Hello, this is Attorney Park Jong-han from Cheongchul Law Firm.

The regulations related to bidding participation change frequently. In this regard, under the existing regulations, it was possible to enter into a contract without competition; however, if the revision of the relevant regulations makes it impossible to enter into such a contract, the companies that were planning to enter into the contract find themselves in a difficult situation. This is especially problematic if they have agreed with the administrative agency to enter into a contract without competition beyond mere preparation to participate in the contract.

Then, it is necessary to examine how companies that have made an agreement with the ordering agency to enter into a contract without competition can be compensated when the revision of the relevant regulations makes it impossible to enter into such a contract.

[Question]

Ways for companies to seek relief when it becomes impossible to enter into a contract without competition due to the revision of the relevant regulations after making an agreement to enter into such a contract.

[Answer]

When the state agrees that the contracting party will enter into a contract without competition, it was possible to enter into such a contract under the relevant regulations, but if after that the revision of the regulations makes it impossible to enter into a contract without competition, the state's obligation to enter into the contract without competition is considered impossible to perform, and therefore the failure to fulfill that contract can be claimed as the state’s fault and damages can be sought (Refer to Supreme Court ruling 95Da12071, delivered on October 11, 1996).

However, in such cases, seeking confirmation of the obligation to enter into a contract without competition which is not allowed by law against the state by the contracting party is not considered an effective and appropriate method to resolve existing legal uncertainties and risks, hence it cannot be claimed due to lack of interest in confirmation.

In such cases, the scope of damages that the contracting party can claim against the state would be the equivalent amount of the benefits that the party could have obtained by entering into a contract without competition, and if the content of the contract to be entered into was a construction contract, the damages may include the amount of profit that could have been obtained if the corresponding construction had been completed.

On the other hand, it can be argued that, from the state’s perspective, the contracting party should have submitted opinions as an interested party during the announcement period for the revision of laws to maintain the rights regarding the contract without competition, and whether this can be cited as a reason for comparative negligence could be disputed, but even if the contracting party did not submit opinions, simply submitting such opinions does not necessarily reflect the maintenance of the contracting party's rights regarding the contract without competition during the revision of the law, so this reason alone cannot be considered a reason for comparative negligence.

Thus, we briefly looked at the relief methods for companies when it becomes impossible to enter into a contract without competition due to the revision of the relevant regulations after making an agreement to enter into such a contract. In cases of disputes related to national contracts and public procurement, the relevant laws are very complex and subject to frequent revisions, so it is necessary to have knowledge and experience in this area, and one should also be well aware of not only court rulings but also administrative interpretations and cases. Therefore, it is recommended that you seek the assistance of a lawyer who has expertise in national contract regulations and experience in resolving various disputes related to national contracts and procurement.

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