Suit for Damages in Relation with CP of LIG Engineering & Construction Co.

   Hit. 323

SK Gas Co. and SK Energy Co. (defendants of this case) and other four non-defendants LPG providers have been fixing the LPG price in collusion for six years from 2003 to 2008, and Fair Trade Commission charged penalties of 669 billion won on the six companies for the wrongdoings. Although the increase of LPG price at the international market ceased by December, 2007, LPG price in the domestic market was beyond reasonable level. Fair Trade Commission found out the reason of the high LPG price was due to the price fixing of the LPG providers as described below. From January 2003 to December 2008, the following methods were used: checking the other companies’ price in advance, discussing the price level or letting know the price level. LPG providers including the defendants also invented various competition avoidance methods in order to continue the highly fixed price. Accordingly, the purchasers of LPG from gas stations of the defendants brought this suit for compensation of damages resulted from those anti-trust activities of the defendants.

Litigation Update

Overview of litigation: Investors who invested in CPs issued by LIG Construction stated that the purchase contract was a case of incomplete sales (illegal sales) accompanying fraud or trigger of mistake by the vendors. Therefore, investors primarily insisted on cancellation of contracts and restoration of principal, and secondarily demanded damages for illegal activities due to violations of the obligation to explain, etc.


* Ruling of the first trial: Some courts have dismissed all of the plaintiffs' claims for the following reasons:


Claims to cancel the contract due to a mistake

: Contract can be canceled when mistake in regards to a party’s ‘motivation’ to sign a contract is caused by the other party or is common in both parties. In this case mistake on LIG’s financial status or whether there is LIG Group’s financial backing for LIG construction constitutes mistake in regards to investors’ ‘motivation’ to purchase the CPs. However, the ruling of the first trial dismissed plaintiffs’ claims stating that it is insufficient to conclude that such mistake was triggered by defendant nor was common for both parties.


Claims for breach of duty to explain

: The description about CP provided merely rephrasing of the credit rating, and the possibility of the LIG group’s financial support was not clearly stated. A3- was a credit rating under which LIG Construction's situation was considered comprehensively at the time and the sales person’s explanation provided only evident information.


Concluded by waiver of re-appeal or withdrawal of a lawsuit

The first trial ruling seemed unfair, but LIG Group individually compensated the plaintiffs for all damages around that time. Thus, investors decided to drop re-appeals and withdrew the lawsuit.