1. Case Overview
a. Party Represented by Barun Law:
We represented the plaintiff, a housing redevelopment project association ( the "Plaintiff") established under the Act on Improvement Urban Areas and Residential Environments (the "Urban Improvement Act").

b. Background of the Case:
The head of a local government (the "Defendant") approved a modification to the project implementation plan that included the transfer of disused urban infrastructure to the Plaintiff without cost. However, the Defendant imposed a condition requiring the Plaintiff to donate approximately KRW 3.5 billion to the Defendant, calculated as the cost of the newly established infrastructure minus the monetary value of both the floor area ratio (FAR) incentives and the disused public land to be transferred without cost.

c. Litigation:
The Plaintiff argued that this condition effectively rendered the transaction a paid transfer of the disused urban infrastructure, which contravened the mandatory provisions of Article 97(2) of the Urban Improvement Act, thereby rendering it void. The Plaintiff sought the return of approximately KRW 3.5 billion as unjust enrichment.

The Defendant countered that all disused urban infrastructure had been transferred to the Plaintiff without cost, as explicitly stated in the plan modification approval. The Defendant argued that the monetary donation was solely for the benefit of the FAR adjustment and did not amount to a purchase price.

2. Court Decision
The court ruled in favor of the Plaintiff, holding that:
- Article 97(2) of the Urban Improvement Act is a mandatory provision requiring that disused urban infrastructure be transferred to the project owner without cost, within the scope of the costs for constructing the new infrastructure.
- Even if the condition was formally structured as a donation, its substance effectively constituted a paid transfer. The court applied the principle that the substance of the arrangement, rather than its formal appearance, determines compliance with mandatory provisions.
- The imposed condition violated Article 97(2) by requiring a donation equivalent to the excess amount of the combined value of the FAR incentives and disused public land over the cost of the new infrastructure. This made the condition void as an act of evading mandatory provisions.
The court further found the Defendant to be a willful violator, noting that the Defendant was aware of the illegality of charging for the disused public land and had intentionally structured the condition to circumvent the mandatory provision.

3. Our Argument and Role
We argued that the essence of this case is that the Defendant, despite the mandatory nature of the provision, effectively transferred a portion of the disused urban infrastructure for consideration in the form of a conditional contribution, thereby attempting to evade the mandatory provision. We demonstrated that the court has consistently ruled such evasive acts against mandatory provisions to be invalid based on the "substance" rather than the "form."

In particular, we explained the circumstances under which the condition was imposed, stating, "The Defendant initially intended to transfer the disused urban infrastructure to the Plaintiff for consideration but, upon realizing that this would violate the mandatory provision of the Urban Improvement Act, requested an alternative plan from the Plaintiff. The condition was subsequently imposed based on the remedial plan submitted by the Plaintiff." We emphasized that the Defendant, having realized that transferring the disused urban infrastructure for consideration would violate the mandatory provision, added the condition in an attempt to circumvent the law.

4. Significance of the Judgment
This ruling extends existing legal principles concerning the mandatory nature of Article 97(2) of the Urban Redevelopment Act. It reaffirms that:
- Contracts violating the mandatory provisions of the Act are void, even when disused infrastructure is formally transferred without cost while requiring monetary contributions in exchange.
- Courts will assess the substance of transactions to determine whether they constitute an evasion of mandatory provisions.
This case sets an important precedent for urban redevelopment projects, emphasizing that attempts to bypass legal prohibitions through conditional arrangements will not be upheld.