Procedure Act)
·The place where the tort was committed (Article 18 of the Civil Procedure Act)
Application Procedure
- The provisions relating to a civil proceeding shall apply to an application for a payment order in so far as they are not contrary to the nature of the payment order. (Article 464 of the Civil Procedure Act)
- Accordingly, the creditor may commence a procedure for payment demand by lodging an application for a payment order to the court having jurisdiction. (Article 248 of the Civil Procedure Act)
Denial of Application
- If an application for a payment order was not based on a claim in relation to a fixed amount of money, its substitute, or other negotiable security (Article 462 of the Civil Procedure Act); or if an application is lodged to the court that has no jurisdiction (Article 463 of the Civil Procedure Act); or if the court considers that the application evidently lacks a justifiable ground, the court must deny such application. When a payment order is not issuable against part of a claim, the same shall also apply to such part. (Article 465(1) of the Civil Procedure Act)
- No appeal shall be made against such denial by the court. (Article 465(2) of the Civil Procedure Act)
Decision as to Payment Order
Case Where Payment Order Is Not Issued
- A creditor may, upon receipt of an order from the court to rectify the debtor's address, file an application for commencing civil litigation proceedings. (Article 466(1) of the Civil Procedure Act)
- When it is impossible to serve the payment order without resorting to a service by public notice, or when it must be served to a foreign country, the court may place the case to civil litigation proceedings at its own discretion. (Article 466(2) of the Civil Procedure Act)
·No appeal shall be made against such decision by the court. (Article 466(3) of the Civil Procedure Act)
Case Where Payment Order Is Issued
- A payment order shall be issued ex parte without interrogating the debtor. (Article 467 of the Civil Procedure Act)
- A payment order shall contain an entry of the parties, their legal representatives, the gist and counts of the claim, and an additional entry to the effect that the debtor is entitled to raise an objection within two weeks from the date of receiving the service of the payment order. (Article 468 of the Civil Procedure Act)
- A payment order shall be served on the parties. (Article 469(1) of the Civil Procedure Act)
Objection
Objection
- The debtor may raise an objection against the payment order. (Article 469(2) of the Civil Procedure Act)
Effect of Objection
- When a debtor has raised an objection within two weeks from the date of receiving the service of the payment order, such order shall lose its effect within such extent. (Article 470(1) of the Civil Procedure Act)
- The period for an objection shall be an invariable period. (Article 470(2) of the Civil Procedure Act)
※Unlike other statutory periods, the court may fix an additional period to an "invariable period" (Article 172(2) of the Civil Procedure Act), although the invariable period shall be a fixed period which cannot be extended or shortened by the court (Article 172(1) of the Civil Procedure Act). Notwithstanding this, where a party could not observe the invariable period due to any cause not attributable to him or her, the party may subsequently complete the procedural acts that he or she failed to follow, within two weeks from the date on which such a cause has been extinguished. (Article 173 of the Civil Procedure Act)
Denial of Objection
- The court shall, when admitting that an objection is unlawful, deny it by its ruling. (Article 471(1) of the Civil Procedure Act)
- An immediate appeal may be made against such ruling of denial. (Article 471(2) of the Civil Procedure Act)
Shifting to Litigation
- If a creditor, upon receipt of an order from the court to rectify the debtor's address, files an application for commencing civil litigation proceedings (Article 466(1) of the Civil Procedure Act), or if the court places the case to civil litigation proceedings at its own discretion (Article 466(2) of the Civil Procedure Act), the civil litigation proceedings shall be deemed to have been commenced when an application for a payment order was lodged. (Article 472(1) of the Civil Procedure Act)
- Where a debtor has raised a lawful objection against the payment order, it shall be deemed that civil litigation proceedings have been commenced for the value of the subject matter of the claim, from which an objection has been raised, when an application for a payment order was lodged. (Article 472(2) of the Civil Procedure Act)
Dispositions Following Shifting to Litigation
- Where it is deemed that civil litigation proceedings have been commenced under Article 472 of the Civil Procedure Act, the court that has issued the payment order shall order the creditor, with fixing a reasonable period, to supplement the stamps in the amount obtained by deducting the amount of stamps that have been put on when the application for civil litigation proceedings or for payment order has been lodged, from the amount of stamps to be put on a complaint in commencing civil litigation proceedings. (Article 473(1) of the Civil Procedure Act)
- When a creditor fails to supplement the stamps within the reasonable period fixed by the court, the court that has issued the payment order shall deny an application for the payment order by its ruling. An immediate appeal may be made against such ruling. (Article 473(2) of the Civil Procedure Act)
- If the stamps are supplemented, a court officer such as a junior administrative officer of the court, shall promptly forward the litigation record to the court having jurisdiction. In such case, if the case falls under the jurisdiction of the collegiate panel, the court officer such as the junior administrative officer, shall promptly forward the litigation record to the collegiate panel of the court having jurisdiction. (Article 473(3) of the Civil Procedure Act)
- In the case where a procedure for payment demand is shifted to civil litigation proceedings, the cost of demanding procedures shall constitute part of the costs of civil litigation proceedings. (Article 473(4) of the Civil Procedure Act)
Effect of Payment Order
- When no objection has been raised against a payment order, or an objection has been withdrawn, or a ruling of denial has become final and conclusive, the said payment order shall take the same effect as a final and conclusive judgment. (Article 474 of the Civil Procedure Act)