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| It's not their Money! |
Supreme Court Tosses Landmark Divorce Settlement: SK Chairman Must Recalculate ₩1,380 Billion Award
In a dramatic turn of events, the Supreme Court has overturned the appellate ruling that ordered SK Group Chairman Choi Tae-won (65) to pay ₩1,380.8 billion to Noh So-young (64), director of Art Center Nabi, as part of their divorce property division. The appellate court’s finding that the slush funds held by late President Noh Tae-woo (Noh’s father) formed the growth capital of SK failed to survive the highest court’s scrutiny. Now, the case returns to the trial court for a recalculation in line with the Supreme Court’s guidance.
⚖️ Supreme Court: Even If Slush Funds Exist, They’re “Unlawful Transfers”
On July 16, the Supreme Court’s First Division, presided by Justice Seo Gyeong-hwan, announced that it would “vacate the portion related to property division demands and remand it to the Seoul High Court”. However, it left the compensation award of ₩2 billion to Noh unchanged. It is the culmination of an 8-year, 3-month journey since Chey first filed for divorce in July 2017, and 1 year and 3 months since the case was admitted to the Supreme Court.
What triggered the reversal was the appellate court’s classification of the disputed ₩30 billion slush fund as “unlawful transfer (불법원인급여)”. Documents introduced at the appeal—such as two “Seongyeong 300” memos and six promissory notes drafted by Noh’s late mother, Kim Ok-sook, in April 1998 and February 1999—depicted the funds as having been given to then SK founder Chey Jong-hyeon, and were tied to SK’s rise.
But the Supreme Court rejected that characterization. It held that even accepting the premise that Noh privatized ₩30 billion and transferred it to Choi, the source likely derived from bribes during Noh’s presidency, and thus could not be considered legitimate property for division.
The Court invoked Article 746 of the Civil Code, which bars “claims for return of unjust enrichment when the cause is illegal”, and pointed out that Noh had already been convicted of accepting ₩270.8 billion in bribes while as president. Given the timeline and scale, the justices deemed the slush funds indistinguishable from bribery. They described, in strong language, Noh’s strategy of distributing monies via in-laws and children and suppressing disclosures as acts so contrary to public order, morality, and societal norms that they fall outside legal protection.
They also rejected Noh’s argument that this was not a restitution claim but rather a request for recognition of “contribution”. According to the Court, any use of funds tainted by bribery cannot be accepted—even as a measure of spousal contribution—in property division. In short: regardless of whether the funds truly existed or passed into SK, they cannot be counted as divisible marital assets under law.
🏛️ “Disposal” Assets Also Struck from Division
The Supreme Court didn’t stop at slush funds. It also ruled that Chey’s stock gifts to relatives and his salary returns to SK do not fall under divisible property. Between 2012 and 2014, Chey transferred ₩92.76 billion in stock and paid ₩24.6 billion in gift taxes on his brother’s behalf. He also donated shares to foundations and family members. The appellate court had included all of this as marital assets because they were deemed unilaterally disposed without Noh’s consent.
The Supreme Court disagreed. It held that those disposals occurred before the court-recognized marriage breakdown date (December 4, 2019), and that many transfers served the joint interests of the couple—e.g. preserving or enhancing the value of shared assets—and thus were not disqualifying. The Court clarified: if disposed assets were relevant to maintaining or forming marital property, they should not be excluded. This ruling also establishes a new standard: in divorce, not all pre-breakdown disposals are off the table—but disposals devoid of connection to marital property management may be excluded.
💰 From ₩65.5 Billion → ₩1,380.8 Billion → Overturned
This case became known as the “divorce of the century.” Initially, in the first instance, the division was ₩65.5 billion. But after slush funds entered evidence, the appeal court awarded a staggering ₩1,380.8 billion—a more than 20-fold jump. That award threatened SK’s governance structure given its scale and potential impact.
Before slush funds were introduced, the first court excluded much of Choi’s SK stock, making ₩65.5 billion the base. But when the 300 billion slush fund emerged at appeal, the dynamics shifted dramatically—Choi’s denial was dismissed, and he was hammered with the full impact. The appellate court treated the fund as legitimate capital supporting SK’s success.
But now, with the Supreme Court’s decision, that massive award is void. A Justice involved noted the significance: the Court reaffirmed Civil Code Article 746’s principle that the law provides no protection for acts contrary to public order. The case will now be reassigned to a Family Court division (Family Court 1 or 3) rather than the originally assigned Family Court 2 in Seoul High Court.
🏷️ Final Thoughts
This judgment underscores a key point: even the appearance of illegal funds cannot be converted into marital assets simply by labeling them “family property.” The Supreme Court’s reversal makes clear that Korean law prioritizes legality, public order, and moral order, above marriage settlement pressures.
It will now fall to the appellate court on remand to recommit a division based purely on lawful assets and sound legal principles—while the public watches SK’s next move.
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