Doosan Infracore Effectively Wins Lawsuit Related to Chinese Subsidiary... Supreme Court Overturns and Remands Lower Court Ruling

[Asia Economy Reporter Choi Seok-jin] Doosan Infracore has effectively won a lawsuit filed by financial investors (FIs) who claimed that the company violated a public offering agreement related to the sale of its Chinese subsidiary, Doosan Infracore China (DICC).

The Supreme Court's 3rd Division (Presiding Justice Kim Jae-hyung) on the 14th overturned the lower court's ruling, which partially ruled in favor of the plaintiffs (FIs) in the appeal trial of a stock purchase price claim lawsuit filed by DICC investors including Mirae Asset Global Investments, Hana Financial Investment, and IMM Private Equity (PE) against Doosan Infracore. The case was remanded to the Seoul High Court with a judgment dismissing the plaintiffs' claims. The lawsuit began in November 2015, making it about 5 years and 2 months old.

The court acknowledged that Doosan Infracore failed to fulfill its public offering obligations. However, it stated the reason for reversal and remand, saying, "It is difficult to view that Doosan Infracore obstructed the fulfillment of conditions in bad faith merely because it did not respond to the plaintiffs' requests for data provision."

Doosan Infracore attracted external investment of 380 billion KRW to DICC in 2011 on the condition of a public offering. The contract at the time included an obligation clause that Doosan Infracore would make its best efforts to conduct a public offering within the scope of meeting the stock exchange listing requirements, and an agreement that if the public offering failed, shareholders could exercise a drag-along right.

When DICC failed to go public, the FIs, who had secured a 20% stake, exercised the drag-along right in 2015 based on the agreement that "if the company does not go public within three years, one party may sell its DICC shares and demand that the other party sell their DICC shares together," and attempted a public sale of 100% of the shares, but this also failed.

Subsequently, the investors filed a lawsuit claiming the stock purchase price, arguing that "Doosan Infracore had assured the public offering but did not achieve it and did not cooperate with the sale process, thus failing to fulfill the shareholders' agreement."

Doosan Infracore countered in court that the failure of the public offering was an unavoidable result due to economic downturn and that the subsequent sale procedures were conducted properly.

Earlier, the first trial ruled against the plaintiffs, stating that Doosan Infracore had no obligation to pay the purchase price.

However, the second trial partially recognized Doosan Infracore's responsibility for the failed public sale and ordered the payment of 10 billion KRW out of the 14 billion KRW purchase price demanded by the investors, partially ruling in favor of the plaintiffs.

This content was produced with the assistance of AI translation services.