SOUTH KOREA Law and Practice Contributed by: Hyeon Kang, Tae Kyoon Kim, Seungil Hong and Sung-Ho Moon, Bae, Kim & Lee LLC
such a long adjudication procedure, at the time the lease contract is made, they may opt for a pre-trial settlement procedure. With respect to the enforcement of the court judgment or the pre-trial settlement protocol, the eviction is exe - cuted by a court-appointed enforcement officer, and it usually takes two to three weeks from the landlord’s filing of a petition for the commence - ment to the completion of the eviction process. 6.22 Termination by a Third Party A lease may be terminated in accordance with the relevant law, including the AELPWC, and the tenant’s leasehold interest may be extinguished upon expropriation of the leased premises (whether land or building) by the government. Specifically, a lease is automatically terminated at the time the expropriation process is com - menced, in which case the landlord must return the lease deposit to the tenant. The landlord is not obliged to pay separate damages for termi - nation due to expropriation. However, under the relevant law, the expropriating entity must pay the following as compensation to the tenant of an expropriated building: • if a residential lease – two months’ cost of living for relocation, relocation settlement cost (between KRW6 million and KRW12 million) and the cost of moving; or • if a commercial lease – loss of profits for the interruption of business for up to four months (calculated by aggregating profits from opera - tions, decrease in profits from operations, depreciation, maintenance costs, labour costs, etc). 6.23 Remedies/Damages for Breach If a lease is terminated due to reasons attribut - able to the tenant, the landlord, in principle, is entitled to claim liquidated damages under the lease (eg, an amount equivalent to the remaining
rent). However, if the lease agreement is silent as to liquidated damages, the landlord may only claim damages equivalent to the rent covering the period between the date of termination and the date on which the landlord was able to secure a new tenant. The majority of case law has rarely allowed this period to be longer than six months. Please refer to 6.16 Forms of Security to Pro- tect Against a Failure of the Tenant to Meet Its Obligations regarding security deposits. 7. Construction 7.1 Common Structures Used to Price Construction Projects Since there are no statutory or other legal proce - dures for paying contractors, the payment struc - tures for construction projects are typically set out in contractual agreements. The most com - mon payment method for construction contracts is the fixed fee method, while the cost of the work method (or cost plus fee) is rarely used. However, in public construction contracts, unlike private construction contracts, escalation claus - es are generally allowed. In fixed-fee contracts, contractors bear the risks relating to, among others: • delays due to local civil petitions against the construction; • cost increases (including labour and material costs); • procurement of construction equipment; and • personal injury caused by on-site accidents. 7.2 Assigning Responsibility for the Design and Construction of a Project For small to medium-sized projects, build-only contracts are common in both public and private construction projects. In such contracts, the
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