Seoul High Court Rules in Favor of Asiana Airlines, Upholds Deposit Retention

The Seoul High Court, in a decisive ruling on March 21, 2024, dismissed HDC Hyundai Development Company’s appeal regarding the retention of a KRW200 billion (USD149 million) deposit by Asiana Airlines. This deposit was part of a failed acquisition attempt in 2019, valued at KRW2.5 trillion (USD1.86 billion). The court’s decision supports the legality of Asiana Airlines’ action to keep the deposit, considering it a justified penalty for breach of contract by HDC.

The acquisition bid’s collapse came amid the emerging COVID-19 pandemic, significantly altering Asiana’s financial landscape and operational dynamics. This shift prompted HDC and its then-partner, Mirae Asset Securities, to seek a renewed due diligence process, arguing that the changed circumstances warranted a closer examination of Asiana’s standing. However, Asiana, supported by its principal creditors including the Korea Development Bank and Kumho Industrial, rejected this request, citing that such an action fell outside the original agreement’s scope. This disagreement led to Asiana terminating the acquisition contract in September 2020 and holding onto the deposit, triggering a protracted legal battle.

Interestingly, Mirae Asset Securities, HDC’s partner in the initial acquisition bid, has not joined the appeal process, having ceased its legal actions against Asiana following a court defeat last year.

The ruling by judges Kim In-gyeom, Lee Yang-hee, and Kim Gyu-dong emphasizes that HDC’s push for renegotiation effectively amounted to a refusal to fulfill the original contract terms, thereby validating Asiana’s contract termination and deposit retention as lawful actions. This verdict marks a significant moment in the legal tussle over the failed acquisition, solidifying Asiana Airlines’ stance and providing a closure to this chapter of legal disputes surrounding the deposit.