Preliminary Attachments Encourage Settlements
Appeared in the Korea Times on August 23, 2007.
by Sean Hayes
Dear Attorney Sean Hayes: I shipped items to a Korean retailer and I have not been paid. After the items were shipped, the retailer has been impossible to contact. The retailer will not return my calls, letters or e-mails. How can I get them to pay for the goods?
Unpaid in Hong Kong.
Dear Unpaid: One of the quickest and most cost effective ways to obtain money owed is to file for a preliminary attachment. A preliminary attachment often encourages defendants to settle a case. A preliminary attachment may be filed prior to the commencement of formal court proceedings.
Before filing for an attachment you must send a demand letter. A demand letter is often more effective in encouraging payment if it is sent by a law firm. A law firm will charge a modest fee for a demand letter.
If the demand letter bears no fruit, then, if the retailer has real or personal property it is often advisable to obtain a preliminary attachment. To obtain information on the assets of the retailer an asset search should to be performed. Again, a law firm will charge a minimal fee to do an asset check.
After obtaining information on real or moveable property, a preliminary attachment may be filed. The clerks at the court are normally helpful in guiding plaintiffs on how to file with the court. However, few clerks will be well versed in the English language.
In order to file for a preliminary attachment, the plaintiff is required to post security. In the case of real property the typical security requested is 10 percent of the claimed amount. In the case of moveable property the amount may be much greater. If the security is posted and the preliminary attachment filing is properly made a court normally will grant the preliminary attachment.
In my experience, if a defendant knows he is in default he will pay the money. However, if there is a dispute over the quality of the goods or services often the retailer will still not pay.
If the sum owed is less than 20 million won, the case may be filed at the Small Claims Court. The Small Claims Court operates in an efficient and non-formal manner and hence often an attorney is not needed. However, if the amount claimed is more than 20 million won, then an attorney should be employed to file the case in the normal courts.