Supreme Court rules only bank or insurance guarantees can halt enforcement

The Supreme Court ruled Tuesday that parties seeking to suspend compulsory execution must submit a payment guarantee contract executed with a bank or an insurance company, rejecting other forms of documentation as invalid security.

Under the Civil Procedure Act, a party appealing a judgment with a provisional execution order may apply to suspend enforcement by providing security if their grounds for appeal are legally justified. This security typically involves depositing cash or approved securities, or submitting a written contract guaranteeing payment.

The justices found that such contracts must be formed exclusively with financial institutions defined under the Banking Act or insurance companies governed by the Insurance Business Act. Submitting documents outside this scope does not constitute lawful provision of security because the Civil Procedure Rules require prior court approval and mandate that the counterparty be a regulated bank or insurer.

In the May 12 decision on case 2025Gu1024, an objection to execution, the high court concluded that the lower court erred in accepting non-compliant documentation as sufficient grounds to stay the process. The Supreme Court stated that an execution court cannot suspend compulsory enforcement when a party submits a document other than a valid payment guarantee contract from a qualified institution.

Based on this finding, the Supreme Court broke the original ruling and remanded the case for re-examination.