Court orders Chey Tae-won to pay W944b in record divorce settlement

A retrial court on Friday ordered SK Group Chairman Chey Tae-won, 65, to pay 944 billion won ($642 million) in marital asset division to Noh So-young, 65, director of Art Center Nabi — the largest such award in South Korean legal history. The ruling came nine months after the Supreme Court finalized their divorce last October, and six and a half years after the divorce and asset-division suit was first filed in January 2020.

The Seoul High Court's Family Division 1, presided over by Chief Judge Lee Sang-ju, handed down the ruling Friday afternoon at the retrial sentencing hearing.

The court included Chey's shares in SK Inc. in the pool of divisible assets, a central point of contention throughout the proceedings. It set the division ratio at two-thirds for Chey and one-third for Noh, with share values calculated as of April 16, 2024 — the date the lower court closed arguments on the divorce claim — when the share price stood at around 160,000 won.

"The shares held by Chairman Chey constitute divisible marital property," the court said, adding that both Chey and Noh were recognized as having contributed to the formation, maintenance and increase in value of those shares. The court further found that Noh's household management, child-rearing and public activities on behalf of SK Group contributed to the significant growth in the value of Chey's shares during the marriage.

On the choice of valuation date, the court said that while the share price had risen sharply between the second-instance ruling and the close of arguments in the current retrial, it could not conclude that Chey's management contributions played no role in that increase.

The court went on to say that because share prices carry high volatility, the valuation can shift considerably depending on when arguments are closed, and that failing to apportion gains and losses from share disposal between both spouses could produce a result that falls far short of the system's goal of fair settlement and distribution of marital assets.

However, the court said it had factored the sharp rise in Chey's share price into the calculation of the division ratio in order to ensure equitable distribution of marital assets.

In explaining the two-thirds/one-third split, the court cited the assets each party held at the time of marriage, the circumstances under which the marital assets were acquired, the degree to which each party contributed to forming and maintaining those assets, and the length of the marriage.

The court ordered the asset division to be paid in cash, noting that the shares serve as the basis for Chey's management control and ownership of the company he runs.

Chey first publicly disclosed his intention to divorce Noh and revealed the existence of a child born outside the marriage in a letter published in a daily newspaper in December 2015. Noh publicly stated she would not agree to a divorce. Chey filed for divorce mediation in July last year, but the mediation broke down, leading to the current litigation.

In December 2022, the first-instance court ruled that Chey's SK Inc. shares were his separate property — assets owned by one spouse before marriage — and therefore not subject to division. It ordered Chey to pay Noh 100 million won in consolation damages and divide 66.5 billion won in assets.

The second-instance court, however, ruled in May 2024 that the SK Inc. shares had been acquired during the marriage and that funds presumed to be slush money belonging to Noh's father, former President Roh Tae-woo, had flowed to the late SK Group founder Chey Jong-hyun. It found the shares to be marital property and therefore subject to division.

The second-instance court ordered Chey to pay Noh 1.38 trillion won, or 35 percent, of 4 trillion won in total marital assets, and sharply raised the consolation damages to 2 billion won.

At the time, the second-instance court said the funds that flowed from Roh's side to the late founder had been commingled with his personal assets and placed under his full control to use, profit from and dispose of as he saw fit, and could therefore be recognized as a tangible contribution by Noh's side.

The Supreme Court overturned the second-instance ruling last October, however, finding that the 30 billion won in financial support from former President Roh could not be counted as Noh's contribution in the asset division. The court said the funds constituted illegal payments from presidential slush money and ordered the Seoul High Court to exclude them from the contribution calculation and reassess the weight given to Noh's domestic labor.

The Supreme Court did, however, uphold the order for Chey to pay Noh 2 billion won in consolation damages, as well as the divorce itself.

Immediately after Friday's ruling, Chey's legal representative said, "The divorce was finalized by last year's Supreme Court ruling after nearly 20 years of proceedings to dissolve the marriage, and the retrial ruling on asset division was handed down today, Friday." The representative added that "Chairman Chey Tae-won feels deeply sorry for causing so much concern to many people throughout this process," and said the team would announce whether it would appeal after reviewing the written ruling.

Noh's legal representative declined to answer questions from reporters, including whether Noh had a statement and how she viewed the outcome.

The ruling is not yet final. If either party appeals, the case will return to the Supreme Court.