30 South Korea

Subject(s):

Banks and cross-border issues — Debt — Contractual set-off — Insolvency set-off — Judicial set-off

This chapter discusses the law of set-off in South Korea, along with certain restrictions on the exercise of the right of set-off in insolvency proceedings. The legal framework for set-off in South Korea is based on the Civil Code. The courts have also generally supported set-off as a means of satisfying a claim or discharging debt. The Korean Private International Law does not expressly lay down the governing law for set-off. This governing law issue is commonly discussed under two scenarios: set-off is undertaken on the basis of a set-off agreement between the parties; and set-off is undertaken in the absence of an agreement. The chapter first considers the governing law of contractual and non-contractual set-off in South Korea before turning to set-off between solvent parties and set-off against insolvent parties. It also analyses issues arising in cross-border set-off.