[1] The method of determining whether a limitation on participation in bidding by a public corporation or quasi-governmental institution is an administrative disposition based on a contract based on the statute

[2] The purport of Article 39(2) of the Act on the Management of Public Institutions, and whether the said provision applies only to unlawful acts against public corporations and quasi-governmental institutions (affirmative)

[1] Article 39(2) of the Act on the Management of Public Institutions; Article 15 of the Rules on Contract Affairs of Public Corporations and Quasi-Governmental Institutions; Article 27 of the Act on Contracts to Which the State is a Party; Article 76 of the Enforcement Decree of the Act on Contracts to which the State is a Party; Article 2(1)1 of the Administrative Litigation Act / [2] Article 39(2) of the Act

[1] [2] Supreme Court Decision 2016Du33537 decided Oct. 25, 2018 (Gong2018Ha, 2254)

APP Co., Ltd. (formerly: 3rd PPS Co., Ltd.) (Law Firm Rois, Attorneys Nam-hee et al., Counsel for the plaintiff-appellant)

Korea hydroelectric Power Co., Ltd. (Law Firm Zyeong, Attorneys Kim Young-soo et al., Counsel for the plaintiff-appellant)

Daegu High Court Decision 2015Nu6508 decided January 15, 2016

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

A. In a case where a public corporation or quasi-governmental institution can impose a limitation on qualification for participation in bidding on the basis of statutes or a contract, whether a limitation 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 is an issue of interpretation of intention in principle. 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 has taken a limitation 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 which has a significant interest in the decision on the method of objection (see Supreme Court Decision 201

B. Review of the reasoning of the lower judgment and the evidence duly admitted by the lower court reveals the following circumstances.

(1) Before taking a measure to restrict participation in bidding, the Defendant issued to the Plaintiff a document stating that “Prior Notice of Disposition (Hearing Procedure Notice)” 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. under the Administrative Procedures Act.

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

(3) In the notice issued by the Defendant while taking a restriction on qualification for participation in bidding, the Defendant stated “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 “six months limited to Hanwon.” However, regarding the method of appeal, the Defendant stated as follows: “A request for administrative appeal or administrative litigation may be filed pursuant to Article 27 of the Administrative Appeals Act or Article 20 of the Administrative Litigation Act,” and the limitation period for filing an administrative appeal or administrative litigation shall be as follows: (a) within ninety (90) days from the date on which he becomes aware of the disposition; (b) administrative litigation is filed within ninety (10) days from the date on which he becomes aware of the disposition (Provided, That it is not filed after one (1) year from the date on which the disposition, etc. was taken).”

C. Examining the above circumstances in light of the legal principles as seen earlier, it is reasonable to view the Defendant’s restriction on participation in bidding as an administrative disposition based on Article 39(2) of the Public Institutions Operation Act, not based on the contract. The reasons are as follows.

(1) Each document notified by the Defendant to the Plaintiff is mixed with the content premised on the fact that the pertinent measure is a contract, and the content premised on the fact that it is an administrative disposition, so it is difficult to clearly understand the nature and grounds of

(2) Even if examining all processes up to the measure in question, it is still unclear whether the Defendant selects any means and takes a limitation on participation in bidding.

(3) The Defendant proceeded with the procedure for limiting participation in bidding pursuant to the Administrative Procedures Act, and ordered the Plaintiff to file an administrative appeal or lawsuit pursuant to the Administrative Appeals Act or the Administrative Litigation Act within a given period as the method of filing an appeal against a limitation on participation in bidding.

(4) Therefore, in such circumstances, it is difficult to expect that the Plaintiff, despite the Defendant’s above notification, was aware that the limitation of participation in bidding was not an administrative disposition, but an exercise of rights based on a contract to dispute in civil procedure

D. In the same purport, the judgment of the court below that rejected the Defendant’s defense of safety since the Defendant’s limitation of qualification for participation in bidding constitutes an administrative disposition is justifiable, and contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles

2. As to the grounds of appeal Nos. 2 and 3

A. Article 39(2) of the Act on the Management of Public Institutions excludes unjust enterprisers who committed an act that public corporations and quasi-governmental institutions are obviously likely to undermine fair competition or appropriate performance of contracts from bidding for a certain period of time in the future, and is a provision to achieve a general preventive purpose of protecting public contracts, as well as to impose sanctions on such unjust enterprisers. Therefore, it is reasonable to interpret that unjust acts subject to the foregoing provision is limited to acts against public corporations and quasi-governmental institutions (see, e.g., Supreme Court Decision 2016Du33537).

B. Review of the reasoning of the lower judgment and the evidence duly admitted by the lower court reveals the following circumstances.

(1) Around 2005, the Plaintiff entered into a supply contract with the Defendant on the so-called So-called So-called “Cho-ri Nuclear Energy 1 and 2” and the equipment attached thereto.

(2) On November 27, 2007 and June 25, 2009, when performing the above contract, the Plaintiff submitted to the Defendant four copies of the test report stating the specifications, etc. differently from the original.

(3) At the time, the Defendant was designated as a market-type public corporation on January 24, 201, when it was in the position of a public corporation and quasi-governmental institution under the Public Agency Operation Act except for public corporations and quasi-governmental institutions

(4) On March 6, 2015, the Defendant rendered a disposition restricting the qualification for participation in the instant bidding against the Plaintiff on the ground that the Plaintiff constitutes “a person who forges, alters, or wrongfully uses documents relating to tendering or contract, or a person who submits false documents.”

C. Examining these circumstances in light of the legal principles as seen earlier, since the Plaintiff was merely the Defendant at the time of submitting the test report to the Defendant, the said submission does not constitute an illegal act against a public corporation or quasi-government institution. Therefore, the disposition imposing restrictions on the qualification to participate in the instant bidding did not meet the sanctions against the restriction on qualification to participate in the bidding under Article 39(2)

D. On the premise that the Plaintiff’s submission of the test report is subject to Article 39(2) of the Act on the Management of Public Institutions, the lower court’s determination on whether the above act would prejudice fair competition or appropriate implementation of the contract is justifiable, but the lower court’s determination that the restriction on participation in the bidding of this case was unlawful is just, and the lower court’s above error did not affect the conclusion of the judgment

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Ahn Jae-chul (Presiding Justice)