Supreme Court Decision February 2, 2023, Ruling 2020Du48260

According to Article 26, Paragraph 2 of the "Act on Fairness in Subcontracting Transactions" (before the amendment by the law No. 18757 on January 11, 2022), "The Fair Trade Commission shall impose penalty points on the primary contractor or supplier who violates the regulations contained in Articles 3 (1) to (4) and (9), Article 3-4, Articles 4 to 12, Articles 12-2, 12-3, Articles 13, 13-2, Articles 14 to 16, Article 16-2, Paragraph 7, and Articles 17 to 20, taking into account the degree of violation and damage, and if such penalty points exceed the criteria determined by presidential decree, it shall request the head of the relevant administrative agency to take action to restrict the bidding qualifications, suspend business under Article 82, Paragraph 1, Item 7 of the Basic Law on Construction Industry, or implement other necessary measures for fair subcontracting transactions." It is regulated. Following this delegation, the previously enforced "Enforcement Decree of the Act on Fairness in Subcontracting Transactions" (before the amendment by presidential decree No. 31393 on January 12, 2021) states in Article 17, Paragraph 1 that "the standards for imposing penalty points by the Fair Trade Commission under Article 26, Paragraph 2 of the Act are as set forth in Appendix 3." Paragraph 2 of the same article states that "the phrase 'if it exceeds the criteria determined by presidential decree' in Article 26, Paragraph 2 of the Act refers to cases where the cumulative points exceed the scores in the respective categories stated in the first item of Appendix 3, whereby; 'Request for restriction of bidding qualifications: 5 points' (Item 1), 'Request for business suspension due to Article 82, Paragraph 1, Item 7 of the Basic Law on Construction Industry: 10 points' (Item 2)" (…).

Article 26, Paragraph 2 of the Act specifies the requirements for the request for restriction of bidding qualifications according to the criteria set by the enforcement decree, and if these requirements are met, the defendant must make the decision for the request for restriction of bidding qualifications regarding the relevant business entity in accordance with the latter part of Article 26, Paragraph 2 of the Act. The head of the relevant administrative agency receiving this request must, unless there are special circumstances, impose a decision to restrict the bidding qualifications on that business entity. Therefore, if a request for restriction of bidding qualifications decision has been made, it indicates a potential legal disadvantage that the bidding qualifications may be restricted by subsequent decisions. Allowing a business entity aware of the request for restriction of bidding qualifications decision to dispute only that decision rather than contesting the legality of the request for restriction of bidding qualifications decision directly facilitates a timely and fundamental resolution of disputes, which is also consistent with the principles of administrative law. Therefore, the defendant's request for restriction of bidding qualifications must be seen as an action subject to an appeal lawsuit.

- In the above judgment, the Supreme Court recognized the dispositional nature of the request for restriction of bidding qualifications, agreeing with the lower court's determination that the plaintiff's use of the standard subcontracting contract qualifies as a reason for reducing penalty points under the penalty reduction regulations, thus deeming the defendant's request for restriction of bidding qualifications against the plaintiff illegal.