Law Firm K&P successfully won a Korea-China investment dispute lawsuit.
1. Party Information
Plaintiff: Company A (Domestic Investment Company)
Defendant: B (Representative of China X Co., Ltd.)
Legal Representative: Law Firm K&P
Case Result: Plaintiff’s claims dismissed (Complete victory for defendant)
2. Case Background and Investment Contract Dispute Development
This dispute, originating from an investment joint venture agreement concluded between the plaintiff and defendant in 2018, represents a typical case of Korea-China investment disputes. The plaintiff entered into a joint venture agreement with the defendant for the purpose of expanding into the Chinese market, specifically for ‘sauce factory establishment and Chinese railway lunchbox supply business.’ However, disputes arose during the contract implementation process.
3. Analysis of Major Legal Issues – Specific Content of Contract Breach
(1) Plaintiff’s Claims
In the breach of contract damages claim, the plaintiff raised the following arguments:
- Breach of Contract Performance Obligations: The defendant failed to properly fulfill contractual obligations, making business operations impossible
- Inability to Recover Investment: The plaintiff’s invested funds became irrecoverable
- Breakdown of Trust Relationship: Trust relationship deteriorated due to defendant’s contract violations
- Unauthorized Capital Increase Claims: The plaintiff claimed that the capital increase of China X Co., Ltd. significantly reduced the plaintiff’s equity stake, asserting that the plaintiff was unaware of the capital increase and that B illegally proceeded with the capital increase procedure without the plaintiff’s consent
(2) Law Firm K&P’s Defense Strategy
- Denial of Contract Party Status: The defendant is not a contracting party
- Assertion of Faithful Performance: The defendant faithfully performed all obligations under the investment joint venture agreement
- Force Majeure Circumstances: The suspension of China X Co., Ltd.’s business and significant losses due to COVID-19 were unavoidable circumstances, different from the defendant’s intentional or negligent breach of the investment contract
- Lawful Capital Increase Procedure: The capital increase of China X Co., Ltd. followed lawful procedures, and while the plaintiff, as a shareholder, consented to the capital increase, they did not subscribe to new shares
4. Litigation Results
The court fully accepted Law Firm K&P’s arguments and dismissed the plaintiff’s claims.