Korail Loses Appeal in 10 Billion Won Fee Dispute with T-money, Heads to Supreme Court

Korail Networks has lost its appeal in a lawsuit seeking more than 10 billion won in transit card processing fees from T-money, the operator of the Seoul metropolitan area's integrated fare system.

Korail Networks and Korea Railroad Corporation (Korail) filed an appeal to the Supreme Court on January 3 after the Seoul High Court ruled against them last month, according to legal sources Tuesday. The legal battle, which began in 2019, will now proceed to the nation's highest court for a final decision.

Korail Networks operates the metropolitan information system and Rail Plus under contract with Korail, handling transit card transaction relay and settlement verification for Korail routes. T-money manages the settlement and distribution of transit fares among transportation operators under the metropolitan area's distance-based fare integration system.

In 2014, Korail Networks signed a contract with T-money under which T-money would handle settlement for Korail routes while Korail Networks would receive fees for data collection services.

The dispute arose as the two sides failed to reach agreement on fee recalculation and contract restructuring ahead of the contract's expiration in 2018. The settlement contract expired in March 2019 without renewal. However, T-money notified Korail that it would continue performing services under the same terms to prevent disruption to the metropolitan area's integrated fare settlement system.

Korail then filed suit, arguing that continued services without a valid contract entitled it to "fair compensation." The plaintiffs claimed T-money owed an additional 11.3 billion won in fees on top of the 6.4 billion won already paid.

The first court ruled in favor of T-money in July last year, stating that settlement operations are T-money's inherent business function and that Korail Networks had already received compensation exceeding its costs for data collection work. The court found that Korail Networks' actual costs for data collection were approximately 5.2 billion won, less than the 6.4 billion won T-money had paid.

After nearly another year of legal proceedings—including a postponement of the originally scheduled August appellate ruling for additional deliberation—the appeals court upheld the lower court's decision with more detailed reasoning.

The appeals court emphasized that metropolitan transit card settlement is an inherent function T-money has performed under Seoul city's integrated transit card system, not a service that a single transportation operator like Korail can independently conduct or delegate to a third party.

"Settlement operations are system-level functions, not individual tasks of transportation operators," the court stated. "Claims for delegation of business affairs or related monetary payments cannot be recognized."

The appeals court also affirmed that the fees T-money already paid exceed Korail Networks' costs for data collection, meaning adequate compensation under commercial law has already been provided.