Incheon Free Economic Zone Authority Wins International Arbitration in 'Eight City' Compensation Claim... "Termination of Basic Agreement is Lawful"

Exterior view of G Tower, the Incheon Free Economic Zone Authority building.

[Asia Economy Reporter Park Hyesook] The Incheon Free Economic Zone Authority has won an international arbitration lawsuit related to the '8 City (Yongyu-Muui Cultural Tourism Leisure Complex City Development)' project, which was canceled in 2013.

On the 6th, the Incheon Free Economic Zone Authority announced that it recently received a dismissal ruling from the International Chamber of Commerce (ICC) International Arbitration Court regarding the 27.6 billion KRW damage compensation claim arbitration application filed by 8 City Co., Ltd. against the Authority.

The 8 City project was promoted to build an artificial tourism leisure city in the shape of the number '8' on Yongyu and Muui Islands, covering a total area of 79.9㎢ (approximately 25 million pyeong) with a project cost of about 317 trillion KRW. It was called the largest project since the era of Dangun.

8 City signed a basic agreement with the Incheon Free Economic Zone Authority in 2007 and established a Special Purpose Company (SPC) in 2011, but the basic agreement was terminated in August 2013 due to failure to increase the promised capital.

In response, the company filed for arbitration in January 2019, claiming damages for various expenses incurred during the project planning stage (initially 60.3 billion KRW), arguing that the termination of the basic agreement by the Authority was illegal and unfair.

During the international arbitration process, 8 City strongly asserted the fulfillment of capital contribution in kind. On the other hand, the Incheon Free Economic Zone Authority countered that the termination of the basic agreement was lawful, citing failure to submit supporting documents for the capital contribution in kind, incomplete registration, and that the contribution amount did not meet the required 40 million USD.

Ultimately, the international arbitration tribunal accepted the Authority's argument and ruled to dismiss the damage compensation claim filed by 8 City, as the basic agreement was lawfully terminated.

The Incheon Free Economic Zone Authority explained that international arbitration is final with no appeal process, so this decision can be regarded as a final judgment.

An official from the Authority stated, "This ruling recognizes procedural legitimacy regarding the termination of the basic agreement due to the fault of the project implementer," and added, "We will proceed with the arbitration cost recovery process and continue to promote follow-up projects such as the Yongyu Ocean View unit project."

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