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

The Public Procurement Service establishes standards for the construction and operation of the electronic procurement system according to the regulations of the Comprehensive e-Procurement System Shopping Mall, which is a notification issued by the Public Procurement Service, entrusted with the law on the use and promotion of electronic procurement.

However, when the contracting party violates the terms of the contract or falls under the reasons specified in the above notification, the Public Procurement Service can suspend the trading of the corresponding contractual goods in the government's comprehensive shopping mall. When the Public Procurement Service suspends trading in the comprehensive shopping mall for the above reasons, not only the corresponding contract but also all forms of contracts that include the name of the contract will be interconnected and suspended from trading, resulting in significant damage to the counterparty. In this case, in order for the contracting party to dispute the trading suspension action of the Public Procurement Service on the electronic procurement system, it is necessary to examine the legal nature of the trading suspension action by the Public Procurement Service.

[Question]

Whether the trading suspension measure of the Public Procurement Service on the electronic procurement system constitutes an administrative disposition

[Answer]

The term ‘disposition’ subject to administrative litigation refers to “the exercise of public power as a legal enforcement of concrete facts conducted by an administrative agency or its refusal and other administrative actions comparable to this” (Administrative Litigation Act Article 2, Paragraph 1, Item 1). Whether any act of the administrative agency can be the subject of administrative litigation cannot be decided abstractly or generally; it is individually determined by considering the content and intent of the relevant laws, the subject, content, form, and procedure of the action, the practical relevance with the disadvantages suffered by the counterpart and other stakeholders, as well as the principles of rule of law administration and the attitudes of the administrative agency and stakeholders related to that action (refer to Supreme Court Decision 2008Du167, Full Bench Decision, delivered on November 18, 2010).

The trading suspension measure of the Public Procurement Service, even if based on a judicial contract, must be regarded as a public exercise of power regarding concrete facts conducted by the administrative agency, which directly affects the rights and obligations of the counterparty, the claimant; thus, it corresponds to the subject of administrative litigation (refer to Supreme Court Decision 2015Du52395, delivered on November 29, 2018). Therefore, regarding the trading suspension measure of the Public Procurement Service, the contracting party can dispute it in the administrative court as an administrative lawsuit.

Examining the specific reasons why the trading suspension measure of the Public Procurement Service constitutes an administrative disposition, they are as follows.

① An electronic procurement user registered in the government's comprehensive electronic procurement system, Nara Marketplace, acquires status to participate in electronic bids of demand institutions or sell registered items directly to demand institutions through the Nara Marketplace. This status is a direct and concrete legal benefit protected by the Electronic Procurement Act, Procurement Business Act, etc. Therefore, the measure to suspend trading in the Nara Marketplace for a certain period against the contracting party by the Public Procurement Service is an act that directly limits or infringes upon the legal interests of the contracting party.

② When the Public Procurement Service enters into third-party unit contracts or multiple supplier contracts for demand materials commonly required by each demand institution and registers them in the Nara Marketplace, the demand institution is able to directly select and purchase the necessary items in the Nara Marketplace. However, if the Public Procurement Service implements a trading suspension action on the comprehensive shopping mall, the contracting party suffers disadvantages as their trading relationships with not only the Public Procurement Service but also with demand institutions such as national agencies, local governments, and public institutions are all suspended.

③ Through the trading suspension measure, the Public Procurement Service can exclude contracting parties who violate the purchase contract from the comprehensive shopping mall, thereby ensuring the faithful execution of contracts while also achieving public interest in ensuring the safety, reliability, and fairness of the comprehensive shopping mall it has constructed and operated.

④ Considering that the Public Procurement Service taking the trading suspension measure is an administrative agency, the objection procedure for the trading suspension measure was also notified based on the Administrative Procedure Act, and procurement companies also recognize that the trading suspension measure in the Nara Marketplace by the Public Procurement Service constitutes an administrative disposition and have filed administrative suits against it, it can be said that the trading suspension measure by the Public Procurement Service has the appearance of an administrative disposition.

Thus, we have briefly reviewed whether the trading suspension measure of the Public Procurement Service on the electronic procurement system constitutes an administrative disposition. Disputes related to national contracts and public procurement involve very complex relevant laws and frequent revisions, so familiarity and experience are necessary, and one must also be well aware of not only court rulings but also the authoritative interpretations and disposal cases from administrative agencies. Therefore, it is recommended to seek assistance from an attorney with expertise in national contract legislation and extensive experience in resolving disputes related to various national contracts and procurements.

Cheongchul Law Firm consists exclusively of attorneys from Korea's top four large law firms: Kim & Chang, Gwangjang, Bae, and Sejong. Rather than just a single attorney, specialized attorneys related to the case form a team to respond. Cheongchul provides comprehensive solutions for overall business, beyond just resolving specific issues, focusing on achieving what clients desire through legal consulting. If you need assistance in achieving your goals, please do not hesitate to contact Cheongchul.