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JIPYONG successfully represented CEO of a Korean public enterprise in case claiming for revocation of disposition of dismissal

2021.11.26

JIPYONG represented the former CEO of Corporation A, a public enterprise, in a case raised against the President and obtained the court’s judgement to revoke the disposition of dismissal and decision to stay its effect.  
 
The head of a public enterprise is appointed or dismissed by the President in accordance with the Act on the Management of Public Institutions (the “Public Institution Management Act”) (Article 25). The client was dismissed by the President for the reason that the client violated the duty of royalty within the meaning of the Public Institution Management Act (Article 35 (1)) by (1) poorly responding to typhoon and making a false report to the National Assembly, etc. about his records of performance, and (2) removing from the position an employee who protested against the decision on removing him/her from the team leader’s position, which allegedly and unduly undermines the fairness of personnel management.  
 
In defending the client, JIPYONG firstly pointed out that as Corporation A, which has an important impact on the national economy, is heavily guaranteed the responsibility management system and autonomous operation under the control of professional manager in accordance with the Act on the Improvement of Managerial Structure and Privatization of Public Enterprises, so when it intends to dismiss the CEO who is a professional manager, the reason for dismissal shall be judged more prudently.  
 
Then, JIPYONG disputed in detail that the reason for misconduct of the client could not be recognized because (1) Corporation A had never been damaged by a typhoon, and rather, had received an excellent rating in the disaster management evaluation by the Ministry of Public Administration and Security, which means that the alleged client’s poor response to typhoon has no reasonable grounds. JIPYONG attorneys also pointed out that the client had never reported falsely to the National Assembly, and even if some of the reports were recognized as false, it does not constitute a violation of the duty of royalty in the relationship with Corporation A. Furthermore, JIPYONG asserted that (2) even removal of the employee from his/her position was made in accordance with the personnel management regulation of Corporation A, to the extent of the CEO’s discretionary power to decide the personnel management as a head of public company. 
 
The court upheld all of JIPYONG’s arguments and determined that the President’s disposition of dismissing the client was illegal in all respects as there was no legal ground for the dismissal, and that the decision falls under the deviation and abuse of discretionary power. In this regard, the court revoked the above dismissal disposition and stayed its effect until the appeals court makes its judgment. In a situation where a new CEO is appointed to Corporation A, it is highly unusual that the court decided to stary the effect of dismissal disposition of the former CEO. 
 
Last year, Corporation A suffered internal conflicts in the process of turning non-regular workers into regular workers. The dismissal of the client, which was made immediately after such transition, also naturally drew a lot of public attention. The above case represented by JIPYONG has confirmed that dismissing the CEO of a public enterprise that has a material impact on the national economy, such as Corporation A, without a legitimate reason could undermine the responsibility management system and autonomous operation of the public enterprise. In addition, stayed the effect of the undue dismissal disposition has been led to a significant result that the client returned to his position as the CEO of Corporation A.

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Won JEONG
+82-2-6200-1750 wjeong@jipyong.com

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