Claim No: CL-2024-000563 - [2025] EWHC 1586 (Comm)

Fecha: 26-Jun-2025

The position as a matter of Korean law

The position as a matter of Korean law

30.

I heard expert evidence on Korean law from Mr Heon Seop Lee of ACE Law firm for Energyen and Mr Junghoo Yoo of EJE law (and formerly of Kim & Chang) for the Defendants. There was little disagreement between the experts on the applicable legal principles (which represent the admissible limits of their evidence although not, alas, the limit of the issues on which the experts had been asked to opine). However, I formed the clear impression that Mr Yoo had rather greater experience of this area of Korean law and legal practice than Mr Lee.

31.

“Spin-offs” take effect by reason of the Commercial Act of Korea. Article 530-2 (Division and Merger after Division of Company) provides:

“(1)
A company may be divided to form one or more new companies.
(2)
A company may merge with one or more existing companies after its division (hereinafter referred to as ‘merger after division’).
(3)
A company may be divided to form one or more new companies, which, in succession, may merge with other existing companies.”

32.

Article 530-10 (Consequential Effect of Division or Merger after Division) provides:

“A newly established company by simple division, succeeding company after division or newly established company by merger after division shall succeed to the rights and obligations of the spin-off company, as prescribed by the spin-off plan or an agreement for the merger after division.”

33.

I was referred to the decision of the Supreme Court of the Republic of Korea dated 28 August 2014. This holds that the issue of what has been “spun off” by a spin-off plan turns on the objective interpretation of the spin-off plan, but if this does not clearly reveal the objective meaning:

“the principle of division and the contents of the right to be succeeded, the existence of the divided company, the rational intention of the divided company that prepared the division plan and the shareholders who approved it, the circumstances of the division, the purpose and true intention to be achieved by the division, the practice of transactions, etc. should be comprehensively considered to be reasonably interpreted in accordance with the laws of logic and experience, common sense of society, and conventional wisdom of transactions.”

34.

I have concluded that the objective interpretation of the Spin-Off plan is clear, and that the business, assets, rights, liabilities and contracts of the Offshore Plant division as formed in January 2015 were spun off, including the Supply Contract. However, if I had concluded that the objective meaning of the Spin-Off Plan was unclear, I am satisfied that it was intended to achieve this effect, Those who prepared of the Spin-Off plan clearly intended to effect such a transfer (as is apparent from the April 2019 Notice sent to all contractual partners and the way in which the HHI 2019 Company has operated since its formation) and that is the obviously rational intention of the Spin-Off plan, when regard is had to the intended different roles of the holding company and operating company and the transfer of labour.

35.

There are two further aspects of the effect of the Spin-Off plan under Korean law which are to be noted:

First, the statutory provisions under consideration embrace both cases where the original company continues in some form, and where it does not. In the present case (in which the HHI Original Signatory continued):

Mr Lee stated that “the new company may be described as having a status identical or equivalent to the former company”.

Mr Yoo stated that the spun-off company “may be regarded as having a status identical or equivalent to the former company under the contract.”

ii)

Second, I find, that the effect of the Spin-Off plan was that all contracts which had been entered into by the Original HHI Signatory were succeeded to by the HHI 2019 Company, not simply contracts to the extent that they remained unperformed (there being no language in the Spin-Off plan supporting a distinction of this kind). It was common ground that it was possible for a Spin-Off plan to transfer wholly performed contract, but in any event, the Supply Contract was not wholly performed, containing continuing repair obligations for latent defects. If the question had been asked, therefore, in July 2019 and thereafter, who the parties to the Supply Contract were, the answer is Energyen and the HHI 2019 Company.