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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] CJ ENM has filed a KRW 516 billion (USD 380 million) lawsuit against Gyeonggi Province, alleging failure to fulfill its cooperation obligations in connection with the collapse of the “K-Culture Valley” mixed-use development project.
According to industry sources on August 10, CJ ENM and its subsidiary CJ LiveCity filed suit with the Seoul Central District Court on August 8. The filing includes a declaratory action of non-liability for KRW 313.4 billion, a damages claim of KRW 181.4 billion, and a recourse claim of KRW 20.3 billion against Seoul Guarantee Insurance.
CJ alleges that permit delays, inadequate water quality improvement of the Hallyu Stream, failure to secure large-scale power supply, and Gyeonggi Province’s breach of cooperation obligations led to project delays and eventual termination of the agreement. The company noted that the separation of contracting parties (Gyeonggi Province and Gyeonggi Housing & Urban Development Corporation) from permitting authorities (Goyang City) caused repeated administrative delays.
One core facility, the riverside park along the Hallyu Stream near the planned arena, was to achieve Class 2 water quality. However, design flaws led to persistent odor and flooding issues, prompting Goyang City to decide to cover the stream — forcing significant changes to CJ LiveCity’s original project plan.
The lack of sufficient power supply was also cited as a major factor. CJ LiveCity confirmed feasibility with Korea Electric Power Corp. (KEPCO) in 2019 and applied for a power supply notice in December 2021, but in February 2023 KEPCO informed the company that part of the site could not be supplied due to a surge in data center construction and resulting power shortages. KEPCO said supply would only be possible after 2028, causing an estimated 16-month delay. CJ also claimed that Gyeonggi Province failed to provide adequate consultation and support.
In July 2023, Gyeonggi Province imposed penalties totaling KRW 314.4 billion on CJ LiveCity, including KRW 284.7 billion in liquidated damages for delay, KRW 28.7 billion in completion delay penalties, and KRW 1 billion for unauthorized land occupation.
Citing failure to meet the development deadline of August 2020, the province terminated the original 2016 agreement and shifted to a dual-track development model involving both public and private sectors. A recent tender for private developers for the T2 site (158,000㎡) drew bids from four companies, including Live Nation Korea.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
