Supreme Court view. /Courtesy of News1

The Korea Airport Service, which operates Gimpo and Gimhae airports, was ordered by the Supreme Court to return the full rent received from the duty-free operators it closed in 2020 due to the impact of COVID-19. The first and second trials had ordered only 70% of the rent to be refunded, but the Supreme Court ruled that 100% should be returned.

On the 26th, according to the legal community, the Supreme Court's Civil Division 2 (Chief Justice Oh Kyung-mi) upheld a partial victory for the plaintiffs, Lotte Hotel and Busan Lotte Hotel, in a lawsuit against Korea Airport Service regarding the return of rent and remanded the case to the Seoul High Court.

Lotte Hotel and Busan Lotte Hotel entered into a contract to operate airport duty-free shops from 2016 to 2021.

However, both duty-free shops went into temporary closure due to the impact of COVID-19 starting in mid-March 2020. Subsequently, the government completely closed the international terminal at Gimpo and Gimhae airports on April 6.

The government stated that it would only collect half of the rent from the duty-free shops from mid-March to August 2020. In response, Lotte Hotel and Busan Lotte Hotel filed a lawsuit against Korea Airport Service, requesting a 100% rent waiver for that period.

The first and second trials ordered Korea Airport Service to return 70% of the rent to the duty-free shops for the period of closure of the international terminal. The court noted, 'The Ministry of Land, Infrastructure and Transport's actions due to COVID-19 were temporary and transient' and added, 'It is difficult to conclude that the duty-free shops reached a state of inability to perform their debts.'

However, the Supreme Court overturned the second trial ruling, stating that it is correct for Korea Airport Service to return the full rent. The court declared, 'The measures taken due to the spread of COVID-19 and airport closures are not the fault of either the plaintiff (the duty-free operator) or the defendant (Korea Airport Service).' It added, 'According to Article 537 of the Civil Code, if one party cannot fulfill its contractual obligations without any fault of either party, both parties are relieved of their contractual obligations.'

With the Supreme Court's ruling, Lotte Hotel is set to receive approximately 5.8 billion won in rent paid during April to August 2020, while Busan Lotte Hotel will recover approximately 9 billion won for the same period.