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 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 the payment of rent and other dues, ordering that "CGV must pay 15.322 billion won."

Previously, CGV closed its Yeonsu CGV branch in Yeonsu-gu, Incheon, in March of last year due to deteriorating business conditions triggered by the fallout of COVID-19.

Although the lease contract period still remained, CGV terminated the agreement by exercising its statutory right to termination under the Commercial Building Lease Protection Act.

The Commercial Building Lease Protection Act stipulates that tenants who have been subjected to quarantine measures for three months or more can terminate their lease agreements if they close their businesses due to resulting financial hardship.

Subsequently, IBK, which succeeded to the status of the lessor, filed a lawsuit against CGV claiming the remaining rent and other expenses.

The court judged that it was difficult to recognize a causal link between the quarantine measures and the closure, given that the branch ceased operations about three years after the COVID-19 quarantine measures ended in May 2022.

The court stated, "It is acknowledged that operating losses occurred due to a decline in audiences following the implementation of COVID-19 measures, leading to the suspension of theater operations from October 2020 to February 2022, and that average monthly sales dropped significantly."

However, it concluded that these circumstances alone were insufficient to prove a significant change in economic conditions severe enough to warrant shutting down 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 contributed to the decline in audience numbers and revenue.

The court determined that CGV's termination of the lease contract was not lawful and that it bore liability for damages covering the remaining contract period.

Accordingly, the amount of damages was calculated based on the monthly rent and management fees from July 2025, when the contract was effectively terminated, through July 2037.

However, considering that the remaining lease period was a lengthy 11 years or more, the court reduced the expected damages to 75 percent of the original amount.

After deducting the security deposit and other items, the final payment was set at 15.322 billion won.

The court ruled, "Even though it is difficult to view that circumstances arose to a degree that would justify terminating the lease contract due to COVID-19, it is recognized that CGV experienced difficulties in operating the theater," adding, "It would be unfair to require CGV to bear the full amount of projected damages resulting from the termination of the lease contract."

(Photo: Yonhap News)