SH Faces 400 Billion Won Land Tax Lawsuit Against Korail... Concerns Over Delay Compensation

President Hwang Sangha: "Expected Profit from Yongsan International Business District Is 900 Billion Won"
If SH Ultimately Loses, 400 Billion Won in Land Holding Tax Must Be Paid
Appeal Filed After First Trial Loss, Legal Review of Agreement Under Scrutiny

Concerns have been raised over the insufficient legal review by Seoul Housing & Communities Corporation (SH) after it lost a lawsuit against Korail regarding the land holding tax for the Yongsan Maintenance Depot development project. Although SH has filed an appeal, there are worries that the likelihood of losing remains high and that additional delay compensation could be imposed.

On the 5th, the Seoul Metropolitan Government announced the "Yongsan International Business District Development Plan (Draft)" to build a 100-story landmark international business district in Yongsan. A panoramic view of the Yongsan Maintenance Depot site, the planned location for the international business district. Photo by Heo Younghan younghan@

During an administrative audit conducted by the Seoul Metropolitan Council’s Housing and Space Committee on the 6th, SH President Hwang Sangha was questioned about whether a prior legal review had been conducted on the terms of the agreement with Korail. He responded, "At the time of signing the agreement, I was serving as acting president. I advised that everything should be settled before entering into the agreement, but the company went ahead and signed it regardless."

Korail filed a lawsuit against SH, demanding that SH share 400 billion won of the land holding tax for the Yongsan Maintenance Depot. On February 1, the court of first instance ordered SH to pay 97.8 billion won, which covers part of the tax for four years. The two companies had signed a joint project implementation agreement in May 2021, which included a provision for a 70:30 split of project costs. SH maintains that it cannot share the land holding tax incurred before the district designation. At the end of November last year, the Seoul Metropolitan Government officially designated the Yongsan International Business District and announced its development plan, and in December, both SH and Korail were designated as project operators.

When asked about the expected profit from the Yongsan International Business District project, President Hwang replied, "900 billion won." If SH loses the lawsuit, it will have to cover 400 billion won, which is about half of the expected profit. President Hwang explained, "The total expected profit was not as high as 1.3 trillion won, and the 400 billion won would come from the project budget."

Seoul Metropolitan Council member Ko Gwangmin pointed out, "The court determined that the final version of the contract, stamped by both parties after the 19th project implementation agreement meeting, included a provision that land holding tax incurred after the agreement date would be part of the project cost. The court explicitly stated that an agreement to include this in the implementation agreement had been reached."

Although SH has appealed, there is a prevailing view that its chances of winning are slim, as the agreed terms are clearly documented. Council member Ko noted, "The delay compensation on the 97.8 billion won is 20 billion won, and if SH ultimately loses, further delay compensation may be imposed. The outcome of the lawsuit is clear, and the additional burden of delay compensation is a very serious issue," adding, "SH must thoroughly review the contract terms to avoid similar litigation risks and financial structure problems in the future."

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