1. Case Overview
The plaintiffs and the defendant were members holding shares in Company A and were involved in a dispute over its management rights. During the conflict, the defendant obtained a preliminary injunction prohibiting the plaintiffs from interfering with certain activities. When the plaintiffs violated the injunction, the defendant applied for indirect enforcement measures, leading to forced execution on the plaintiffs' assets.
However, the appellate court later canceled the preliminary injunction, citing a lack of rights requiring protection and no necessity for preservation at the time of the application. Subsequently, the plaintiffs argued that the cancellation rendered the indirect enforcement decision retroactively invalid, thus nullifying all related enforcement measures, and filed a claim objection lawsuit against the defendant.
2. Court Ruling (Gwangju High Court Decision 2024Na21043, dated October 17, 2024)
The court ruled that unless there is a special reason to believe that the preliminary injunction underlying the indirect enforcement decision was inherently void at the time it was issued, it is reasonable to assume that the subsequent cancellation of the injunction in the appellate court does not retroactively nullify the enforcement authority of the indirect enforcement decision that was entered separately from it, and the cancellation decision will lose its enforcement power only from the cancellation date to the future, and the enforcement power over the indirect enforcement fines still remains valid. The court reasoned that the cancellation of the injunction in the appellate court was due to a lack of necessity and protectable rights at the time of the application, not because it was inherently unlawful or invalid, and that the plaintiffs neither fulfilled the obligations imposed by the injunction nor substantiated their claims in the objection lawsuit. Consequently, the court upheld the validity of the indirect enforcement decision concerning fines for violations that occurred prior to the cancellation of the injunction.
3. Our Argument and Role
We represented the defendant from the first instance and faced a legal environment where lower court precedents often viewed the cancellation of a preliminary injunction by an appellate court as rendering all related indirect enforcement decisions retroactively invalid. In order to defeat this tendency, we argued that even if the appellate court's cancellation of the injunction was binding, it should still be examined whether the cancellation was due to inherent invalidity or changed circumstances; in this case, the cancellation was based on subsequent developments, not inherent illegality; and thus, fines for prior violations should remain enforceable. However, the first-instance court erred in presuming retroactive invalidity without detailed consideration of the objection claims or the legal grounds of the cancellation.
In the appellate court, we argued that the first-instance court erred by presuming that it was bound by the appellate court's decision regarding the cancellation of the preliminary injunction without conducting a detailed review of the plaintiff's objection grounds. We pointed out that the first-instance court did not adequately examine the plaintiff's arguments for objection, leading to a failure to assess whether the enforcement authority of the indirect enforcement decision should be excluded or its scope limited; the appellate court's reasoning for canceling the preliminary injunction lacked binding authority (res judicata) over the current objection case, and therefore, there was no legal basis requiring the first-instance court to be bound by the appellate court's reasoning for cancellation; and treating the appellate court's cancellation reasoning as binding deprived the defendant of any opportunity to challenge what could be a legally flawed appellate decision, thus risking an infringement of the defendant's right to a fair trial.
The appellate court accepted our arguments, reversing the first-instance decision and confirming that the indirect enforcement decision's authority remains valid for obligations breached before the cancellation of the injunction.
- Attorneys involved: Jung Jae-hee and Lee Chan-woong
