Public-Private Partnership Dispute | Insurance Proceeds Claim Based on Design Change, ‘Dismissed’

The client was the insurer for a large-scale project carried out by way of a public-private partnership.

The project operator claimed payment of insurance proceeds on the grounds that it had changed the design standards and performed additional reinforcement work during the course of the project.

However, the client took the view that these costs were not damages caused by an accident or external factors, but an ordinary cost increase arising from the operator’s own design adjustments and construction judgments.

Because the roles and responsibilities of each participant were complexly intertwined under the contractual structure of the public-private partnership project, the client requested the assistance of a corporate specialist attorney capable of providing expert legal interpretation.

The corporate specialist attorney analyzed the contractual framework among the project operator, the contractor, and the supervision team to clearly distinguish the parties responsible.

As a result of the review, the attorney confirmed that the design change had been made by an internal decision of the contractor without the approval of the ordering agency.

Accordingly, the attorney legally proved that the change did not constitute an ‘unexpected accident’ under the insurance policy.

The corporate specialist attorney established the criteria for interpretation based on the scope of coverage and the exemption clauses of the construction insurance policy.

By specifically reviewing items in the additional cost statement, such as the increase in deployed personnel and the adjustment of unit prices, the attorney demonstrated that they were merely ordinary cost adjustments.

On this basis, the attorney clearly excluded the portion of the claimed amount that could not be regarded as actual damage, thereby preventing unnecessary payment.

The corporate attorney structured the key issues by cross-checking the design change approval documents, the construction schedule, and the technical review reports.

We secured technical grounds showing that the construction changes amounted to no more than construction adjustments within a foreseeable range.

By presenting consistent reasoning to the court based on these materials, we obtained a decision consistent with the indemnification purpose of the insurance contract.

1. Clarifying the Cause of the Cost Increase

2. Close Review of the Interpretation of the Insurance Policy Terms

3. Analysis of the Project Structure and Division of Liability

A public-private partnership project dispute is a complex matter that requires a comprehensive assessment going beyond mere contract interpretation to consider the scope of application of the insurance policy terms and the decisions made during the course of construction.

In particular, in a structure involving multiple stakeholders, a company may be exposed to considerable financial and legal risk without a legal review to accurately determine the cost burden and the attribution of liability.

Our firm systematically analyzes the contract provisions, the interpretation of policy terms, and the technical materials to design a logical response strategy grounded in legal bases, and supports clients at each stage of the dispute.

Through this, we focus on preventing unnecessary payment of insurance proceeds and on minimizing a company's legal and financial risk in disputes with stakeholders such as the courts or the ordering agency.

If you are facing a similar dispute, 🔗Legal Consultation Booking is available should you wish to request assistance.