Companies that incurred substantial financial losses due to the Ministry of Environment’s disposable cup deposit scheme have filed a lawsuit against the Korea Mint Corporation, which managed the project. These firms are seeking damages amounting to 7 billion won. The image shows barcode labels on disposable cups (Image courtesy of Yonhap)
DAEJEON, Jun. 27 (Korea Bizwire) – In a contentious legal battle, three South Korean companies have filed a lawsuit against the state-run Korea Minting and Security Printing Corporation (KOMSCO), seeking 7.5 billion won in damages.
The dispute stems from a scrapped government initiative to implement a deposit system for disposable cups.
The deposit system required coffee shops and similar establishments to charge an additional 300 won deposit for disposable cups, which would be refunded upon return of the cup. To facilitate this process, cups were to be affixed with barcode labels for verification.
The Ministry of Environment’s ambitious program, which aimed to encourage the return and recycling of single-use cups, has left participating businesses with substantial financial losses.
Two printing companies and one delivery firm, who had secured contracts through a bidding process, are now taking legal action against KOMSCO, the agency tasked with executing the project.
According to KOMSCO, the three companies had initially agreed to produce and distribute 2 billion barcode labels worth 8 billion won for disposable cups nationwide. However, the actual order amounted to a mere 3.2% of the contracted volume, with only 64 million labels produced, valued at less than 300 million won.
The abrupt scaling back of the program left the companies, which had invested 6.4 billion won in facilities and preparations, facing significant debt. As their contracts expired at the end of last year, the firms found themselves in dire financial straits.
In their lawsuit, the companies argue that they should be compensated for the remaining 7.5 billion won, in line with the original contract terms.
They contend that as government orders dwindled, the unit costs for producing and shipping the barcode labels skyrocketed, resulting in losses with each label manufactured.
The affected businesses claim that KOMSCO repeatedly assured them of compensation for their losses, encouraging them to continue production despite the unfavorable circumstances.
However, as the government’s disposable cup deposit scheme was effectively abandoned, KOMSCO’s stance allegedly changed.
KOMSCO now maintains that it bears no responsibility, attributing the situation to changes in the policy decisions made by the Ministry of Environment.
The corporation states that it has no means to provide compensation after failed negotiations with the ministry’s Resource Circulation Deposit Management Center.
A local cafe on Jeju island suspended a deposit system for disposable cups. (Image courtesy of Yonhap)
Representatives from the printing companies expressed their frustration, stating, “We trusted KOMSCO’s promises of future loss compensation and continued until the end, despite the untenable unit prices. We’re shocked by their current attitude, especially after considering our cooperative relationship.”
KOMSCO has also rejected a court-proposed mediation plan. In one case, a Gwangju-based printing company that had contracted to supply 1.4 billion labels (70% of the total volume) sought 5.6 billion won in damages.
The court suggested KOMSCO pay about 60% of this amount, 3.5 billion won, but the corporation declined.
An industry insider lamented, “While we may receive some compensation through litigation eventually, the process is extremely challenging. How can we trust and work with the government in the future if they behave like this after we made significant investments based on their assurances?”
KOMSCO expressed regret over the situation, stating, “We understand the difficulty in recouping investments made for project preparation due to changes in government policy. We will continue to consult with the ordering agency to minimize investment losses and strive to expand cooperation with our partner companies.”
M. H. Lee (mhlee@koreabizwire.com)
