DR & AJU represented a subcontractor (hereinafter "client") responsible for landscaping in a construction project for a renowned hotel chain and successfully secured a full victory in a lawsuit against a Chinese general contractor, recovering billions of won in unpaid construction fees.

Other subcontractors in similar situations either accepted partial payments through settlements or chose not to file lawsuits, as suing a Chinese corporation was burdensome and enforcement remained uncertain even if successful. Moreover, the general contractor refused to pay the client and all other subcontractors.

Before filing the lawsuit, we took proactive steps to secure the client's claim. We located the Korean office of the general contractor and obtained a provisional attachment order for approximately 90% of the unpaid construction fees from its domestic office's account. Since the provisional attachment was quickly completed before filing the suit, the general contractor had no choice but to respond to the subsequent legal proceedings.

During the proceedings, the general contractor asserted setoff against the client’s claim, arguing that they had claims for damages arising from the construction process, additional costs, penalties for delays, and damages for defects that occurred after the completion of the project, and applied for an appraisal.

In response, we strongly argued and proved the following points: ① there was no evidence to support the contractor's claims regarding defects, ② even if the defects claimed were recognized, they were not included in the scope of landscaping work agreed upon with the client, ③ it was unreasonable for the client to bear the costs of delays caused by the prior contractor’s failure, ④ the additional costs incurred by the company were unilaterally imposed without prior agreement with the client, and ⑤ the cause of the construction delay was not due to the client but rather to delays caused by the general contractor and the prior contractor.

In particular, even though the burden of proof for the setoff defense lies with the general contractor, we applied for an appraisal from the client so that the appraiser could comprehensively review evidence favorable to the client in the appraisal process. As a result, an appraisal outcome favorable to the client was obtained, and we actively used the results to reject all of the general contractor’s set-off defenses.

In subcontract payment disputes, the full amount claimed by the subcontractor is rarely awarded, and enforcement is often difficult. This case is significant because we secured a full judgment in favor of the Korean subcontractor, ordering the overseas general contractor to pay the full amount of unpaid construction payments and 15.5% annual delay damages stipulated under the Fair Transactions in Subcontracting Act. In addition, we ensured the possibility of enforcement against the Chinese corporation in advance.