Why a final payment order and a judgment do not have the same effect

Payment orders (지급명령) are widely used because they are fast and inexpensive. You often hear that if the debtor does not file an objection within 2 weeks of being served, it has the same effect as a final judgment (Articles 470 and 474 of the Civil Procedure Act). But there is something to note about the words ‘same effect’.

Same enforceability, different res judicata

A final payment order is no different from a judgment in that it can be used for seizure, collection and compulsory auction. In fact, in principle it can be enforced directly with the original of the payment order without obtaining a separate certificate of execution (Article 58(1) of the Civil Execution Act). But unlike a judgment, a final payment order is not given res judicata effect (기판력). Res judicata is the effect that prevents a final decision from being disputed again later.

So even after a payment order becomes final, the debtor can file a lawsuit objecting to the claim (청구이의의 소) based on grounds that existed before then, for example that the debt had already been paid before the payment order was issued or that there was never a debt in the first place. An objection to a judgment can only be based on grounds that arose after the hearings ended, but that restriction does not apply to payment orders (Article 58(3) of the Civil Execution Act).

For creditors, this difference may not often be a real problem. But if the other side belatedly files a lawsuit objecting to the claim together with an application to stay compulsory execution at the enforcement stage, recovery is delayed accordingly. If you see the seeds of a dispute in a case, factor this in from the outset.

Cases suited to a payment order

Payment orders are efficient for cases such as payment for goods or undisputed loans, where the amount is clear and the other side does not seem likely to contest it. The procedure is in writing and the stamp fee is one tenth of that for a complaint. If the other side does not object, you obtain an enforceable title without ever going to court.

On the other hand, in cases where the other side is sure to claim it was a gift or an investment, or where deductions will be disputed, an objection will turn it into a lawsuit in the end, and even if it becomes final, there remains room to dispute it again through an objection to the claim. For such cases, going to a lawsuit from the start may end up being faster.

When it cannot be used or gets blocked

A payment order can be applied for only if it can be served on the debtor by a method other than service by public notice (proviso to Article 462 of the Civil Procedure Act). If you don't know the other side's address, the right approach is to file a lawsuit from the start and find the address through a fact inquiry. If you apply with only a name and an old address, even if the order becomes final you may get stuck at the enforcement stage because the debtor cannot be identified, so it is a good idea to confirm the resident registration number or business registration number as well.

If you are the one who received a payment order, the 2-week period is what matters most. Simply filing an objection moves the matter to a lawsuit even without lengthy reasons, so if there is anything to dispute, you can file the objection within the period first and prepare your answer after that. The fast route is not always the short one. Please anticipate what the other side will dispute before choosing a procedure.