CONTENTS
- 1. Financial Fee Refund Lawsuit: A Client Who Sought Assistance
- - How the Fee Refund Dispute Arose
- 2. Precedents Relating to Financial Fee Refunds
- 3. Financial Fee Refund: The Corporate Attorney's Defense Strategy
- - Establishing the Scope of the Financial Institution's Work
- - Clarifying the Purpose and Composition of the Fees
- - Comparison of Precedents and Case Analysis
- 4. Outcome of the Financial Fee Refund Lawsuit: A Favorable Judgment
- - If You Need to Respond to a Fee Refund Lawsuit
1. Financial Fee Refund Lawsuit: A Client Who Sought Assistance
In response to a claim for refund of financial fees, the client retained a corporate attorney to defend the lawsuit in order to establish that the fees were legitimate.
How the Fee Refund Dispute Arose
The client is a domestic financial institution that provided a project financing (PF) loan to a domestic IT company to fund the development of a new product and the company's expansion into global markets.
During the lending process, the financial institution performed various financial advisory functions, including designing the project structure, arranging the lending syndicate, and conducting a risk review.
After the loan was made, the IT company demanded a refund, asserting that the financial advisory fee and loan handling fee received by the financial institution were excessive.
The IT company then filed a lawsuit seeking a refund of the fees.
In order to establish that the fees were a legitimate consideration under the contract, the financial institution retained a corporate attorney to handle the defense of the lawsuit.
2. Precedents Relating to Financial Fee Refunds
Under the principle of freedom of contract, a financial advisory fee is, as a rule, payable according to the terms of the contract where a financial advisory agreement has been concluded.
According to Supreme Court precedent, where the amount of remuneration is stipulated in a mandate contract, the mandatary may in principle claim the full agreed remuneration.
However, in the following circumstances, only a portion may exceptionally be recognized.
ㆍ The degree of effort expended
ㆍ The specific benefit obtained by the client
ㆍ Other relevant circumstances
In other words, this applies where there are special circumstances in which the agreed remuneration is so excessive that it violates the principles of good faith or equity (see Supreme Court Decision 2015Da35560, February 18, 2016).
In practice, where a financial institution has performed substantial advisory work, such as arranging the loan, designing the project structure, and analyzing risks, it is generally recognized that receiving a financial advisory fee in addition to loan interest is not legally improper.
For example, in Seoul Central District Court Decision 2021Gahap594324, April 6, 2023, the court recognized the payment of a financial advisory fee in light of the financial institution's role and scope of work.
That said, there have recently been decisions holding that, in certain circumstances, the borrower need not pay all or part of a financial advisory fee.
These outcomes result from a comprehensive consideration of specific circumstances, such as the terms of the contract, the work actually performed, and the size of the fee.
3. Financial Fee Refund: The Corporate Attorney's Defense Strategy
The principal issues in this case were as follows.
ㆍ Whether multiple fees, such as the financial advisory fee and the loan handling fee, overlapped
ㆍ Whether the level of the fees in this case was excessive compared with existing precedents
Among these three issues, the corporate attorney focused on establishing as objectively as possible the substantive work performed by the financial institution and on distinguishing the purpose and nature of each fee.
Through this approach, the attorney sought to have the court view the case not simply as a matter of excessive fees, but in light of the professional role performed by the financial institution and the practices of the market.
Establishing the Scope of the Financial Institution's Work
The corporate attorney emphasized that the financial institution did not merely provide funds, but also handled the design of the project structure and the development of the financing plan.
The attorney also explained in detail that the financial institution played a central role in assembling the lending syndicate and persuading investors.
To this end, internal reports, meeting materials, and opinions from outside experts were submitted as evidence to establish the scope of the work objectively.
Clarifying the Purpose and Composition of the Fees
The corporate attorney distinguished that each fee was not of the same nature, but rather constituted consideration for different functions, such as financial advisory, loan handling, and the role of an agent institution.
By explaining industry practice and the contractual structure to the court, the attorney argued that the multiple fees were a reasonable allocation rather than duplicate charges.
In particular, by setting out point by point the basis for and necessity of each individual fee, the attorney built the argument that the full amount of the fees was legitimate.
Comparison of Precedents and Case Analysis
The corporate attorney systematically compared this case with prior precedents in which some fees had been reduced.
In doing so, the attorney emphasized that the project in this case differed significantly in scale, complexity, and level of risk.
Through this, the attorney argued to the court that the fees in this case were not excessive and were, rather, legitimate remuneration commensurate with the services the financial institution had provided.
4. Outcome of the Financial Fee Refund Lawsuit: A Favorable Judgment
Ultimately, the claim for refund of the financial advisory fee and the loan handling fee was dismissed in full.
The court recognized the financial advisory work and role performed by the client, and found that the fees could not be regarded as excessive or unfair.
If You Need to Respond to a Fee Refund Lawsuit
A lawsuit seeking a refund of financial fees goes beyond an ordinary civil dispute, and is a highly specialized area requiring a comprehensive interpretation of the financial institution's advisory role, the fee calculation structure, and industry practice.
Accordingly, in responding to such a case, legal analysis covering contract interpretation, financial regulation, and trends in precedent, together with thorough preparation of evidence, is essential.
Drawing on its experience handling numerous financial institution lawsuits and the practical capabilities it has accumulated in complex financial transaction cases, such as PF loans, working capital loans, and overseas investment financing, the firm develops a tailored strategy for each matter.
The firm also works to establish precisely the role and contribution of the financial institution in each case in order to persuade the court to recognize the legitimacy of the fees.
If you are in a situation similar to that of the client in the above case and require a litigation response strategy, please feel free to seek legal assistance from a 🔗corporate attorney.
This content is based on actual case studies of Daeryun Law LLC with some adaptations, and the copyright belongs to our firm.
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