Hotel Shilla, Effectively Wins Share Dispute Lawsuit Over 'Donghwa Duty Free'

Lee Boo-jin, President of Hotel Shilla, is leaving the venue after the 'Hotel Shilla Shareholders' Meeting' held on the 21st at Samsung Electronics Jangchung Building in Jung-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Jeon Jin-young] Hotel Shilla has effectively gained the upper hand after receiving a remand decision in the lawsuit claiming payment for stock transactions against Kim Ki-byeong, chairman of Lotte Tour Development.

According to industry sources on the 18th, the Supreme Court overturned the original ruling in the appeal trial of the lawsuit filed by Hotel Shilla against Chairman Kim for payment of stock transaction funds and remanded the case to the Seoul High Court on the 17th.

The issue originated from a put option contract. In 2013, Hotel Shilla signed a contract to purchase 19.9% of Donghwa Duty Free Shop shares held by Chairman Kim for 60 billion KRW. The contract allowed the exercise of a put option (the right to sell at a specific price) three years after the contract date. Chairman Kim provided 30.2% of Donghwa Duty Free Shop shares as collateral.

Three years later, in 2016, Chairman Kim declared default, stating he could not fulfill the debt and proposed to substitute repayment by transferring management rights of Donghwa Duty Free Shop. Hotel Shilla then filed a lawsuit claiming payment for the stock transaction.

In the first trial, Hotel Shilla partially won. Chairman Kim was ordered to pay Hotel Shilla 60 billion KRW plus interest of 11.6 billion KRW and additional charges of 7.2 billion KRW, totaling 78.8 billion KRW. However, the appellate court reversed the decision. The court ruled that Hotel Shilla intended to acquire management rights at the time of the contract and ordered the transfer of the 30.2% Donghwa Duty Free Shop shares held as collateral. The appeal proceeded to the Supreme Court, which remanded the case.

According to the industry, if the second trial ruling is followed, Hotel Shilla would become the largest shareholder of Donghwa Duty Free Shop, creating a situation where a large corporation invades small and medium-sized duty-free shops. Currently, the Customs Act divides duty-free shop licenses between large corporations and small to medium-sized enterprises.

The industry maintains a stance of waiting to see the remaining remand trial. An industry official said, “The trial is not over yet, so we need to wait and see the outcome for now.”

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