Unjust Enrichment in South Korea: Equity Limits

A person placed a container box and planted trees on someone else's land and used it for about four years. The landowner sued for the rental value of that period, KRW 64,375,000, as unjust enrichment. The appellate court awarded only KRW 20 million, citing how the occupation began and how an earlier court mediation was reached.

Unjust enrichment is the doctrine under which a person who obtains a benefit from another's property without legal grounds must return it (Article 741 of the Civil Act of South Korea). Tort damages can be reduced through comparative negligence (gwasil-sanggye, a reduction for the claimant's own fault) and other limitations of liability. The question in this case was whether a court may reduce unjust enrichment in the same way.

On September 10, 2026, the Supreme Court of Korea reversed that part of the appellate ruling. It held that a court may not limit the scope of unjust enrichment on grounds of good faith or equity absent special circumstances, and gave four reasons (Supreme Court of Korea, September 10, 2026, 2026Da203472). The ruling sets a baseline for landowners and occupiers in property disputes in South Korea, including foreign-invested companies holding real estate in Korea.

The structure of the decision is summarized below (Supreme Court of Korea, September 10, 2026, 2026Da203472).

What happened in this land occupation case?

The plaintiff has owned a 1,922 m² plot in Icheon, Gyeonggi Province, since June 23, 2017. The appellate court found the following facts (Suwon District Court, April 9, 2026, 2024Na103424).

The mediated deadline for handing over the land was March 6, 2024, while the defendant removed the structures and trees around June 2024. A utility pole that Korea Electric Power Corporation had installed for farming use at the defendant's request was later removed by the utility at the plaintiff's request (Suwon District Court, April 9, 2026, 2024Na103424).

A rent appraisal commissioned by the first-instance court valued the rent as follows (Suwon District Court, April 9, 2026, 2024Na103424).

The plaintiff won in full at first instance. On appeal, the plaintiff withdrew a claim to remove the utility pole and, through a cross-appeal, increased the unjust enrichment claim to KRW 64,375,000, the rental value from around May 2020 to around May 2024 (Suwon District Court, April 9, 2026, 2024Na103424).

What must an unauthorized occupier return as unjust enrichment?

Article 741 of the Civil Act of South Korea provides that a person who, without any legal ground, derives a benefit from the property or services of another and thereby causes a loss to the other must return the benefit. A person who uses another's land without permission must return the benefit of that use.

The Supreme Court of Korea described this as enrichment by infringement, meaning unjust enrichment that arises when a person, without legal grounds, infringes on a property interest that should belong exclusively to someone else (Supreme Court of Korea, September 10, 2026, 2026Da203472).

The benefit of use is usually measured by the rental value. The Supreme Court of Korea has explained that, when the benefit of occupying and using real estate is valued objectively, it is reasonable to use the price that would have been agreed if the parties had created a right to use the property by agreement. The rental value is only a yardstick for measuring in money the unjust enrichment gained from unauthorized occupation and use (Supreme Court of Korea, March 12, 2026, 2025Da217883).

An owner therefore does not lose its claim merely because it had no plan to lease the property. In that case, a redevelopment association was entitled to a building it had expropriated, but the former owner delayed handing it over. The lower court denied rent-equivalent damages because the association planned to proceed with redevelopment rather than lease the building. The Supreme Court of Korea reversed, holding that this alone did not show special circumstances in which the owner could not have earned rental or other income, and that the party asserting no loss bears the burden of proving such circumstances (Supreme Court of Korea, March 12, 2026, 2025Da217883).

Does permission from the owner's father create a right to occupy?

Not in this case. The appellate court held that permission from the plaintiff's father, or receipt of a copy of the plaintiff's resident registration card to apply for electricity for agricultural water, was not enough to establish a lawful right to occupy the land. It also found no evidence that the plaintiff had consented to the free use of the land (Suwon District Court, April 9, 2026, 2024Na103424).

The defendant appealed this finding. The Supreme Court of Korea held that the appellate court's judgment was correct and that it had not violated the rules of logic and experience, exceeded the limits of free evaluation of evidence, or misunderstood the law on contract formation and subsequent ratification. It dismissed the defendant's appeal (Supreme Court of Korea, September 10, 2026, 2026Da203472).

Although the defendant and the plaintiff's father had signed a lease document with annual rent of KRW 340,000, no lawful right to occupy was recognized against the plaintiff as owner. The case shows that permission from a family member of the owner may not be enough.

Why did the appellate court cut the award to KRW 20 million?

The appellate court found that the defendant had occupied and used the land without authorization from around May 2020 to around May 2024 and thereby gained unjust enrichment equal to the rent. It nevertheless reduced the amount to be returned (Suwon District Court, April 9, 2026, 2024Na103424).

The court cited how the defendant came to occupy and use the land, how the voluntary mediation on surrender of the land was reached, and other circumstances in the record. Based on these, it limited the amount to KRW 20 million, slightly more than 30% of the claim, on the principle of equity (Suwon District Court, April 9, 2026, 2024Na103424).

The appellate court modified the first-instance judgment, ordered the defendant to pay KRW 20 million with late-payment interest, dismissed the rest of the claim and ordered each party to bear its own costs (Suwon District Court, April 9, 2026, 2024Na103424). The plaintiff appealed the dismissed part, and the issue before the Supreme Court of Korea was whether unjust enrichment can be limited in this way.

Did the Supreme Court of Korea allow the reduction?

No. After referring to Article 741 of the Civil Act, the Supreme Court of Korea held that where a benefit constitutes unjust enrichment that must be returned to another person, a court may not limit the scope of the return by invoking good faith or equity by analogy to comparative negligence in damages, absent special circumstances (Supreme Court of Korea, September 10, 2026, 2026Da203472).

Applied to this case, the defendant must, absent special circumstances, return the full rental value of the land for the period of occupation, and the circumstances relied on by the appellate court should not be considered in setting that amount (Supreme Court of Korea, September 10, 2026, 2026Da203472).

The Court found that limiting the defendant's liability to 30% on the premise that such a limitation was possible reflected a misunderstanding of the law on unjust enrichment and limitation of liability. Without ruling on the plaintiff's other grounds of appeal, it reversed the part of the judgment the plaintiff lost and remanded it to the Suwon District Court. It dismissed the defendant's appeal, and the decision was unanimous (Supreme Court of Korea, September 10, 2026, 2026Da203472).

Why can't unjust enrichment be reduced like tort damages?

The Supreme Court of Korea gave four reasons (Supreme Court of Korea, September 10, 2026, 2026Da203472).

1) Equity is already built into the unjust enrichment rules

Unjust enrichment requires a person whose gain lacks legal grounds to return it, based on the ideas of fairness and justice. It resolves situations in which a transfer of value that appears valid in general and formal terms contradicts equity in relative and substantive terms (Supreme Court of Korea en banc, June 25, 2015, 2014Da5531).

The Court held that this idea is already reflected in the specific provisions and case law governing when unjust enrichment arises, how much must be returned and when return is limited (Supreme Court of Korea, September 10, 2026, 2026Da203472). For example, the Civil Act provides that a recipient in good faith returns the benefit only to the extent it still exists, while a recipient in bad faith must return the benefit with interest (Article 748 of the Civil Act of South Korea). Once a benefit has been found returnable under those rules, a further equity-based reduction by the court is not something the system contemplates (Supreme Court of Korea, September 10, 2026, 2026Da203472).

2) Good faith applies only as a supplementary principle

Article 2(1) of the Civil Act requires rights to be exercised and duties performed in good faith. The Court explained that general and abstract principles such as good faith and equity should apply only as a supplement, where the specific statutory provisions cannot resolve a case fairly (Supreme Court of Korea, September 10, 2026, 2026Da203472).

Because unjust enrichment already has its own rules on requirements and scope, the reasoning is that courts should not set those rules aside and change the outcome through a general principle.

3) Tort law and unjust enrichment pursue different goals

Enrichment by infringement, such as unauthorized land occupation, resembles a tort because it presupposes an infringement of another's legal interest. The Court held, however, that tort law aims to compensate losses caused by culpable wrongful acts, while unjust enrichment law aims to restore the proper allocation of property regardless of culpability (Supreme Court of Korea, September 10, 2026, 2026Da203472).

The Court linked this difference to the fact that provisions adjusting the scope of tort liability, such as comparative negligence and reduction of damages, do not apply to unjust enrichment, and held that the doctrine limiting tort liability cannot be assumed to apply to unjust enrichment as well (Supreme Court of Korea, September 10, 2026, 2026Da203472).

4) The rule for restitution after contract termination now extends further

The Court cited its earlier position that a right to restitution after termination of a contract cannot be limited on grounds of good faith or equity by analogy to comparative negligence (Supreme Court of Korea, March 13, 2014, 2013Da34143). Considering that such restitution has the nature of returning unjust enrichment, together with the reasons above, it held that the same rule applies to unjust enrichment claims in general (Supreme Court of Korea, September 10, 2026, 2026Da203472).

Would a tort damages claim lead to a different result?

It can, depending on the cause of action. In tort damages, if the injured party contributed to the occurrence or increase of the loss, or there are other grounds for limiting liability, courts take this into account in setting the amount. The ratio is set in light of the fair sharing of losses and all related circumstances, and although it falls within the trial court's discretion, it must not be grossly unreasonable (Supreme Court of Korea, April 28, 2022, 2019Da224726).

Here is an example. A tenant leased a building for a deposit of KRW 15 million and monthly rent of KRW 500,000. Around the time a court mediation was reached, the tenant moved out but handed the keys to a third party instead of the landlord, letting that person occupy and use the building. The lower court treated this as a tort and ordered the tenant to pay damages equal to the rent. It limited the tenant's liability to 30%, because the landlord had failed to give the tenant an address for service or contact the tenant by other means, and had taken no steps against the third party. The Supreme Court of Korea found no error in the application of comparative negligence and limitation of liability (Supreme Court of Korea, July 26, 2018, 2018Da227551).

The new decision, by contrast, rules out such a limitation for unjust enrichment (Supreme Court of Korea, September 10, 2026, 2026Da203472). For the same unauthorized occupation, a claim framed as unjust enrichment generally covers the full rental value absent special circumstances. Landowners should weigh this difference when choosing the cause of action. For occupiers, it means that defenses based on the owner's conduct are unlikely to reduce an unjust enrichment claim.

Has the Supreme Court of Korea ruled this way before?

Yes, for restitution after termination of a contract (Supreme Court of Korea, March 13, 2014, 2013Da34143).

In that case, the seller of a housing-site allocation right transferred the allocation to a third party, making transfer to the buyer impossible, and the buyer terminated the contract. The appellate court noted that the buyer had not managed the documents needed to secure the right and had left them with another person. On grounds of good faith and equity, it limited the seller's restitution obligation to KRW 58 million, 40% of the KRW 145 million purchase price. The Supreme Court of Korea reversed (Supreme Court of Korea, March 13, 2014, 2013Da34143).

The Court first explained that Article 548(1) of the Civil Act, which governs restitution after termination, is a special rule on unjust enrichment, so the scope of return is, absent special reasons, the entire benefit received regardless of whether it still exists or whether the recipient acted in good or bad faith. It added that comparative negligence applies to damages for breach of contract or tort. It then set out the problems of limiting restitution on good faith or equity grounds (Supreme Court of Korea, March 13, 2014, 2013Da34143).

• It conflicts with the termination system. The party in breach bears primary responsibility for the termination, so following the same logic would require the breaching party's own restitution claim to be cut even more. Restitution would shrink, without any basis, into a merely partial restitution.
• It cannot work for non-monetary obligations. Where a buyer must cancel a registration of ownership or hand over property, there is no standard for deciding whether only a share or part needs to be returned. The Court questioned whether courts should bear the burden of making such decisions.
• It produces results the law does not intend. If a contract induced by fraud is rescinded and the defrauding party's restitution claim is also cut, the defrauded party gains a windfall far beyond the economic effect intended by the contract, and the defrauding party faces a civil sanction the law does not provide.

The Court concluded that the statutory rules, developed carefully through long reflection and practical application, are in fact wiser and fairer than vague principles such as good faith (Supreme Court of Korea, March 13, 2014, 2013Da34143).

The significance of the new decision is that it extends this rule beyond restitution after contract termination to unjust enrichment claims in general, including unauthorized land occupation (Supreme Court of Korea, September 10, 2026, 2026Da203472).

What happens after the remand?

The case returns to the Suwon District Court for a new trial (Supreme Court of Korea, September 10, 2026, 2026Da203472).

Under Article 436(2) of the Civil Procedure Act of South Korea, the court receiving a remanded case must hold new hearings, and it is bound by the factual and legal findings on which the Supreme Court of Korea based the reversal. The court on remand will therefore decide the case on the premise that unjust enrichment may not be limited on good faith or equity grounds.

What the court will reconsider is the part of the judgment the plaintiff lost, that is, the KRW 44,375,000 dismissed on appeal. Because the defendant's appeal was dismissed, the part of the appellate judgment against the defendant stands (Supreme Court of Korea, September 10, 2026, 2026Da203472). As the Supreme Court of Korea did not rule on the plaintiff's other grounds of appeal, it remains to be seen which issues will be revisited on remand.

What should landowners and occupiers in South Korea prepare?

Based on this decision and related case law, the key points are as follows. Outcomes can vary with the facts.

For landowners

1. Pin down the occupation period and rental value. In this case, the rent appraisal by the first-instance court formed the basis of the claim. Keep records of when the occupation began and when the property was returned or cleared.
2. Prepare for reduction arguments based on how the occupation began or how mediation went. The Supreme Court of Korea held that such circumstances should not be considered in setting the amount of unjust enrichment.
3. Organize evidence on consent. In this case, permission from the owner's father did not establish a lawful right to occupy.
4. Prepare for the argument that you had no plan to lease. The rental value is only a yardstick for measuring the benefit, and the land need not be leasable.
5. Choose the cause of action carefully. A tort damages claim may be reduced for comparative negligence and other limitations of liability.

For occupiers

1. Focus on the right to occupy rather than a reduction. The first question is whether you can prove the owner's consent. In this case, a lease document signed with the owner's father did not establish a lawful right to occupy.
2. You must prove special circumstances showing no loss. An owner cannot recover if it could not have earned rental or other income even without the occupation, but the party asserting no loss bears the burden of proof (Supreme Court of Korea, March 12, 2026, 2025Da217883).
3. The scope of "special circumstances" remains open. The Supreme Court of Korea did not give examples of special circumstances that would justify limiting the amount of unjust enrichment.

What does this mean for foreign-invested businesses in IFEZ?

Foreign-invested companies that own or use land in the Incheon Free Economic Zone (IFEZ), including Songdo International Business District, Cheongna International City and Yeongjong International City, may face disputes over who may use a site and for how long.

This decision matters on both sides of such disputes. A company whose land is used without authorization can expect, absent special circumstances, to recover the full rental value as unjust enrichment rather than a reduced, equity-based amount. A company that uses land on the strength of informal permission from someone other than the registered owner should confirm the owner's own consent in writing, because permission from a family member was not enough in this case.

Atlas Legal, based in Songdo, has advised both landowners and occupiers in real estate and unjust enrichment disputes in South Korea. Because the amount recoverable depends on the cause of action and the evidence on how the occupation began, it is worth organizing records before litigation starts.

Frequently asked questions

This article summarizes the Supreme Court of Korea's decision on whether the scope of unjust enrichment may be limited on good faith or equity grounds, based on published court decisions. It is not legal advice on any particular matter. The case was remanded by the Supreme Court of Korea and proceedings may continue, and what counts as "special circumstances" justifying a limitation remains to be developed in future case law, so specific situations require separate review.

About the Author

Taejin Kim | Managing Partner

Corporate Counseling, Corporate Disputes, White-Collar Crime

Former Public Prosecutor | Judicial Research and Training Institute, 33rd Class

Korea University LL.B. & LL.M. (Criminal Law), University of California, Davis LL.M.

Atlas Legal | Incheon Songdo, South Korea

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