By Chung Ah-young
The Jeju Free International City Development Center (JDC) may face a huge compensation suit by Berjaya Jeju Resort (BJR), a joint venture for the development of a resort complex which has been suspended.
Kim Han-wook, CEO of the JDC, said at a press conference Wednesday that he was told the project developer is preparing for the suit, seeking approximately 5.1 trillion won ($4.2 billion) in compensation for the project which was stopped last year.
The compensation reportedly includes damages such as construction costs, loss of future profits and losses from falling share prices.
BJR was established by the Berjaya Group, a Malaysian conglomerate, and the JDC, an affiliated organization of the Ministry of Land, Infrastructure and Transport (MOLIT) with stakes of 81 percent and 19 percent, respectively.
The project began in 2008 with 2.5 trillion won to create a resort area by 2017 in Yere-dong, Segwipo City on Jeju Island with residential condominiums, villas, hotels, a casino, a shopping complex and a medical center.
The JDC had promoted the project as a luxury, value-added resort complex targeting the wealthy elderly and tourists.
But the Supreme Court ordered the suspension of construction last April, citing that the developer had misled landowners over use of the site.
Four landowners filed the suit, claiming that the complex doesn’t meet the requirements of the public good. The law on recreational zone development stipulates building facilities that contribute to residents’ welfare for the public good.
The top court said that the project was invalid because it pursued profits earned
from certain types of customers.
In November, BJR had already filed a suit against the JDC for halted construction in Gotjawal Village, the first part of the total nine-phase project, seeking 350 billion won in compensation.
In response to the lawsuit, Kim said that the JDC has been pushing for revision of the special law in the National Assembly to resume the project. The proposed revision would allow a wider concept of condominiums and other profit-making facilities to be constructed in recreational areas.
“We are preparing for the worst-case scenarios to minimize damages from investors, the provincial government and landowners,” Kim said. “To do that, we will do our best to pass the revision of the special law.”
However, even if the revision is passed, the project will go back to the drawing board for obtaining the land and approval.