SK Group Chairman Chey Tae-won and Art Center Nabi Director Noh So-young's divorce property division lawsuit has reached a significant turning point. On July 24, the Seoul High Court ruled that Chey must pay Noh 944 billion won in cash as part of the property settlement. This decision comes nearly nine years after the legal dispute began with a divorce mediation request in 2017. The substantial changes in the property division amounts—from 66.5 billion won in the first trial to 1.38 trillion won in the second trial, and now to 944 billion won in the retrial—highlight the core issues at stake in this case.
The primary issue was whether the SK shares held by Chey should be considered joint marital property. The first trial deemed the SK shares as separate property acquired through inheritance and gifts, excluding them from division. The court found it difficult to recognize Noh's substantial contribution to the formation, maintenance, and value increase of the shares. Consequently, only shares from some affiliates, real estate, and deposits were included in the division, resulting in a settlement amount of 66.5 billion won.
However, the second trial overturned this decision. It concluded that the value of the SK shares significantly increased due to Chey's management activities during the marriage, and that Noh's contributions in household management, child-rearing, and external activities also played a role in maintaining and enhancing that value. As a result, the SK shares were included as joint property, and Noh's share was recognized at 35%, raising the property division amount to 1.38 trillion won.
In October of last year, the Supreme Court ruled that acknowledging the late former President Roh Tae-woo's slush fund of 30 billion won as a contribution from Noh was incorrect, stating that illegal funds cannot be considered a legitimate contribution to property formation. The court also found it erroneous to include shares gifted to relatives for maintaining management rights before the marriage breakdown in the division. Following this ruling, the case returned to the Seoul High Court.
The retrial reflected the Supreme Court's intent while still determining that the SK shares are joint marital property. Although the 30 billion won slush fund and gifted shares were excluded, the court recognized that Noh's long-term contributions to household management, child-rearing, and external activities contributed to the maintenance and increase in the value of the shares. The property division ratio was set at two-thirds for Chey and one-third for Noh.
This ruling is noteworthy because it does not view a businessman's shares as merely personal property while broadly recognizing the spouse's contributions. While corporate shares are foundational to management rights and governance structures, if their value has significantly increased during the marriage, the spouse's contributions in household management, child-rearing, and social activities cannot be excluded from the property formation process. Even inherited property cannot be entirely considered separate if its value has been maintained and increased during the marriage.
The criteria for stock valuation also hold significant implications. The court assessed the property value based on the date of the conclusion of the appeal hearing on April 16, 2024. At that time, the SK stock price was around 160,000 won, but it rose to the 800,000 won range by the end of the retrial. However, the court did not directly reflect this increase in the property value. Following Supreme Court precedents, the valuation date for property division in confirmed divorce cases is the conclusion of the factual hearing. Nonetheless, the stock price surge was considered in determining the division ratio. This decision balances legal stability with practical equity. Given the high volatility of publicly traded stocks, subsequent price fluctuations after the divorce confirmation are influenced by both managerial actions and market conditions. If all future stock price changes were retroactively divided, it could complicate the resolution of property division cases. Conversely, failing to reflect significant value increases would contradict the intent of equitable liquidation.
Deciding on cash payment for the property division was also deemed appropriate. The SK shares held by Chey are directly linked to the group's management rights. Dividing these shares directly could introduce uncertainties into corporate governance and market stability. While ensuring the spouse's property rights, it is crucial to avoid situations where corporate management rights are jeopardized due to divorce litigation. This decision considers both individual rights and corporate stability.
This case sets an important precedent for property division principles in South Korea, extending beyond the personal divorce of a conglomerate leader. Household management and child-rearing are not secondary roles separate from economic activities. The roles spouses play during long-term marriages can impact corporate value and asset growth. At the same time, it has been reaffirmed that illegal funds cannot be recognized as legitimate contributions under any circumstances.
The court's ruling aims to fairly evaluate the contributions of the marital partnership while preserving the continuity of corporate management. This ruling is a result of efforts to balance these two principles. In future similar cases, it will be essential to establish consistent standards by specifically examining the property formation process, the spouse's actual contributions, and the impact on corporate management rights.
* This article has been translated by AI.
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