Full 100 million won loan recovered, upheld on appeal

Background

Our client lent 100 million won to an acquaintance. When repayment was delayed, the borrower paid monthly interest for several years and then stopped paying both principal and interest. The borrower argued that the money had been invested in an illegal gambling business abroad, so it was an illegal-cause payment that did not have to be returned.

Our approach

Our client's side argued that the money was a loan with a set repayment date, and that after repayment was delayed the parties agreed on 12% annual interest, which our client had been receiving.

Issues and ruling

The court found insufficient evidence that our client knowingly invested in an illegal business. Given that both the money and the interest moved through bank accounts and that our client did not know any profit structure, the court held it was a loan, not an investment.

Outcome

At first instance the court granted the full 100 million won principal plus 12% annual interest and late payment damages. The borrower appealed, but the appellate court dismissed the appeal, and the borrower bears the litigation and appeal costs.

This is the outcome of an individual case and does not guarantee the same result in similar matters. Some facts have been generalized to protect the parties involved.