• Whether the financial advisory fees constituted deemed interest under the Interest Limitation Act

• The substantive nature of the financial advisory agreement

• Whether the statutory maximum interest rate under the Interest Limitation Act had been exceeded

• The validity of the quasi-consumption loan agreement and the notarized deed

3. Legal Strategy
Attorneys Joong-young Choi, Jeong-pyo Ko, and Su-hyeon Song of One Law Partners, LLC advanced the following arguments.

· Arguing the Substantive Nature of the Financial Advisory Fees
The attorneys analyzed the circumstances surrounding the execution of the financial advisory agreement and the overall transaction structure, arguing that the financial advisory fees at issue were not consideration for independent advisory services but were, in substance, consideration for the private bond subscription.

· Establishing Violation of the Interest Limitation Act and Challenging the Validity of the Notarized Deed
The attorneys argued that, regardless of its title, the financial advisory fee constituted consideration for the use of money and therefore qualified as deemed interest under the Interest Limitation Act. When included in the calculation, the total amount exceeded the statutory maximum interest rate.

They further contended that the quasi-consumption loan agreement and the notarized deed, both based on amounts exceeding the statutory maximum interest rate, could not be given legal effect, and that enforcement based upon them should therefore not be permitted.

4. Significance of the Case
The court accepted the arguments presented by One Law Partners, LLC and held that enforcement based on the notarized deed could not be permitted.

The court found that the financial advisory fees at issue were, in substance, deemed interest paid as consideration for the private bond subscription and that the overall transaction structure exceeded the limits imposed by the Interest Limitation Act.

The court further held that the quasi-consumption loan agreement executed on that basis could not be recognized as valid.

This case confirms that, even where funds are characterized as advisory fees, commissions, consulting fees, or similar payments, their legal nature must be determined based on the substance of the transaction rather than the contractual label used by the parties.

The decision is particularly significant because the court looked beyond form to substance in evaluating a transaction structure designed to circumvent the statutory maximum interest rate through a financial advisory agreement linked to a private bond subscription, thereby clarifying the scope of application of the Interest Limitation Act.

The case also demonstrates that, even where an enforceable notarized deed exists, compulsory enforcement may be restricted if the underlying claim itself is invalid.
 

Attorney Joong-young Choi | jychoi@onelawpartners.com
Attorney Jeong-pyo Ko | jpgoh@onelawpartners.com
Attorney Su-hyeon Song | shsong@onelawpartners.com
 

Public Relations Team, One Law Partners, LLC | pr@onelawpartners.com