Lee & Ko said on the 29th that it has recently won back-to-back rulings worth hundreds of billions of won in project financing (PF) financial damage lawsuits against local governments.
According to Lee & Ko, the Supreme Court rejected Namwon City's appeal in a PF loan damages case filed against the city, finalizing a ruling fully in favor of the plaintiff, Meritz Securities. The amount in dispute was about 50 billion won, and the case centered on issues related to a public-private monorail project in which Namwon City participated as the Assistant Deputy Director authority, including the legal nature of the implementation agreement, the lawfulness of terminating the implementation agreement, whether there were violations of laws related to contributed acceptance-type public-private partnership projects such as the Act on local government property, and whether the liquidated damages agreed to as a credit enhancement measure could be reduced.
At the final appeal, Namwon City argued lack of jurisdiction, claiming the implementation agreement was an administrative law contract under the exclusive jurisdiction of an administrative court. Lee & Ko countered that the case was not about canceling an administrative disposition but a civil case seeking compensation for losses suffered by a third-party financial institution due to illegality in the termination process of the implementation agreement, and the Supreme Court did not accept the grounds for appeal. Lee & Ko said that at the appellate stage Namwon City even retained a large law firm and a former Supreme Court justice to contest the case.
Lee & Ko said the finalized ruling is viewed as confirming that a local government's credit enhancement agreement can be protected as a civil right within the PF receivables recovery structure. It also noted the decision offers implications for analyzing legal theories in similar PF disputes, such as damages for breach of completion-guarantee obligations.
Lee & Ko added that it also secured a full victory at the trial court in a PF loan damages case involving a hotel development project in County H, and that at the appellate stage the case concluded with a settlement under which the contractor and County H agreed to share payment of the entire principal and interest. Representative attorney Kim Sang-gon said, "We resolved the legal uncertainty surrounding local governments' credit enhancement agreements."