Hanil Railroad Co., Ltd. and one other (Law Firm LLC, Attorney Song In-bok, Counsel for the plaintiff-appellant)

Korea Railroad Corporation (Law Firm Barun, Attorneys Song Tae-op et al., Counsel for the defendant-appellant)

May 20, 2016

1. All of the plaintiffs' primary claims are dismissed.

2. The plaintiffs' preliminary claims are all dismissed.

3. The costs of lawsuit are assessed against the plaintiffs.

In the vicinity of ○○, the Defendant expressed his/her consent to the Plaintiff on September 1, 2014; the index adjustment rate of 3.03%; the adjusted amount of 47,547,00 won; and (2) with respect to the contract for the maintenance and repair of line tracks (total body and first unit) concluded on April 17, 201 with the Plaintiff Han-il Railroad Co., Ltd. on the basis of price fluctuations in which the adjusted amount of 474,547,00 won was adjusted; and (3) with respect to the contract for the maintenance and repair of line tracks (total body and first unit) concluded on January 3, 2014 with the Plaintiff on September 1, 2014 with the Plaintiff on January 3, 2014, the Defendant expressed his/her consent to the said Plaintiff on the contract price adjustment as a result of price fluctuations in which the index adjustment rate was adjusted; the adjusted amount was adjusted to 88,3800 won.

1.2.1 to 4.6: (1); (2) to 2.5; (3) to 4.6; (3) to 2.5; (4) to 2.6; (4) to 2.5; (5) to 2.6; (6) to 2.5; (3) to 2.6; (4) to 2.6; (5) to 2.8; (6) to 2.5 to 2.6; (4) to 2.6; (3) to 2.5 to 2.6; (4) to 2.6; (5) to 3.6; (6) to 2.5 to 2.6; (4) to 2.6; and (5) to 28; and (6) to 29.5 to 25; and (3) to 20.5 to 27.6 per annum; and (4) to 294,922; and (4) to 20.64

1. Basic facts

A. On April 17, 2014, Plaintiff Korea-Japan Railroad Co., Ltd. (hereinafter “Plaintiff Korea-Japan Railroad”) entered into a contract for the maintenance and repair of tracks for light-speed railroads with the Defendant. On January 3, 2014, Plaintiff Korea-Japan Railroad Co., Ltd. (hereinafter “Plaintiff-Korea Railroad”) entered into a contract for the maintenance and repair of tracks at the central facilities and places of business of the Central Cable Railroad on January 3, 201

B. Article 22 of the General Conditions included in the terms and conditions of each contract shall be governed by Article 64 of the Enforcement Decree of the Act on Contracts to Which the State is a Party (hereinafter “State Contract Act”), and Article 74 of the Enforcement Rule of the same Act. Article 64(2) of the Enforcement Decree of the State Contracts Act provides that “When the contract amount is adjusted for the same contract, the rate of product adjustment and index adjustment shall not be applied at the same time, and when the contract is concluded, the contract shall be clearly stated in the contract so that the contract amount may be adjusted at the rate of product adjustment, except where the other party wants the index adjustment method.”

C. On October 29, 2014, Plaintiff Han-il Railroad filed an application for the adjustment of the contract amount with the Defendant according to the index adjustment rate on the ground that the cause for the adjustment of the contract amount due to price fluctuation occurred, and Plaintiff Han-il Railroad also filed an application for the adjustment of the contract amount on the same ground as the Plaintiff’s railway on December 23, 2014.

D. On December 19, 2014, the Defendant respondeded to the Plaintiff’s Korea Railroad, and on December 31, 2014, to the Plaintiff’s Railroad, that “The contract amount adjustment due to price fluctuation should be applied according to the product adjustment rate under Article 22 of the said General Conditions because there was no separate request at the time of the contract.”

E. On December 22, 2014, Plaintiff Hanil Railroad requested a reexamination to the Defendant on December 22, 2014, but the Defendant, on February 3, 2015, sent to the said Plaintiff a reply to the effect that the method according to the product adjustment rate should be applied based on the content of “the review on price fluctuation and the response to questioning” published on September 3, 2012 by the Public Procurement Service.

【Ground for recognition】 The fact that there has been no dispute, each entry of Gap's 1 through 5 (including virtual numbers), and the purport of the whole pleadings

2. Whether the part demanding an expression of consent is lawful.

In the adjustment of the contract amount due to price fluctuation in accordance with Article 19 of the State Contracts Act, Article 64 of the Enforcement Decree of the same Act, and Article 74 of the Enforcement Rule of the same Act, the reason for the adjustment of the contract amount arises due to the increase or decrease in the item adjustment rate or the index adjustment rate in excess of a certain ratio at the same time after a certain period has elapsed from the execution date of the contract, and the other party to the contract is duly formed by the application for the adjustment of the contract amount to the other party (see Supreme Court Decisions 2004Da28825, Sept. 14, 2006; 2013Da74110, Jan.

Since Article 22 of the General Conditions included in the terms of each contract of this case provides that the contract amount adjustment due to price fluctuation is in accordance with Article 64 of the Enforcement Decree of the State Contracts Act and Article 74 of the Enforcement Rule of the same Act, it is recognized earlier, it is reasonable to view that the plaintiffs as the plaintiffs immediately seek payment of increased contract amount against the defendant on the ground that the contract amount adjustment has been made upon their request for adjustment, and that there is no benefit of lawsuit claiming for declaration of consent separately to the defendant.

Therefore, all of the plaintiffs' primary claims are unlawful.

3. As to the method of adjusting the contract amount due to price fluctuation

A. The plaintiffs' assertion

Unless it is clearly stated in each contract of this case that the contract of this case is to adjust the contract amount in accordance with the product adjustment rate, the defendant is obligated to adjust the contract amount by the index adjustment rate "at the choice of the plaintiffs who are the counter party to the contract," and the defendant is obligated to pay the amount of each of the preliminary claims and damages for delay calculated according to the above index adjustment rate to the plaintiffs.

B. Determination

Article 22 of the General Conditions for each of the instant contracts and Article 64(2) of the Enforcement Decree of the State Contracts Act provide that “When concluding a contract, the parties to the contract shall clearly state that the contract will adjust the contract amount by the item adjustment rate, except where the parties to the contract wish to do so by the index adjustment rate.”

In light of the forms and contents of the above provisions, the method of adjusting the contract amount is composed of the principle and exceptions, and in principle, the method of adjusting the contract amount shall be based on the item. It is reasonable to view that the contract is based only on the case where the counter-party wants the index adjustment rate when concluding the contract.

In the case of the instant contract, the Plaintiffs did not specify any method in the contract, so they were reserved, and therefore, they are entitled to exercise the said options at any time. However, such options should be deemed to be able to be exercised only at the time of concluding the contract. Of course, even if the Plaintiffs expressed their intent to want to adjust the index of the Plaintiffs when concluding the contract, but the Defendant did not expressly state it in the contract, such assertion in the instant case does not exist.

Meanwhile, even if examining the amendment of the Enforcement Decree of the State Contracts Act, it is difficult to view that the Plaintiffs’ right of choice without any limitation on the time alleged by the Plaintiffs is recognized. In other words, Article 64(1) and (2) of the Enforcement Decree of the State Contracts Act (amended by Presidential Decree No. 19035, Sept. 8, 2005) provides that the head of each central government agency or the public official in charge of contracts shall adjust the contract amount if the rate of product adjustment or index adjustment is increased or decreased by 5/100 or more from the date of entering into the contract, and that the same contract shall be adjusted by one of the above method of product adjustment or index adjustment with respect to the same contract in adjustment of the contract amount, and the method of contract adjustment shall be clearly indicated in the contract at the time of signing the contract in consultation with the other party. Then, Article 64(1) and (2) of the Enforcement Decree of the State Contracts Act provides that, in principle, at the time of signing the contract, the method of price adjustment or index adjustment shall be determined as the date of tender adjustment.

As a reference, Article 73(2) of the Enforcement Decree of the Act on Contracts to Which a Local Government is a Party, which has been providing the same content as that of Article 64(2) of the Enforcement Decree of the State Contracts Act, to prevent dispute over interpretation of the method of adjustment on November 20, 2013, the head of the local government or the contracting officer of the local government shall adjust the contract amount by the method of item adjustment, except as otherwise expressly provided in the contract by the other party to the contract at the time of concluding the contract.

Therefore, the argument of other plaintiffs cannot be accepted without the need to examine other issues.

4. Conclusion

Therefore, all of the plaintiffs' primary claims shall be dismissed, and all of the conjunctive claims shall be dismissed.

Judges Yoon Sang-do (Presiding Judge)