The Effectiveness of Prior Waiver Agreements on the Right of Retention - Supreme Court Decision 2016Da234043, Decided on January 24, 2018 -

The subject ruling, “Korea Supreme Court Decision 2016Da234043, Decided on January 24, 2018” states that if a contractor who has a right of retention has made a special agreement to exclude the right of retention before the right of retention arises, the agreement is valid, and even if all legal requirements are met, the right of retention does not arise in accordance with the special agreement, and the agreement’s effect can be asserted by third parties. However, if it is considered that the establishment of a right of retention can be excluded through a contract between the parties, this raises issues that conflict with various general principles of property law and the legal nature of the right of retention. Furthermore, recognizing the general effect of special provisions would excessively expand the effect of property rights waivers based on legal acts, which would be inconsistent with the characteristics of property law, which strictly requires formalism and public disclosure. Therefore, it is submitted that the legal logic behind recognizing the prior waiver of the right of retention is insufficient, and that it is not desirable to conclude, as in the subject judgment, that the right of retention does not arise automatically based solely on a prior waiver agreement. Rather, it is submitted that it is appropriate to strictly assess the prior waiver and exclusion of the right of retention between the parties. Based on the issues raised in the 2016Da234043 ruling, this paper comprehensively addresses questions such as how the exclusion of the right of retention conflicts with certain aspects of the Korean legal system; what problems arise from recognizing the erga omnes effect of the right of retention waiver agreements; and how the agreements to exclude the right of retention differ from settlement agreements or pre-litigation settlements.