The Shilla Duty Free has received a court ruling mandating a 25% reduction in rent following its lawsuit against Incheon International Airport Corporation requesting a rent decrease. However, this ruling lacks legal binding force, and the corporation has maintained its stance not to accept it, increasing the likelihood of a prolonged dispute.
According to related industries on the 8th, the Incheon District Court delivered a compulsory mediation proposal to the legal representatives of the corporation and The Shilla Duty Free on the 5th. The proposal specified a reasonable rent determined by the court, reportedly about 25% lower than the current rent.
Previously, The Shilla Duty Free and Shinsegae Duty Free filed a request with the court to reduce rent by 40% due to poor sales leading to operational losses. In response, the corporation stated that the amount was determined through competitive bidding and is a decision made autonomously by the operators, showing a stance that mediation is not possible.
During the two previous mediation sessions, the corporation insisted on its 'no reduction' position in the first session and did not even attend the second session. As a result, the court concluded that the negotiations had effectively collapsed and moved to the compulsory arbitration process.
Though a compulsory mediation proposal has yet to be issued regarding the rent reduction adjustment raised by Shinsegae Duty Free, it is anticipated to be announced soon.
It has been reported that the corporation will immediately undergo the objection application process concerning this court ruling. Since compulsory mediation lacks legal binding force, should one party file an objection, the mediation proposal will become null and the process will transition to legal proceedings.
Starting from the day the compulsory mediation proposal is received, The Shilla Duty Free is expected to consider its response strategy during a two-week objection period. The options narrow down to either continuing to demand a rent reduction through prolonged litigation or withdrawing its business from Incheon Airport.
Currently, The Shilla Duty Free and Shinsegae are reportedly incurring monthly losses of 6 billion to 8 billion won while paying 30 billion won in rent to Incheon Airport. According to the corporation, if the two companies terminate their contracts, they will each have to pay a penalty of approximately 190 billion won. There are also 6-month mandatory operating conditions. Participation in re-bidding is possible, but a deduction in qualitative assessments is unavoidable. The legal representatives of The Shilla Duty Free and Shinsegae have hinted at the possibility of closing the airport duty-free shop alongside the court mediation.