[Civil] Barun Law wins an appeal by making the case that a private contract under the provision pertaining to exceptions to disposal by a preferential beneficiary under a security trust agreement does not fall under Article 27 (2) 4 of the Athletic Facility Act.
1. Who did Barun Law represent?We represented a client who had purchased real estate relating to a golf course as preferential beneficiary under a security trust agreement in accordance with a private contract.2. Progress of the lawsuits and our roleMembers of a golf club filed several lawsuits to claim membership security payments against the client. The members asserted that the client succeeded to all the rights and obligations regarding the members pursuant to Article 27(2)4 of the Athletic Facility Act even in the case of a private contract made pursuant to a security trust agreement according to the en banc decision rendered by the Supreme Court of Korea as Decision 2016Da220143 dated October 18, 2018.We emphasized that the en banc decision above was regarding the case where real estate is disposed of by a public sale procedure under a security trust agreement or is disposed of by a private contract in accordance with the predetermined conditions of public sale, but the client in this case purchased the real estate in accordance with a general process of making a private contract in accordance with the special exception provision pertaining to disposal by a preferential beneficiary under a security trust agreement without taking a public sale procedure. In addition, we clearly stated that, in light of the opposition opinion in the en banc decision above, Article 27 of the Athletic Facility Act prescribes exceptions to legal principles, and in the case where the interpretation of that provision regarding exceptions is unclear, we should go back to the general legal principle and should not extend the intent of the exceptional provision. In the end, we won one appeal case, reversing the district court’s decision among the four lawsuits filed for the return of membership security payments. As for the remaining three lawsuits, we led the plaintiffs to withdraw their appeals after we had won the lawsuits at the district court level.3. Meaning of the judgmentAccording to the en banc decision on Article 27 (2) 4 of the Athletic Facility Act, there was a room for controversy over a transferee’s succession of rights and obligations regarding members of a certain athletic facility in the case of disposal of the athletic facility under a security trust agreement. The judgment is meaningful in that it confirms that Article 27 (2) 4 of the Athletic Facility Act does not apply to a private contract that is executed in accordance with contractual terms without taking a public sale procedure even in the case where the relevant real estate is disposed of pursuant to a security trust agreement.□ Attorneys in charge : HyunDong kim, GyuHee Park
2023. 02. 15
IP Advisory and Litigation
[Intellectual Property] Barun Law incapacitates the other party holding patent and design rights from exercising intellectual property rights.
1. Case summaryWarning the vendors of our client that the client’s product infringed on the patent right and the design right to its product, a safety equipment manufacturer urged the client’s vendors to stop selling the infringing product and filed an application for an interim injunction against the client to stop its act of infringement (Case No. Seoul Central District Court 2022Kahap21487).2. Court judgmentThe court dismissed all the claims made in the application above on the ground that it is difficult to see that the client’s product contains all the components in the claimed items of the patent right held by the manufacturer and that the court cannot see the manufacturer’s assertion that the registered design held by it and the client’s design will give a similar aesthetic impression to the viewers be substantiated (Seoul Central District Court’s Decision 2022Kahap21487 dated January 16, 2023).3. Our argument and roleWe, after closely analyzing the manufacturer’s patent and design rights and refuting its claims from various angles in accordance with the legal principles regarding the criteria for determining whether patent rights and design rights are infringed, led to a decision to dismiss the application for an interim injunction.4. ImplicationsSurprisingly, there are many companies that misunderstand the scope of their patents and design rights among companies that own patents and design rights. This case is an alarming case against the indiscriminate exercise of patent/design rights.In addition, there are quite a few people among patent and design right holders who misunderstand that their act of issuing a warning are always a legitimate exercise of their rights as patent/design right holders. Sometimes, the act of warning takes the form of exercising rights only in appearance, but the substance of the warning goes beyond the scope of legitimate exercise of rights under social norms and violates the reputation of competitors. In addition, it should be noted that such acts may fall under illegal tortious acts committed with intention to gain an edge in competition. It is also necessary to note that if a person causes damage to its competitor by giving a strong patent/design right infringement warning under the premise of infringement when it is not actually an infringement, in particular giving the warning to the vendors of its competitor, not to the competitor itself, the patent/design right holder may rather bear the “liability for damages based on tort”.□ Attorneys in charge: Changwon Baek, Younghoon Jeong, and Minsun Shim
2023. 02. 15
Finance and Litigation
Construction & Real Estate
[Construction/Finance] Barun Law wins the case regarding a claim for KRW166.2 billion, including a payment to be made upon termination of contract in relation to the Gyeongnam Masan Robot Land Project.
1. Case summaryRepresenting Gyeongnam Robot Land Co., Ltd., which is a private business operator of a project to develop a theme park called “Robot Land” in Mansan, Gyeongnam (the “Robot Land Project”), Barun Law won the appeal case by receiving a judgment of dismissal after we had won the case at the district court level.The Robot Land Project was in danger of being stranded as the originally selected lead manager entered the rehabilitation process. However, it was resumed in the second half of 2015 when the Daewoo E&C Consortium signed a concession agreement to conduct the Robot Land Project with Gyeongsangnam-do, Changwon-si, and the Gyeongnam Robot Land Foundation (collectively, the “defendants”). Gyeongnam Masan Robot Land Co., Ltd. (“PFV”), a private operator established as a project financing vehicle, raised funds through PF and carried out construction after signing the concession agreement. Then, PFV completed and commenced operation of a theme park, a first-phase private investment project facility. At the time of negotiating the concession agreement, a clause was newly added thereto to ensure that part of the second-phase project site (i.e., site for pension construction) would be supplied early while lowering the ratio of payments to be made in case the agreement is terminated. However, as the defendants violated the obligation to supply the pension site, repayment of the PF loan, which had been delayed, became impossible at all. The financial institution and PFV terminated the concession agreement. Accordingly, PFV filed a lawsuit claiming the payment of the amount to be paid when the agreement is terminated according to the relevant provisions of the concession agreement and the operating expenses incurred from the termination of the agreement until the return of the operating right.2. DecisionThe key issue in this case was whether the defendants had an obligation to supply the pension site to PFV and whether the violation of this obligation constituted grounds for termination. The Defendants argued that they had no obligation to supply the pension site because PFV did not fulfill several obligations precedent to their obligation to supply the pension site. Like the district court, however, the appeal court determined that PFV’s exercise of termination right was lawful because the Defendants violated the obligation to supply the pension site and, as a result, the loan under the loan agreement had to be repaid immediately before maturity. In addition, there was a dispute over the amount to be paid upon termination, but the court determined that the defendants were obliged to pay KRW 100 billion payable upon termination plus KRW 10 billion in value-added tax according to the payment calculation table attached to the concession agreement.3. Our argument and roleSince the provision pertaining to the obligation to supply the pension site was stipulated in a very brief form and the purpose of introducing the provision was not stipulated, there was a fierce battle over whether the provision on the supply of the pension site was related to financing. Emphasizing the words of the final concession agreement and the meaning and purpose of the provisions presented in the negotiation process, we were able to finally win the case by effectively arguing and substantiating that the payment made for termination is not a special benefit to the private business operator, but is paid to liquidate the contractual relationship at the time of termination.4. ImplicationsFrom the overall perspective, the Project is a public-private PF project in a public-private partnership method, but the first-stage private project, which is part of the PF project, is a project that was carried out on a BTO basis as stipulated in the Act on Public-Private Partnerships in Infrastructure (the “PPP Act”). Given that there have been very few lawsuits claiming payment upon termination in domestic private investment projects conducted in accordance with the PPP Act, it is very meaningful that the court recognized the competent authority's obligation to make the payment for termination in accordance with the words and purpose of the concession agreement.In addition, Barun Law showed its expertise in private investment business-related litigation by winning all four lawsuits related to Gyeongnam Masan Robot Land. In the lawsuit filed to cancel the resolution of the shareholders’ meeting held for the termination of the concession agreement, we won the lawsuit by obtaining a judgment of dismissal with regard to the shareholders’ meeting, which was held in the form of reporting after termination in accordance with the procedures in the shareholder agreement, in a situation where the shareholders’ agreement and the articles of incorporation were inconsistent. With regard to acquisition tax imposed in the procession of donations made after the construction completion of the theme park, we led to a judgment cancelling the acquisition tax by applying the logic that the ownership was originally vested in the Gyeongnam Robot Land Foundation although the term “donation” was used. We also represented PFV in a preliminary injunction against infringement of the exclusive distribution right filed by a company selected as an online ticket sales and group visitor recruitment business operator.□ Attorneys in charge : Jaehyeong Kim, Sangyeop Byon, Dohyung Kim and Jisu Kim
2023. 02. 15
Corporate Investigations & White Collar Defense
[Corporate/Criminal] Barun Law effectively responds to both corporate and criminal cases relating to disputes between shareholders.
1. The matter to be reportedIn a dispute over management rights to a semiconductor manufacturer based in Daejeon, we represented a representative director and management of the company, and won all the cases regarding an interim injunction to suspend the execution of business affairs and convening an extraordinary meeting of shareholders. We also received the suspension of sentence regarding the punishment of paying millions of dollars as a fine in the related criminal case. As such, we successfully finished the dispute continued for a long time.Mr. B who was a registered director and minority shareholder filed a complaint and a petition against a large shareholder and the representative director of the company under allegations that they had violated the Act on the Aggravated Punishment of Specific Crimes by issuing fraudulent tax invoices, etc. Mr. B intentionally made unfavorable testimonies at criminal trial. He also filed for an interim injunction to suspend the execution of business affairs against the representative director and a suit to convene an extraordinary meeting of shareholders to discuss his dismissal. As such, Mr. B actively created disputes over management rights.In response to legal actions taken by Mr. B, our Criminal Group and Corporate Group closely cooperated and systematically responded to litigation both at and out of court. As a result, our client was able to receive a judgment of suspension of sentence with regard to a fine amounting to millions of dollars at the criminal trial. We also won the lawsuit for management rights and finally ended the long-standing dispute.Barun Law’s expert groups will continue to precisely diagnose situations, which clients are facing with, through close collaboration and take the lead in establishing an effective response strategy.□ Attorneys in charge: Mankyeong Noh, Jinsook Kim, Minhoon Yi, Jihye Jeon, Jiwon Baik and Seyoung Kim
2023. 02. 15
Corporate Investigations & White Collar Defense
[Criminal] Barun Law assists the client, who is accused of abusing ex officio authority in relation to activities of the Sewolho Special Investigation Committee, to be found innocent.
1. Case summary The prosecution accused a chief in charge of personnel management and several staff working at the presidential office of abusing their ex officio authority and obstructing the exercise of a right by the Sewolho Special Investigation Committee (the “SIC”) in conducting its duties, on the premise that they obstructed the SIC’s activities by suspending a procedure to hire senior public officials and not dispatching public officials to the SIC. Defending the chief in this case, we emphasized that he had not colluded with the other defendants and he had not had any perception of the alleged abuse of ex officio authority. Accepting our defense, the court found the chief innocent of all the accusations made against him (Seoul Central District Court’s Decision 202Gohap412 dated February 1, 2023). As we draw the decision that the alleged acts of the chief, who was deemed as a person engaging in execution, did not constitute the abuse of ex officio authority, the other defendants who were prosecuted as collusive joint true criminal were found innocent of all the charges. 2. Content and meaning of the decision The court specifically explained the legal theory under which a defendant can be found that he has a collusive relationship in the alleged crime of abuse of ex officio authority, stating that in order for a crime of abusing ex officio authority to constitute against a person, the person is required to be a public official and to have general authority to conduct acts indicated as acts constituting the act of abusing ex officio authority. Thus, a person who is a public official but does not have such authority can be held liable for the crime of abusing ex officio authority as collusive joint true criminal only when he has colluded with another person who is a public official and has general authority to conduct such acts as constituting the act of abusing ex officio authority and has controlled the alleged acts by making an essential contribution to the alleged crime. In addition, the court presented the criteria of judgment to find the existence of a “right” referred to in relation to the crime of abusing ex officio authority (i.e., whether the right is an embodied right exercisable under the statute), judging that it is difficult to see that the authority held by the Commissioner of the SIC constitutes the “right” subject to the crime of abusing ex officio authority, that the court cannot find that such rights arose in this case, and that it is difficult to find that the exercise of such rights was practically obstructed by the suspension of appointment of senior public officials. □ Attorneys in charge: Jaeho Kim, Ilkwang Ko, Sangoh Park, and Jonghwa Lee
2023. 02. 15
[Civil] Barun Law represents a creditor and obtains the final judgment that the deleted registration of the commencement of compulsory auction be restored as the real estate sale procedure was cancelled due to a definitive registration made by a holder of a provisional registration after the creditor had won a bid at the real estate auction.
1. Case summaryThere was mountain land (the "Land") to which a senior provisional registration of ownership was made. A winner of a compulsory auction procedure on the Land attempted to acquire the ownership of the Land after he obtained approval for sale of the Land in the compulsory auction procedure. Against this backdrop, the holder of senior provisional ownership registration made the definitive registration of ownership against the Land.
As the definitive registration was made, the entry of registration made on the basis of the decision on the commencement of the compulsory auction was deleted by a registration officer ex officio on the ground that the registration infringed on the right intended to be preserved by the provisional registration of ownership.
2. Our role and implications of this case
Our attorneys filed for an immediate appeal on behalf of the winner against the decision on the cancellation of the compulsory auction in the name of the creditor who had applied for the compulsory auction, obtaining the creditor’s consent. In the meantime, we filed a suit to obtain an approval for a procedure to restore the entry of registration made on the basis of the decision on the initiation of the compulsory auction procedure against a defendant who holds the definitive registration with regard to the Land.
In the lawsuit on the merits, the defendant asserted that the definitive registration is legal since the provisional registration is not a provisional registration of security but a provisional registration to preserve seniority over collateral. However, accepting our argument, the district court determined that the provisional registration constitutes the provisional registration of security, the definitive registration is null and void because the defendant has not taken a legal liquidation procedure as provided in the Provisional Registration Security Act. The court further determined that the entry of registration regarding the decision on the initiation of compulsory auction (the “Entry”) should not be subject to ex officio deletion because the Entry does not conflict with the effect of the provisional registration to preserve seniority, but the Entry was deleted without any underlying cause, and therefore, the defendant has an obligation to express its intent of approval as an interest related third party under registration with regard to the restoration of the Entry .
After the high court rendered its decision, the appeal court cancelled the auction court’s decision on the cancellation of compulsory auction and the compulsory auction case was revived.
The Supreme Court of Korea has upheld that a creditor applying for a compulsory auction may file a suit for approval of a procedure to restore an entry of registration against a person who has finished making a registration of ownership transfer at the time of the entry being deleted (e.g., Supreme Court of Korea’s Decision 2015Da253573 dated May 16, 2019, etc.). This case is meaningful in that we properly apply the legal theory upheld in similar precedents and resolve the dispute in favor of the winner in the case where the debtor colluded with the holder of provisional registration of ownership to attempt to make a definitive registration of ownership in order to prevent the loss of ownership immediately after the winner had won the bid for compulsory auction of the Land.
□ Attorneys in charge: Son Heungsoo and Shin Eunryeong
2023. 01. 18