[1] In a case where the representative of a member of a joint supply and demand organization participating in a contract which becomes a party to the contract, whether the member should register the change (affirmative)

[2] In a case where a public official in charge of contract neglects the registration of change of representative, the tender participants shall be informed or presented to the tender participants through the public announcement of tender, etc. so that the tender participants shall be aware of the invalidity of the tender, and the tender participants shall also participate in the tender on such premise, whether the tender of the tender participants who have failed to register the change of representative becomes invalid

[3] Where a tender becomes invalid due to a defect in the submission of a tender document in a tendering procedure for the conclusion of so-called public contract to which the State becomes a party, and whether the participation in the tender is naturally null and void if a part of the members of the joint supply and demand organization participating in the tender is excluded from the tendering procedure (negative)

[1] Article 39(4) of the Enforcement Decree of the Act on Contracts to Which the State Is a Party (hereinafter “Enforcement Decree of the State Contracts Act”) provides that “tenders conducted by a person who is not qualified for participation in competition or any other tender falling under any of the causes prescribed by Ordinance of the Ministry of Strategy and Finance shall be invalidated.” Article 44 subparag. 6-3(b) of the Enforcement Rule of the Act on Contracts to which the State is a Party (hereinafter “Enforcement Rule of the State Contracts Act”) provides that “the tender submitted a tender without changing the name of the representative (where there are several representatives, all the representatives) from among the matters for the registration of the tender shall be invalidated.” As such, the provision on the grounds of invalidity of the registration of the change of the representative’s tender provides that “The purpose of Article 39(4) of the Enforcement Decree of the State Contracts Act is to prevent any dispute over the legitimate exercise or effect of the representative’s authority in subsequent proceedings after the tender by accurately registering the representative, while preventing the participation of unjust enterprisers pursuant to Article 76(1) of the State Contracts Act.

[2] In a case where a public official in charge of this contract under Article 44 subparagraph 6-3 (b) of the Enforcement Rule of the Act on Contracts to Which the State is a Party is a Party is informed or presented to the tender participants through the public tender notice that the tender may be invalidated if the public official failed to register the change of the representative, and the tender participants participate in the tender on such premise, the tender made by the tender participants in the above ground shall be null and void and the tender shall be excluded from the tender procedure.

[3] The so-called public contract which becomes a party to the State under the Act on Contracts to Which the State Is a Party (hereinafter “State Contract Act”) is a private contract to be concluded at an equal position with the other party as a private economic entity, and its essential content does not differ from a contract between private parties. Thus, the principle of private autonomy and freedom of contract applies as it is, except as otherwise expressly provided in the relevant Acts and subordinate statutes. Therefore, even if there is a defect in submitting a tender in the tendering procedure for concluding a contract, the tender does not become null and void merely because the defect is so serious that the public nature and fairness of the tendering procedure would be considerably infringed, and the other party knew or could have known such defect, or that the determination of the successful bidder and the conclusion of the contract would result in a clear violation of good morals and other social order, it is reasonable to interpret that the contract becomes null and void only where there are special circumstances where the remaining members of the joint supply and demand organization are excluded from participating in the tendering procedure, and the remaining members of the joint supply and demand organization cannot be deemed null and void in the tendering procedure.

[1] Articles 39(4) and 76 of the Enforcement Decree of the Act on Contracts to which the State is a Party; Article 44 subparag. 6-3(b) of the Enforcement Rule of the Act on Contracts to which the State is a Party / [2] Articles 39(4) and 76 of the Enforcement Decree of the Act on Contracts to which the State is a Party; Article 44 subparag. 6-3(b) of the Enforcement Rule of the Act on Contracts to which the State is a Party / [3] Article 105 of the Civil Act; Article 5(1) of the Act on Contracts to which the State is a Party; Articles 39(4) and 76 of the Enforcement Decree of the Act on Contracts to which the State is a Party; Article 44 subparag. 6-3(b

[3] Supreme Court Order 2006Ma117 dated June 19, 2006 (Gong2006Ha, 1336)

KS Construction Co., Ltd. and nine others (Law Firm Barun et al., Counsel for the plaintiff-appellant)

Korea

Large Forest Industry Co., Ltd. (Law Firm LLC et al., Counsel for the defendant-appellant)

Seoul High Court Order 2011Kahap1987 dated June 15, 2012

Of the judgment of the court below, the part concerning port engineering against the creditor, Inc. is reversed, and that part of the case is remanded to the Seoul High Court. The debtor and the intervenor’s supplementary appeal against the remaining creditors are all dismissed. Of the re-appeal cost of the re-appeal part, the part concerning the participation in the supplementary appeal against the obligor’s supplementary intervenor

The grounds of reappeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to the ground of reappeal against creditor's navigational engineering corporation

A. Article 39(4) of the Enforcement Decree of the Act on Contracts to Which the State Is a Party (hereinafter “State Contracts Act”) provides that “a tender conducted by a person who is not entitled to participate in competition or any other tender falling under the grounds prescribed by Ordinance of the Ministry of Strategy and Finance shall be null and void.” Article 44 Subparag. 6-3(b) of the Enforcement Rule of the State Contracts Act provides that a tender submitted without changing the name of the representative (where there are several representatives, all the representatives) from among the registered matters for the tender shall be null and void

The purpose of Article 76 of the Enforcement Decree of the State Contracts Act is to prevent any dispute over the legitimate exercise of the authority of the representative or the validity thereof in subsequent procedures after the tender by accurately registering the representative, and to prevent the participation of unjust enterprisers in the tender by the same representative, while at the same time, to prevent the overlapping or fraudulent bidding by many corporations. Therefore, Article 44 subparagraph 6-3 (b) of the Enforcement Rule of the State Contracts Act provides a detailed matter that is likely to substantially infringe on the public nature and fairness of the tender, and where the representative of the member participates in the tender by organizing a joint supply and demand organization, the class members shall be changed even if the representative of the group is changed. Meanwhile, even if a public official in charge of this contract fails to comply with the internal rules to register the change in the tender procedure, it is reasonable to deem that the tender of the participant is invalid or excluded from the tender in the tender procedure.

B. Review of the reasoning of the lower judgment and the record reveals the following facts.

1) On December 29, 2010, at the commission of the Korea Coast Guard, the Public Procurement Service under the jurisdiction of the debtor publicly announced the tender (hereinafter “instant tender”) with respect to the “Construction of the YYYYYYYYYYYYYYYYYYYY YYYYYYYY YYYYYYYYYYYY YYYYYYYYYYYYYYYYYYYYYY YYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYY

2) The obligees constitute a joint contractors (hereinafter “joint contractors”) and selected creditors Sc construction Co., Ltd. (hereinafter “creditor Sc construction”) as a joint contractors’ representative on January 11, 201. The creditors Sc construction, the representative of the joint contractors, submitted a tender to the effect that the tender will be submitted in accordance with the bid price through the National Integrated Procurement System on the shop design, which was enforced on April 28, 2011, was selected as a person eligible for the execution design on June 21, 2011. As a result of the qualification examination, the creditors’ bid was selected as a person eligible for the execution design on June 21, 201.

3) However, among Nonparty 1 and 2, Nonparty 2, the joint representative director of the creditor joint venture body, the creditor joint venture body (hereinafter “creditor navigational navigational navigation engineering”), Nonparty 2 resigned from office on March 31, 201 and the cancellation registration was completed on April 7, 2011, but did not change the registered information on the national comprehensive electronic procurement system. As a result, at the time of the tender, Nonparty 1 was indicated as the representative of the creditor navigational navigational navigational navigation engineering on the national comprehensive electronic procurement system, but both Nonparty 1 and 2 were indicated as the representative. Nonparty 2 maintained the status of the creditor navigational navigational navigational navigation engineering as the director.

4) As above, the Administrator of the Public Procurement Service, on June 24, 201, issued a notice of cancellation of the selection of a person qualified for working plans (hereinafter “instant cancellation notice”) on the ground that the modification of the representative of creditor’s navigational navigational navigational navigation engineering was not duly registered, and Article 39(4) of the Enforcement Decree of the State Contracts Act, and Article 44 subparag. 6-3(b) of the Enforcement Rule of the State Contracts Act provides that, on the same day, a joint supply and demand organization for assisting the debtor (hereinafter “subvener”) was selected as a person qualified for working plans on the grounds that the representative’s modification constitutes grounds for invalidation of bidding under Article 44 subparag. 6-3(b)(b) of the Enforcement Rule of the State Contracts Act. However, Article 10(2) of the Guidelines for the Preliminary Examination of Qualifications, which is the accounting established by the Ministry of Strategy and Finance, and Article 12(4) of the Criteria for the Preliminary Examination of Qualifications shall be modified to the extent

5) Nevertheless, on June 30, 2011, the Administrator of the Public Procurement Service determined a joint supply and demand organization for the Intervenor as a successful bidder, and concluded a contract on the same day with regard to the pertinent bid conducted by design and construction method pursuant to Article 85(5) of the Enforcement Decree of the State Contracts Act, with the joint supply and demand organization for the Intervenor as a joint supply and demand organization for the Intervenor as a successful bidder. On the same day, the contract was concluded on the part of KRW 4.75 billion of the construction cost of the instant case, whichever

6) After reviewing and determining the execution design drawings, the instant bid becomes final and conclusive after the conclusion of the contract on the remainder of the construction works excluding the construction cost. On October 11, 201, the Posi Port Regional Port Authority, a procuring entity, notified the supplementary participant of the completion of the deliberation on the eligibility for the remainder of the construction works other than the construction cost, and the type of construction work, including the instant provisional disposition, was suspended without the progress of the construction work, and the subsequent procedure was suspended.

C. Examining these facts in light of the legal principles as seen earlier, there is room to view that the participation in the tender for aviation engineering by the creditor would be null and void unless the debtor fails to register the change of the representative through bidding notice, etc., and the creditor’s participation in the tender for aviation engineering is changed even though the representative was at the time of bidding and the change was not registered.

Nevertheless, the court below determined that the above failure to register the change of representative of creditor's port engineering does not constitute a ground for invalidity of the bid by the above creditor. In so doing, the court below erred by misapprehending the legal principles on the ground for invalidity of tender, thereby affecting the conclusion

The ground of reappeal pointing this out is with merit.

2. As to the grounds for reappeal against the remaining obligees

A. The so-called public contract to which the State is a party under the State Contracts Act is a private economic entity, and its essential content is a contract under private law concluded at an equal level with the other party, and there is no difference between a contract and a private person. Thus, the principle of private autonomy and the principle of freedom of contract, etc. shall be applied as it is, except as otherwise provided in the relevant statutes. Therefore, even if there is a defect in submitting a tender in the tendering procedure for the conclusion of a contract, the tender does not become null and void. It is so serious that the defect is so serious that the public nature and fairness of the tendering procedure would be considerably infringed, and the other party knew or could have known such defect, or that the determination and conclusion of a contract would result in a violation of good customs and other social order, it is reasonable to interpret that it becomes null and void only if there are special circumstances that would result in excluding the other members from participating in the tendering procedure (see Supreme Court Decision 2006Ma17, Jun. 19, 2006).

B. Examining the above facts in light of the above legal principles, in the case of this case, the status of the director is maintained even after the resignation of the joint representative director of the creditor's navigational navigational navigation engineering, and the non-party 1 remains as the representative director, as well as the non-party 1 is registered as the representative of the creditor's navigational navigational navigational navigation engineering under the National Integrated Electronic Procurement System, it is difficult to view that the defect in the creditor's navigational navigational navigational navigation engineering is serious enough to invalidate the rest of the creditor's tender. Accordingly, the debtor's notice of cancellation of this case has no effect on the remaining creditors except

Meanwhile, the need for preservation is recognized in light of the following: (a) the design drawings for the execution of the joint contractor in the case of the instant construction project, where it is difficult to deem that the contract for the remainder of the construction project except for the portion for the preferential construction among the instant construction projects has become final and conclusive; and (b) the status of the joint contractor’s person eligible for design for the remainder of the creditors’ joint contractor’

C. Therefore, although the judgment of the court below is somewhat inappropriate at the time of the reasoning of the judgment below, the decision of the court below which held that the remaining creditors except the creditor's resistance engineering have clearly explained the grounds for invalidation of tender, the right to expectation and the necessity of preservation, or contrary to the allegations in the grounds for reappeal, there are no errors of law that affected the conclusion of the judgment by either misapprehending the legal principles on the grounds for invalidation of tender, the right to expectation and the necessity of preservation, or violating the private autonomy principle or judicial precedents

3. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of reappeal against creditor's port engineering, the part of creditor's port engineering among the order of the court below is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The debtor and the intervenor's remaining creditors are all dismissed. Of the costs of reappeal against the part, the part pertaining to participation in the supplementary appeal is borne by the supplementary intervenor and the remainder is borne by the debtor. It is so decided as per Disposition by the assent

[Attachment] List of Creditors: Omitted

Justices Kim Yong-deok (Presiding Justice)