[Exclusive] "Lost 4.5 Billion Won in Design Fees" Lawsuit Adds to Fluctuating Yangjae Logistics Complex Plans

[10 Years of Stalled Urban Logistics] ④
Lawsuit With Preferred Bidder Heerim Over Architectural Design of Yangjae Urban High-Tech Logistics Complex
First Trial Dismisses Claims of Both Harim Industry and Heerim

The development project for the "Yangjae Urban High-Tech Logistics Complex" (Yangjae Logistics Complex), which Harim Group is currently pursuing, has hit a roadblock at the Seoul Metropolitan Government's architectural review. In addition, it has been confirmed that Harim is currently engaged in a lawsuit worth approximately 4 billion won with the architectural firm originally commissioned for the project. Harim revised its Yangjae Logistics Complex business plan once last year, and this year received a request from the city of Seoul for a "complete redesign," and is now awaiting a re-evaluation. The project has made little progress for a decade, as legal disputes over permits and frequent design changes have repeatedly stalled its advancement.

According to The Asia Business Daily's coverage on the 11th, Harim Industry, a subsidiary of Harim Holdings, and Heerim Architects & Planners (Heerim) are currently engaged in a lawsuit over approximately 4.5 billion won in design service fees. In July last year, the court dismissed both Harim Industry and Heerim’s claims; however, both parties appealed the first-instance verdict, and the case is now in the second trial at the Seoul High Court.

According to the court ruling, in December 2020, Harim Industry designated Heerim as the preferred bidder for the Yangjae Logistics Complex architectural design. Heerim initially proposed a design service fee of 36.4 billion won to Harim Industry. Subsequently, by April 2021, Heerim had revised and supplemented the design and master plans a total of 11 times, and after conducting international competitions to select an overseas design firm for certain design aspects, Heerim increased its proposed service fees to over 46 billion won.

As a result, Harim Industry and Heerim had differing views regarding the amount of the service fees and whether the fees should be linked to the floor area ratio, ultimately leading to a breakdown in the final contract negotiations.

Heerim argued that although a formal design service contract for the Yangjae Logistics Complex was never signed,it nonetheless performed design work for Harim Industry and is therefore entitled to part of the service fees and delay damages, totaling approximately 4.5 billion won.

In contrast, Harim Industry countered that Heerim "unjustly terminated negotiations" and claimed that Heerim should compensate a total of 370 million won, including interest on funds raised to purchase the project site and costs related to the international competition.

The 11th Civil Division of the Seoul Eastern District Court (Presiding Judge Cho Joongrae) last July denied both Harim Industry’s and Heerim’s claims. The court stated, "Heerim’s activities, such as preparing design and master plans and handling international competition tasks, appear to have been preparatory actions for entering into a service contract with Harim Industry, or efforts to gain an advantage over competitors in that process, and thus were carried out in its own interest." The ruling was based on the fact that neither the scope of the service fees nor the scope of work for the overseas design firm had been specifically determined between Heerim and Harim Industry.

The court further stated, "The allegation that Heerim unilaterally broke off negotiations with Harim Industry is simply a matter of Heerim presenting its final contractual conditions necessary for the design service agreement, and expressing that it would be difficult to finalize the contract if those conditions were not accepted. Therefore, it is difficult to view this as Heerim refusing to sign the contract without cause."

Previously, after Harim Group purchased the Yangjae Logistics Complex site, construction was delayed due to legal disputes with the Seoul Metropolitan Government over floor area ratio issues. In 2024, the plan for a 58-story mixed-use logistics, residential, and commercial complex was finally approved. However, last year, Harim Industry revised the design, moving some of the logistics vehicle parking and residential parking—originally planned to be entirely underground—above ground to reduce construction costs and improve profitability. This year, the business plan submitted by Harim was halted during the Seoul Metropolitan Government's architectural review. As a result, the construction start date, which had been targeted for the first half of this year, is now uncertain, and completion is likely to be delayed until after 2030.

Such design changes and frequent lawsuits have caused related costs to surge. According to Harim Industry’s audit report, the company's commission expenses increased from 3.1 billion won in 2024 to 5.2 billion won last year. Commission expenses are costs paid by a company for external services, and include fees for credit card payments, consulting, legal and accounting services, and patent royalties.

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