Supreme Court rules debtor retains right to sue despite garnishment order

The Supreme Court ruled that a debtor retains the legal standing to file a performance lawsuit against a third-party debtor even after a garnishment order has been issued on the receivable. The judgment, delivered in a damages case on March 12, addresses interpretations regarding whether such orders disqualify the original creditor from pursuing litigation.

The high court stated that the right to claim damages for torts or breach of contract arises only when losses have actually occurred. Determining whether damage has materialized requires an objective assessment based on social conventions, placing the burden of proof on the creditor to demonstrate this occurrence.

The ruling stemmed from a dispute where Company A leased a crane barge to Company B with an agreement to return the vessel at Gunsan Port. After the barge sustained damage rendering it economically unrepairable, Company A sought compensation that included towing costs from Incheon Port to Gunsan.

The Supreme Court found fault with the lower court's decision to include these towing fees without sufficient scrutiny. It reasoned that if a vessel is deemed economically unrepairable, its remains generally hold value only for disposal, meaning there is no inherent requirement to move them to the specific return location defined in the lease.

Unless special circumstances exist requiring the remains to be towed to Gunsan Port, or unless the lessor can prove a concrete plan to do so, the court held that the mere existence of the return clause does not mean the towing expense was a realistically incurred loss.