Redevelopment of Heukseok 9 District Engulfed in Turmoil... Signs of Escalating Litigation Emerge

Lotte Construction Responds to Construction Contract Termination Notice, Saying "We Must Wait for the Court's Judgment"

[Asia Economy Reporter Donghyun Choi] The redevelopment project of Heukseok New Town District 9 in Dongjak-gu, Seoul is facing difficulties due to conflicts over the re-selection of the construction company. There are concerns about the possibility of lawsuits regarding the cancellation of the contract with the existing construction company, Lotte Construction.

According to industry sources on the 25th, the Heukseok District 9 redevelopment association recently delivered a notice to Lotte Construction terminating the construction contract. Earlier, the association had resolved the agenda to cancel the construction contract at the regular general meeting at the end of May and gave Lotte Construction a 30-day period to provide an explanation. However, since Lotte Construction did not present any response afterward, the association proceeded with the related procedures.

An association official stated, "We will soon begin the process of selecting a new construction company." It is reported that major construction companies such as Samsung C&T and Hyundai Construction are showing interest in the re-selection of the construction company for Heukseok District 9.

However, the process of re-selecting the construction company is expected to be far from smooth. Lotte Construction recently sent a reply letter to the association, effectively expressing refusal by stating that the association’s decision to terminate the construction contract could be invalidated.

The current association is operating under an acting management system after dismissing the previous association head and executive team, but the previous association has filed a lawsuit seeking to nullify the dismissal of the association head. According to Lotte’s position, if the previous association wins, the decision to cancel the construction contract made by the current association will automatically become invalid. They also expressed concerns about whether an acting manager can make decisions that significantly affect association members, such as notifying the termination of the construction contract. A Lotte Construction representative explained, "We will proceed with consultations with the association after the court’s judgment on the representative authority of the association."

In response, the association stated, "Since this was decided at the general meeting of the association members, we cannot and have no intention to negotiate." On the other hand, Lotte argued, "Even if the current association wins, the unfair profits such as the 10 billion KRW bid bond converted into association loans and other civil damages must be left to legal judgment," making the possibility of litigation between the two sides difficult to rule out.

The Heukseok District 9 redevelopment project involves building 1,539 apartment units on a 94,000㎡ site in the Heukseok-dong 90 area. When Lotte Construction was selected as the construction company in 2018, they proposed a design plan with a maximum of 28 floors, but the project was blocked by the Seoul city government’s opposition, which limited the maximum height in this area, classified as a Type 2 General Residential Zone, to 25 floors, preventing approval. Later, the association requested the application of the premium brand 'Le L' free of charge, but Lotte opposed, stating they could not accept this without an increase in construction costs, which ultimately led to the termination of the construction contract.

This content was produced with the assistance of AI translation services.