In a dispute over the contractor rights for the 1.9 trillion won redevelopment project in the Sangdaewon 2 District of Seongnam, a court has reinstated DL E&C's status as the contractor. The court suspended the effect of the general meeting resolution that selected GS Construction as the new contractor and the notice of contract termination to DL E&C, allowing DL E&C to retain its contractor rights for the time being.
On July 31, the 5th Civil Division of the Suwon District Court's Seongnam branch partially granted an injunction filed by DL E&C and some members of the association against the housing redevelopment project association.
The court temporarily determined that DL E&C holds the contractor status for the Sangdaewon 2 District redevelopment project. It also suspended the effect of the association's notifications to DL E&C regarding the termination of the construction contract issued on May 31 and June 17.
Additionally, the court suspended the effect of the resolution passed at the extraordinary general meeting on May 30, which included the termination of the contract with DL E&C and the selection of GS Construction as the new contractor. This has halted the association's subsequent contract procedures with GS Construction.
The court noted that the extraordinary general meeting likely did not meet procedural requirements, such as direct attendance and quorum, which could render the resolutions invalid.
The minutes from the association indicated that 1,137 members were present at the meeting when the resolution to select GS Construction was proposed, just two more than the majority threshold of 1,135 out of 2,268 total members.
However, the court determined that at least three members who left the meeting and those who were not properly represented should be excluded from the count. This reduced the number of direct attendees to 1,134, falling short of the majority requirement by one.
The court stated, "It is unlawful to proceed with the resolution on contractor selection without a majority of members present." It pointed out that many members may have left the venue before the meeting began, and there were indications that proper verification of attendees and DL E&C's participation in the meeting procedures were not adequately conducted.
The handling of written resolutions was also problematic. The association recognized only three of the withdrawal letters submitted during the meeting as valid, while DL E&C submitted 51 letters that overlapped with the written resolutions. The court concluded that including these letters would mean the number of members participating directly or via written resolution would also fall below the quorum of 1,135.
The association claimed that 38 members who submitted withdrawal letters later reversed their decisions. However, the court rejected this claim, stating that the related documents did not clearly indicate a reversal of intent and that the timing of the submissions was difficult to verify.
The court emphasized, "If subsequent procedures proceed on the assumption that the resolutions are valid, there is a significant risk of infringing on DL E&C's status as contractor and supplier." It also noted the potential for escalating internal disputes within the association and the complexity of legal relationships, underscoring the need to suspend the effect of the resolutions.
However, the court's partial grant of the injunction did not include a request for the execution officer to publicize the decision. The core requests regarding DL E&C's contractor status and the effects of the contract termination and extraordinary general meeting resolutions were all granted.
Previously, the association selected DL E&C as the contractor in 2015 and signed a construction contract in 2021. Following conflicts over the application of the high-end brand 'Acro,' the association voted to terminate the contract with DL E&C in April. When the court accepted DL E&C's injunction request, the association held another extraordinary general meeting on May 30 to terminate the contract with DL E&C and select GS Construction as the new contractor.
While this decision reaffirms DL E&C's contractor status, the dispute over contractor rights is not fully resolved. The injunction serves as a temporary measure until a final judgment is made, and the association and GS Construction may appeal or initiate separate litigation.
The Sangdaewon 2 District redevelopment project involves the development of a 242,000 square meter area in Sangdaewon-dong, Jungwon-gu, Seongnam, with plans for 12 underground and 29 above-ground floors, 43 buildings, and 4,885 housing units along with community facilities. GS Construction has announced an estimated construction cost of approximately 1.92 trillion won.
* This article has been translated by AI.
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