Supreme Court: "Conflict Over Opposing Hospital Partnership Renewal Terms... Expulsion of Union Member Justified"

[Asia Economy Reporter Kim Daehyun] The Supreme Court has ruled that it is legitimate for a minority shareholder to be expelled by other partners after opposing a change proposal without justifiable reason during the process of renewing a hospital partnership contract.

On the 16th, the Supreme Court's 3rd Division (Presiding Justice Kim Jaehyung) announced that it overturned the lower court's ruling, which partially ruled in favor of plaintiff Dr. A in a damages claim lawsuit against partners Mr. B and Mr. C, and remanded the case to the Seoul High Court.

Previously, in 2008, they entered into a partnership contract for a women's hospital, with Mr. B holding 5/7 of the shares, and Dr. A and Mr. C each holding 1/7. During the process of renewing the contract in 2014 by changing the terms, Dr. A had conflicts with Mr. B and Mr. C. Dr. A opposed the change proposal that stipulated if the contract was not renewed after three years, those withdrawing from the partnership would be reimbursed by the remaining partners according to their shares, and that the fixed doctor duty allowance would be changed to a performance-based pay.

As the discord worsened, Mr. B and Mr. C, following a resolution, expelled Dr. A, and thereafter Dr. A filed a lawsuit demanding confirmation of his membership status and approximately 200 million won in hospital profits.

The first trial court dismissed Dr. A's claim, stating that the expulsion was based on "justifiable reasons" as defined by the Civil Act, reasoning that irreparable discord had arisen making it impossible to maintain the partnership.

On the other hand, the appellate court ruled that the failure to renew the contract could not be attributed to Dr. A, and ordered Mr. B and Mr. C to compensate Dr. A with over 800 million won.

However, the Supreme Court stated, "If the change proposal agreed upon by all members holding the majority shares except Dr. A can be considered reasonable, Dr. A must also seriously consider it," and ordered the case to be re-examined and judged.

The Supreme Court panel said, "Regarding unacceptable parts, proposals for modification should be made, and sincere negotiations for contract renewal should be conducted on the premise of maintaining the partnership," adding, "The lower court erred in its understanding of the legal principle concerning 'justifiable reasons' for expulsion under Article 718(1) of the Civil Act, which affected the judgment."

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