Namwon-si Suffers First Trial Defeat in 40 Billion Won Lawsuit Over 'Theme Park Operation Suspension'

Court: "Namwon City Provided the Fundamental Cause of the Dispute"

Namwon City Hall View
Photo by Yonhap News

Namwon City in Jeonbuk is facing the risk of paying hundreds of billions of won in damages after unilaterally canceling a theme park project agreement.

On the 23rd, Yonhap News reported, "The Civil Division of the Namwon Branch of Jeonju District Court (Chief Judge Kim Yoo-jung) ruled in favor of the plaintiffs in a damages lawsuit filed by a financial consortium that invested 40.8 billion won in the theme park project against Namwon City." The court ordered Namwon City to pay approximately 40.8 billion won and delayed interest to the consortium.

Previously, in 2017, Namwon City promoted a theme park project centered around Gwanghallu Garden and selected a private operator to build leisure facilities such as a monorail, luge, and zip wire. The private operator, Namwon Theme Park, borrowed about 40.5 billion won in project funds from the financial consortium in 2022 with Namwon City's guarantee and completed amusement facilities including a 2.44 km monorail and a zip wire crossing the city in the Eohyeon-dong area of Namwon City.

However, Mayor Choi Kyung-sik overturned the promises made by the previous mayor with the private operator and did not grant the facility donation and use permit specified in the agreement. At the time, Namwon City stated, "The agreement with the private operator is fundamentally invalid due to violations of related laws," and "therefore, the administrative agency has no reason to pay damages," even threatening legal disputes.

As a result, the private operator was unable to operate properly after the completion in 2022 and suspended facility operations in February this year.

Consequently, the financial consortium, which guaranteed the theme park project, filed a large civil lawsuit against Namwon City, and after deliberation, the court ruled in favor of the consortium.

The court stated, "The defendant failed to grant the use permit in a timely manner without justifiable reasons, delaying the opening of the facility, and ultimately the company terminated the implementation agreement," adding, "Considering that Namwon City caused the fundamental cause of the dispute, liability for damages is recognized." The court further explained, "Even if the theme park project ultimately failed, it cannot be concluded that the business feasibility prediction during the previous mayor's term was wrong," and "Considering that Namwon City did not attempt to select an alternative operator even after the operator returned the facility, the consortium's claim for principal and interest repayment is reasonable."

Namwon City expressed its intention to appeal the ruling. The city stated, "The original agreement included a 'toxic clause' requiring Namwon City to compensate the loan principal and interest upon termination, which is illegal and therefore invalid," and claimed, "The private operator also distorted the business profit structure by excessively forecasting tourism demand and aggressively pursued loans." The city added, "Citizens are outraged by this ruling, saying, 'We are struggling to make a living, yet if the project succeeds, private companies take the profits, and if it fails, Namwon City must bear the losses with taxpayers' money,'" emphasizing, "We will actively respond through an appeal to ensure that citizens' taxes are not wasted."