Commercial Lease Disputes Between Landlords and Tenants... Seoul Districts Directly Conduct Mediation and Deliberation

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[Asia Economy Reporter Lim Cheol-young] The Seoul Metropolitan Government announced on the 5th that starting in April, dispute mediation committee members will directly visit the autonomous districts where business locations are situated to hold committee meetings and mediate and deliberate on various commercial lease disputes such as contract termination, rent increases, and key money refunds, for the convenience of the parties involved.

Seoul analyzed 185 dispute cases submitted to the Commercial Building Lease Dispute Mediation Committee last year by autonomous district. It found that applications from business locations in districts farther from City Hall, such as Dobong-gu and Geumcheon-gu, were low compared to those closer to City Hall. This was judged to be because travel time and inconvenience to attend the committee discouraged or burdened applicants from filing mediation requests.

The Seoul Commercial Building Lease Dispute Mediation Committee consists of 30 experts in various fields including lawyers, appraisers, architects, and licensed real estate agents. When a mediation request is received, the committee coordinates dates when both the landlord and tenant can attend, and three committee members review the law and conduct on-site investigations to mediate and deliberate as quickly as possible. The mediation agreement signed by the landlord and tenant at the dispute mediation committee has the effect of a settlement under civil law and is enforceable like a court judgment.

Mediation requests can be made by any landlord or tenant without a special form. Applications can be submitted online via the Seoul Fair Trade Comprehensive Counseling Center or by phone.

Additionally, on the days when the Commercial Lease Dispute Mediation Committee is held, Seoul plans to separately establish a Commercial Lease Counseling Center in the respective autonomous district. Through professional counselors such as lawyers and licensed real estate agents, consultations on various issues related to commercial leases including key money recovery, contract renewal, rent adjustments, and contract termination will also be provided to local residents.

Meanwhile, according to Seoul, since establishing the Commercial Building Lease Dispute Mediation Committee in 2016, it has resolved 411 disputes. The mediation rate for cases initiated in the past three years has averaged over 86%, and the number of cases has been increasing annually.

Comparing the types of commercial lease disputes before and after the COVID-19 outbreak, in 2019, contract termination, key money, and rent adjustment were evenly distributed. However, in 2020, as tenants’ sales declined due to COVID-19, rent adjustment cases surged, and in 2021, prolonged COVID-19 led to a high proportion of contract termination and rent adjustment cases.

To revitalize the Commercial Lease Dispute Mediation Committee, Seoul plans to build cooperative systems with organizations currently operating such committees, including the Korea Legal Aid Corporation, Korea Real Estate Board, Korea Land and Housing Corporation, and other local governments (Gyeonggi Province). It will share excellent dispute resolution cases and know-how, enhance expertise through exchange and dispatch of mediation committee members, and strengthen its public role.

Han Young-hee, Director of Labor, Fair Trade, and Win-Win Policy, said, “Small business owners who find it difficult to leave their workplaces for long hours will have their inconvenience reduced by shortening travel time when attending the committee. We have established a visiting dispute mediation committee to lessen the impact on their sales.” She added, “Through the visiting commercial lease dispute mediation committee, we will actively support landlords and tenants to receive relief from damages and protect their rights more promptly.”

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