▲ A CGV theater in Seoul
A court has ruled that CGV must pay remaining rent and other costs after shutting down a branch about three years after COVID-19 quarantine measures ended.
The 33rd Civil Settlement Division of the Seoul Central District Court (Presiding Judge Choi Jong-jin) partially ruled in favor of the plaintiff in a lawsuit filed by Industrial Bank of Korea (IBK) against CGV seeking rent and other payments, ordering that "CGV must pay 15.322 billion won."
Previously, CGV closed Yeonsu CGV located in Yeonsu-gu, Incheon, in March of last year, citing deteriorating management due to the aftermath of COVID-19.
Although the lease contract period remained, CGV terminated the contract by exercising its statutory right to termination under the Commercial Building Lease Protection Act.
The Commercial Building Lease Protection Act stipulates that a lessee who has been subjected to quarantine measures for three months or more can terminate a lease contract if they close their business due to resulting financial deterioration.
Subsequently, the Industrial Bank of Korea, which succeeded to the status of the lessor, filed a lawsuit against CGV claiming the remaining rent and other expenses.
The court determined that it was difficult to acknowledge a causal relationship between the quarantine measures and the closure, given that the branch ceased operations about three years after quarantine measures ended in May 2022.
The court added, "It is recognized that operational losses occurred, such as a decrease in viewers following the implementation of COVID-19 measures, leading to the suspension of movie theater operations from October 2020 to February 2022, and that average monthly sales significantly dropped."
However, it concluded that these circumstances alone were insufficient to show that there had been a critical change in economic conditions severe enough to warrant closing the theater.
Specifically, the court noted that sales increased in 2023 and 2024 after COVID-19 quarantine measures ended, and that other factors—such as the growth of the online video streaming (OTT) industry and a slump in the cinema sector, which had persisted even before COVID-19—also impacted the decline in audience numbers and sales.
The court ruled that CGV's termination of the lease contract was not lawful and that it bore responsibility for damages covering the remaining contract period.
Accordingly, the damages were calculated based on the monthly rent and management fees from July 2025, when the contract was effectively terminated, to July 2037.
However, considering factors such as the long remaining lease period of more than 11 years, the court reduced the amount to 75 percent of the scheduled damages.
After deducting the lease deposit and other items, the final payment was set at 15.322 billion won.
The court stated, "Although it is difficult to view that circumstances arose to an extent that justified terminating the lease contract due to COVID-19, it is recognized that CGV experienced difficulties in operating the cinema," and added, "It would be unfair to force them to bear the entire scheduled amount of damages resulting from the termination of the lease contract."
(Photo: Yonhap News)
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