Introduction

Foreign companies often assume that once they have a strong claim, Korean courts will move quickly to the merits. Yet many cross-border disputes in Korea pause at a preliminary procedural step: security for litigation costs. This requirement can surprise foreign plaintiffs and delay a case before it starts.

Security for litigation costs in Korea matters because it affects both timing and budget. If the defendant requests security and the court grants it, the plaintiff must provide a cash deposit, bank guarantee, or other security before the case proceeds. For fund managers or corporate counsel running multi-jurisdictional claims, this can disrupt enforcement timelines and reserve planning.

This guide explains the legal basis, how courts apply it, and the practical steps foreign plaintiffs should take to avoid avoidable delays.

The legal basis for security for litigation costs in Korea

The requirement is grounded in the Civil Procedure Act. Under Article 117 of the Civil Procedure Act, a defendant may request the court to order a plaintiff to provide security for litigation costs if the plaintiff lacks a domicile or principal office in Korea and there is concern that costs could not be recovered. The policy rationale is to protect Korean defendants from being unable to recover cost awards from foreign plaintiffs.

Courts consider a number of factors when deciding whether to order security. The core inquiry is whether a cost award against the plaintiff would be practically enforceable. If the plaintiff has assets in Korea or a sufficient presence, the court may decline the request.

While security for costs is a procedural safeguard, it can be used strategically. Defendants often file the request to slow a case or raise settlement leverage. For foreign plaintiffs, this is a predictable hurdle that can be planned for.

When and how the request is made

A defendant can typically request security early, often at the first opportunity after service of the complaint. The court usually issues a brief order inviting the plaintiff to respond. If security is ordered, the court sets the amount and the deadline for deposit or guarantee.

Key timing points:

Early-stage request: Defendants prefer to raise the issue before substantive pleadings progress.
Court discretion: The court decides whether security is appropriate and, if so, the amount.
Failure to comply: If the plaintiff does not provide security by the deadline, the court can dismiss the case.

How courts calculate the security amount

The security amount is generally tied to the anticipated litigation costs that could be awarded against the plaintiff if the defendant prevails. This includes:

Court fees and service expenses
Statutory attorney fee recovery (limited by court schedules)
Potential costs for evidence collection or expert opinions

The amount is not a full indemnity for legal fees. Korea limits recoverable attorney fees to statutory schedules, which is why the security amount is often lower than actual projected fees. Still, for complex litigation, the required security can be substantial.

Forms of security accepted by Korean courts

Courts accept several forms of security, subject to local practice and judicial discretion:

Cash deposit: paid into a court-designated account. This is the simplest but ties up capital.
Bank guarantee: a guarantee issued by a Korean bank or a foreign bank acceptable to the court. This is common for corporate plaintiffs.
Insurance bond: less common but occasionally accepted in larger cases.

From a treasury perspective, a bank guarantee is often the most efficient. However, it requires advance coordination with a Korean bank and may require collateral or credit approval.

Strategies for foreign plaintiffs to reduce risk and delay

1) Demonstrate a Korean presence or assets

If the plaintiff can show a stable presence in Korea—such as a registered branch office, subsidiary, or assets—the court may deem security unnecessary. Evidence can include:

Korean real estate or equipment assets
Registered business operations in Korea
Bank accounts or receivables in Korea

2) Consider a Korean SPV or local affiliate as plaintiff

In some cases, structuring the claim through a Korean subsidiary or a Korean special purpose vehicle can reduce the risk of a security order. This must be balanced against tax and corporate governance considerations.

3) Prepare a guarantee in advance

If a security order is likely, proactively arranging a bank guarantee can prevent delays. Courts often grant short deadlines, and international bank coordination can take time.

4) Respond with evidence and legal argument

The court is not required to automatically order security. A detailed response can influence the outcome. Consider addressing:

The plaintiff’s asset base in Korea or in a reciprocal jurisdiction
The enforceability of a cost award under bilateral treaties or reciprocal recognition standards
The proportionality of security relative to the claim

Comparison with US, UK, and EU practices

Security for costs is not unique to Korea. English courts, for example, can order security for costs against foreign plaintiffs under the Civil Procedure Rules, and US federal courts may require security in limited contexts. The Korean approach is comparatively structured and predictable, especially when the plaintiff has no Korean domicile.

For foreign litigants, the key difference is procedural timing: Korean courts often address security at the early stage, before deep merits briefing. This makes advance planning more important than in some other jurisdictions.

Practical scenario: supplier dispute with a Korean manufacturer

A Singapore-based supplier files a breach of contract claim against a Korean manufacturer in Seoul. The supplier has no assets in Korea and only a sales office in Singapore. The defendant requests security for litigation costs under Civil Procedure Act Article 117.

The court orders the supplier to provide a bank guarantee of $60,000 to cover potential costs. Because the supplier did not pre-arrange a guarantee, it needs six weeks to obtain one through its Korean banking partner. The case is delayed while the guarantee is processed. If the supplier had prepared a standby guarantee before filing, the case could have proceeded without delay.

Factors courts consider when deciding security

Courts look at more than just the plaintiff’s nationality. The practical question is enforcement: if the defendant later wins a cost award, can it actually collect? Factors include:

Domicile or principal office: If the plaintiff is headquartered abroad with no Korean assets, security is more likely.
Asset location: The presence of assets or receivables in Korea lowers the risk to defendants.
Reciprocity and enforceability: If the plaintiff is based in a jurisdiction where Korean judgments are routinely recognized, courts may be more lenient.
Case posture and proportionality: Courts avoid ordering security that effectively blocks access to justice for a legitimate claim.

The plaintiff’s response should be evidence-driven. Bank statements, asset schedules, or proof of a Korean branch office can change outcomes.

Interaction with counterclaims, interim measures, and settlement

Security for costs does not eliminate a plaintiff’s ability to seek interim relief, such as provisional attachment, but courts may be less receptive if the security order is outstanding. If the defendant files a counterclaim, the court may adjust the security amount or timing depending on the overall risk of cost recovery.

In settlement discussions, security orders are sometimes used as leverage. Defendants may propose a stay or partial release of security as part of a settlement structure. Foreign plaintiffs should keep this in mind when planning negotiation strategy.

How security is released and costs are recovered

Security is not a penalty. If the plaintiff prevails, the security is released back to the plaintiff. If the defendant prevails, the security can be applied to the cost award after the judgment becomes final. This is why accurate documentation and proper security form matter—delays in release often occur if the guarantee documentation is unclear or if the amount exceeds the final cost award.

Checklist for foreign plaintiffs and in-house counsel

Confirm whether the plaintiff has Korean assets or a local business presence.
Pre-arrange a bank guarantee option with a Korean bank or a partner bank accepted by the court.
Prepare a draft response to a security request with supporting evidence.
Align the litigation budget with possible security deposit requirements.
Coordinate with your global counsel to assess reciprocity and enforceability risks.

Practical tips / key takeaways

Security for litigation costs in Korea is grounded in Civil Procedure Act Article 117 and is commonly invoked against foreign plaintiffs.
The request is typically made early, and failure to comply can lead to dismissal.
A bank guarantee is often more efficient than a cash deposit but requires advance coordination.
Demonstrating assets or a legal presence in Korea can reduce the likelihood of a security order.
Build security planning into your litigation budget and timeline from the start.

Conclusion

Security for litigation costs is a procedural checkpoint that foreign plaintiffs should anticipate in Korean litigation. It is not a judgment on the merits but a cost-protection mechanism. With proper planning—especially around documentation, bank guarantees, and Korean asset evidence—you can avoid delays and keep your case on track.

Korea Business Hub helps foreign companies structure litigation strategies in Korea, including cost-security planning, local presence strategies, and cross-border enforcement coordination. If you are considering litigation in Korea, we can help you evaluate the security risk and prepare the right documentation before filing.

Security for Litigation Costs in Korea: A Guide for Foreign Plaintiffs