2016du62382 The revocation of the disposition to dismiss the improper businessman;

A Stock Company

Law Firm LLC et al., Counsel for defendant-appellant

[Defendant-Appellee] Plaintiff 1 and 3 others

Korea hydroelectric Power Co., Ltd.

Government Legal Service Corporation (Law Firm LLC)

Attorney Kim Jong-sik, Justice Kim Jong-sung, Justice Kim Jong-soo, Justice Cho Jong-sik, Justice Cho Jong-tae, and Justice Kim Jong-hwan

Daegu High Court Decision 2015Nu7501 Decided November 25, 2016

February 14, 2019

The judgment below is reversed, and the case is remanded to the Daegu High Court.

The grounds of appeal are examined.

1. In a case where a public corporation or quasi-governmental institution may impose restrictions on qualification for participation in bidding on the basis of statutes or a contract, the issue of interpreting intent is, in principle, whether a restriction on qualification for participation in bidding against a contracting party is an administrative disposition based on statutes or exercise of rights based on a contract. In this case, the objective and comprehensive review of the document notified by the public corporation or quasi-governmental institution to the contracting party and the process up to the relevant measure should be determined. Nevertheless, where it is still unclear whether a public corporation or quasi-governmental institution takes a restriction on qualification for participation in bidding as an administrative disposition based on statutes or a limitation on qualification for participation in bidding as a contract based on a contract is still unclear, it is reasonable to finally determine it by taking into account the other party’s awareness and predictability of the measure that has a significant interest in the decision on the method of objection (see Supreme Court Decision 201

2. The lower court acknowledged the following facts.

(1) The Defendant was designated as a market-based public corporation on January 24, 201, under the Act on the Management of Public Institutions (hereinafter “Public Institutions Management Act”).

(2) The Plaintiff entered into a contract with the Defendant for the supply of goods to be used in the period of B nuclear power plants 3 and 4, and submitted a revised and modified test report on several occasions in connection with the implementation of the said contract. From July 24, 2008 to January 23, 201, which was before the Defendant was designated as a market-based public corporation, 66 and 5 copies after January 24, 201, which were designated as a market-based public corporation.

(3) On March 6, 2015, the Defendant: (a) deemed that the Plaintiff constitutes a person who forged, altered, or unlawfully used documents relating to the tender or contract or a person who submitted false documents, on the ground that the 71st test report that was forged or altered was submitted; and (b) taken measures to restrict the Plaintiff’s participation in bidding.

3. Based on the above findings, the lower court determined that the Defendant’s limitation of qualification for participation in bidding constitutes an administrative disposition, but the contract provision between the parties regarding the part concerning the submission of the 66th test report, which was designated as a market-type public corporation before January 24, 201, was based on the contract provision concluded between the parties. As to the part concerning the submission of the 5th test report thereafter, Article 39(2) of the Public Institutions Operation Act was based on the relevant administrative disposition, and that the above administrative disposition satisfies the contract provision and the sanctions stipulated in the relevant statutes and was lawful.

4. However, we cannot accept the judgment of the court below as it is.

A. First, examining the following circumstances acknowledged by the reasoning of the lower judgment and records as to whether the Defendant’s limitation on participation in bidding constitutes an administrative disposition, it is reasonable to view the Defendant’s restriction on participation in bidding as a single administrative disposition applying Article 39(2) of the Public Institution Operation Act to all Plaintiff’s submission of test report 71 copies as a whole (hereinafter “instant disposition”).

(1) Before taking measures to restrict participation in bidding, the Defendant issued to the Plaintiff a document stating that “Prior Notice of Disposition (Notification of Holding of Hearing)” was “A notice of the intended disposition by our agency pursuant to Article 39 of the Act on the Management of Public Institutions,” and carried out the relevant procedures, etc. in accordance with the Administrative Procedures Act.

(2) In the form of submission of opinions issued by the Defendant along with the aforementioned prior notice of disposition, the same letter stating that “I will present the above opinion in accordance with Article 16 of the Rules on Contract Affairs of Public Corporations and Quasi-Governmental Organizations,” and the above Article 16 provides detailed procedures for the restriction of qualification for participation in bidding in accordance with delegation under Article 39(3) of the Public Institutions Operation Act.

(3) In the notice issued by the Defendant while taking a limitation on participation in bidding, the Defendant stated that “Article 26(1) of the Contract Regulations, Article 97(1)8 of the Enforcement Rule of the Contract Regulations, Article 97(1)10(b) of the Enforcement Rule [Attachment 2] as the grounds for sanctions, and the period of sanctions as “six months limited to Hanwon.” However, as the method of objection, the Defendant would have known that an administrative appeal may be requested or filed pursuant to Article 27 of the Administrative Appeals Act or Article 20 of the Administrative Litigation Act, and the period of exclusion of filing an administrative appeal and an administrative litigation is as follows: (i) an administrative appeal is filed within 90 days from the date on which he becomes aware of the disposition (the claim is not filed after 180 days from the date on which the disposition is made), and (ii) an administrative litigation is filed within 90 days from the date on which he becomes aware of the administrative litigation, etc.”

(4) As such, it is objectively unclear whether the Defendant selected any means among administrative disposition and contract-based exercise of rights, and taken measures to restrict participation in bidding. However, in light of various circumstances such as the Defendant’s procedural progress and details of notice, it is difficult to expect that the Plaintiff was not an administrative disposition.

(5) On the other hand, the defendant takes one measure as a whole against the plaintiff's 71 test report as a whole.

It does not appear that only expressed the intention to take the action, and it does not seem that a separate measure was taken by dividing the act of submission by time.

B. Furthermore, the part pertaining to the submission of 66 test results that the Defendant was designated as a market-based public corporation on or before January 24, 2011 among the instant disposition is not acknowledged for the following reasons.

(1) Article 39(2) of the Act on the Management of Public Institutions excludes a public corporation or quasi-governmental institution from a tender for a certain period of time in the future, where a public corporation or quasi-governmental institution commits an act that is obviously likely to undermine fair competition or the proper performance of a contract, and is a provision to achieve the general preventive purpose of protecting public contracts and to impose sanctions on the relevant improper businessman. Therefore, it is reasonable to interpret that the act of illegality subject to the said provision is limited to an act against a public corporation or quasi-governmental institution (see Supreme Court Decision 2016Du

(2) At the time of the Plaintiff’s submission of Chapter 66 test report to the Defendant, the above submission does not constitute an illegal act against a public corporation or quasi-government institution. Therefore, this part of the act cannot be deemed as satisfying the requirements for sanctions under Article 39(2) of the Act on the Management of Public Institutions. If so, only the Plaintiff’s submission of test report among the Plaintiff’s 71 submission of the changed test report can be recognized as the premise of the instant disposition. Therefore, the lower court should have determined whether the above submission of test report under the premise only on the above 5 submission of the test report is obvious that it would interfere with the proper implementation of the contract, and whether the disposition of this case is deviation or abuse of discretionary authority.

5. Nevertheless, the lower court concluded that the instant disposition was lawful on the erroneous premise that the Plaintiff’s submission of the Plaintiff’s test report was conducted by dividing it into the transfer of public enterprises and subsequent division, and that the submission of the previous test report satisfies the requirements for sanctions. In so determining, the lower court erred by misapprehending the legal doctrine on the confirmation of the grounds for disposition and the interpretation of the written disposition, thereby

6. Therefore, without further proceeding to decide on the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Cho Jong-hee

Justices Kim Jae-in

Justices Min Il-young in charge

Justices Lee Jae-hwan