Law "E-Land Retail Breaches Lease Contract, Pays 3.2 Billion Won to H&M"

H&M Files 15 Billion Won Compensation Lawsuit in 2018

E-Land Group was ordered to pay 3.2 billion KRW in damages after terminating a lease contract early with Swedish clothing company H&M, to whom it had rented a department store it operated.

Seoul Central District Court. / Photo by Mun Ho-nam munonam@

According to the legal community on the 21st, the Civil Division 36 of the Seoul Central District Court (Presiding Judge Hwang Soon-hyun) recently ruled partially in favor of H&M in the first trial of the damages claim lawsuit filed by H&M against E-Land Retail. It has been about 4 years and 5 months since the complaint was filed in 2018.

In June 2015, E-Land Retail leased the 1st and 2nd floors of NC Department Store Pyeongchon Branch in Dongan-gu, Anyang-si, Gyeonggi Province to H&M for 13 years. However, less than two years after the lease began, in January 2017, E-Land Retail unilaterally notified H&M that it would terminate the lease contract early. This was due to the sale of the Pyeongchon branch for over 130 billion KRW through a real estate investment trust (REIT) as part of E-Land Group’s restructuring process. A large-scale high-rise officetel was built on the department store site.

In June of the same year, both parties agreed that "E-Land Retail would provide a replacement store at NC Department Store Ansan Gojan Branch by January 2018 and pay 1.8 billion KRW in early termination damages." However, four months after the agreement, E-Land notified that "it would be difficult to deliver the promised store due to the difficulty in renewing the existing lease contracts with the individual owners of Ansan Gojan Branch."

Ultimately, H&M filed a damages lawsuit claiming over 15 billion KRW against E-Land Retail, and the court ruled that E-Land Retail must pay approximately 3.2 billion KRW in damages.

E-Land Retail argued, "We had notified that renewing the existing lease contracts might be difficult, and the delay in delivering the store was due to the realization of those difficulties," but the court recognized E-Land Retail’s intent and negligence, stating, "E-Land Retail was aware of the potential difficulties in renewing contracts with the individual owners of Ansan Gojan Branch even before reaching an agreement with H&M, so it should have promptly conducted related negotiations."