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Untitled Document
THE LAW OF THE DEMOCRATIC PEOPLE’S REPUBLIC OF KOREA ON THE LEASING OF LAND

Adopted by Resolution No. 40 of the Standing Committee of the Supreme People’s Assembly on the October 27, 1993, and
amended by Decree No. 484 of the Presidium of the Supreme People’s Assembly on the February 26, 1999

Chapter 1. Fundamentals

Article 1. The Law of the Democratic People’s Republic of Korea on the Leasing of Land shall contribute to establishing a proper system in the leasing of land needed for foreign investors and foreign-invested enterprises and for use of the leased land.
Article 2. A foreign corporate body or individual may lease and use land in the DPRK.
Article 3. The lessee shall have the right to use the land leased. Natural resources and deposits in the land leased shall not be covered by the right to use land.
Article 4. The leasing of land shall be undertaken with the approval of the central land and environment protection guidance organ.
The contract for leasing land shall be made by the land and environment protection department of the People’s committee of the province (or municipality directly under central authority) or of Rason City.
Article 5. Any institution, enterprise and entity of the DPRK that intends to contribute land to an equity or contractual joint venture may be granted the right to use land by the People’s Committee of the province (or municipality directly under central authority) where it is located, or of Rason City.
Article 6. The term of lease shall be fixed by agreement between the contracting parties within the limit of 50 years, as stipulated in the Law of the Democratic People’s Republic of Korea on Foreign Investment.
Article 7. The right to use the land leased shall become the property right of the lessee.
Article 8. The lessee shall manage and use the land leased in accordance with the laws and regulations of the DPRK and the contract for leasing the land.

Chapter 2. Ways of Leasing Land

Article 9. The leasing of land shall be undertaken through consultation. It may also be realized by means of tender and auction in the Rason economic and trade zone.
Article 10. The lessor shall provide the lessee with the following data:
1. The location and area of the land and its topographical map,
2. Uses to which the land may be put,
3. The building area and a plan for development of the land,
4. The period during which construction must be completed and the minimum amount of investment required,
5. The requirements for environmental protection, for hygiene and anti-epidemics and for fire prevention,
6. The term of lease of the land, and
7. The state of development of the land.
Article 11. Land shall be leased through consultation in accordance with the following procedure:
1. A potential lessee shall study the supplied information concerning the land and submit to the lessor an application for the use of land accompanied by a copy of document approving the establishment of an enterprise or residence,
2. The lessor shall notify the applicant of its approval or rejection within 20 days of the receipt of the application,
3. The lessor and the potential lessee shall conclude a contract which specifies the area and usage of the land, the purpose and period of the lease, the total amount of investment, period during which construction may be undertaken, the rent for the land and other relevant matters, and
4. The lessor shall, after the receipt of the charge for transferring the right to use land in accordance with the contract or the leasing of land, issue a certificate for use of the land and register it.
Article 12. The procedure for leasing land through tender is as follows:
1. The lessor shall make public information of the land, the place and date of the tender, the opening date for the tender, the procedure for tender and other relevant information, or forward a tender guide to designated tenderers,
2. The lessor shall sell tender documents to tenderers,
3. The lessor shall provide consultation with regard to the tender,
4. The tenderer shall pay the required amount as a guarantee and place a sealed tender document in the tender box,
5. The lessor shall form a jury, including members from economic, legal and other relevant sectors,
6. The jury shall review and assess the tender documents and decide the best offer in consideration of the development of land and construction on it and the amount of rent offered,
7. The lessor shall issue a notice to the successful tenderer after the jury has reached its decision,
8. The successful tenderer shall conclude a contract for leasing the land with the lessor within 30 days of the receipt of the notice and pay the relevant charge for transferring the right to use the land due prior to receiving and registering the certificate for use of the land.
Should it be necessary to defer the signing of the contract, an application for a deferment of 30 days should be submitted to the lessor at least 10 days prior to the prescribed date,
9. The unsuccessful tenderers shall be informed of the result of the judgement within 5 days of the decision of the jury and the guaranty shall be refunded. No interest shall be paid on the guaranty, and
10. Should the successful tenderer fail to conclude a contract for leasing the land within the prescribed deadline, the tender shall be declared null and void and the guaranty shall not be refunded.
Article 13. Leasing land through auction shall be conducted as follows:
1. The lessor shall make public information concerning the land; data, place and procedure of the auction, reserve price for the land, and other information necessary for the auction,
2. The lessor shall put up land for auction based on the reserve price which has been made public, and the bidder who offers the highest price above this shall be declared the successful bidder, and
3. The successful bidder shall conclude a contract for leasing the land with the lessor and then be issued with a certificate for use of the land and have it registered.
Article 14. The lessee shall use land in accordance with the contract for use of land. A lessee who wishes to alter the use of land shall conclude a supplementary contract with the lessor.

Chapter 3. Transfer and Mortgage of the Right to Use Land

Article 15. The lessee shall be permitted, with the approval of the lessor; to transfer (by means of selling, re-leasing, donation or inheritance) or mortgage to a third party the right to use a part or the whole of the land leased.
The term of the transfer or mortgage of the right to use land shall not exceed the remaining period of the lease prescribed in the contract.
Article 16. The lessee may sell, re-lease, donate or mortgage the leased land only after paying the total amount of charge for transferring the right to use land stipulated in the contract for leasing the land and making the contracted investment.
Article 17. In case of the transfer of the right to use land, the rights and obligations relating to the use of the land, and the structures and other appurtenance of it, shall also be transferred.
Article 18. The sale of the right to use land shall be conducted as follows:
1. The seller and buyer of the right to use land shall conclude a contract and receive attestation from a notary office,
2. The seller shall submit an application for the sale of the right to use land, with a copy of the contract, to the lessor for approval,
3. The seller and buyer shall register any change in the right to use land with the relevant lessor.
Article 19. Where a lessee sells the right to use land, the lessor shall have the preferential right to buy it.
Article 20. The lessee may re-lease the land leased. In this case he shall file an application for the re-lease, accompanied by a copy of the contract for leasing the land, with the lessor for approval.
Article 21. A lessee may mortgage the right to use land with the purpose of obtaining a loan from a bank or other financial institutions. In this case the structures and other appurtenance on the land shall also be mortgaged together with the land.
Article 22. When mortgaging the right to use land, the mortgagor and the mortgagee shall conclude a contract for the mortgage in accordance with the terms of the contract for leasing the land. In this case the mortgagee may request from the mortgagor the contract for leasing the land, a copy of the transfer contract, a copy of the certificate for use of the land or other information relating to the current state of the land.
Article 23. Both the mortgagor and the mortgagee of the right to use land shall register the mortgaged right with the relevant lessor.
Article 24. The mortgagee may dispose of the right to use the land mortgaged by contract, as well as the structures and other appurtenance of the land in accordance with the mortgage contract if the mortgagor fails to pay the amount due by the expiry of the mortgage, or if business has been dissolved or gone bankrupt during the period of the mortgage contract.
Article 25. One who has won the right to use land and the structures and other appurtenance on it disposed of by the mortgagee shall receive attestation from a notary office, register the change with the registration office and use the land in accordance with the contract for leasing the land.
Article 26. The mortgagor shall not be permitted to remortgage or transfer the right to use land during the period of contract without the approval of the mortgagee.
Article 27. Should a mortgage contract be terminated due to the repayment of debt or other reasons, the mortgagee and the mortgagor shall cancel the registration of mortgage of the right to use the land within 10 days.

Chapter 4. Rent of Land

Article 28. The lessee shall pay rent for the leased land to the lessor. The rent shall include the charge transferring the right to use land and the charge for land use.
Article 29. When leasing developed land, the lessor shall receive from the lessee the charge for transferring the right to use land plus the cost of land development.
The cost of land development shall include the costs of land-levelling, road construction, and building water-supply, drainage, electricity, telecommunications and heating systems.
Article 30. The lessee shall pay the total amount of charge for transferring the right to use land within 90 days of signing the contract for leasing land.
The lessee may make payment by installments over a period of five years on agreement with the lessor for part of the land that is eligible for preferential treatment, or for land development which requires a high charge for transferring the right to use land. In this case an appropriate interest shall be paid on the rent in arrears.
Article 31. A lessee who has been leased land through consultation or auction shall pay to the lessor a guaranty equivalent to 10 per cent of the charge for transferring the right to use land, within 15 days of the conclusion of the contract for leasing the land. The guaranty may be appropriated for the charge transferring the right to use land.
Article 32. Should the charge transferring the right to use land not be paid before the prescribed deadline, the lessor shall demand additional payment equivalent to 0.2 per cent the overdue rent on a daily basis, starting from the first day of default. If arrears are not paid for more than 50 days, the contract for leasing land may be cancelled.
Article 33. The user of the land leased shall pay annually land use charge.
For those who invest in priority sectors and in the Rason economic and trade zone, land use charges may be reduced or exempted for up to 10 years.

Chapter 5. Return of the Right to Use Land

Article 34. The right to use land shall automatically return to the lessor on the expiry of the term of the lease stipulated in the contract. The structures and other appurtenance on the land shall also return, without compensation being paid.
In case of land leased for more than 40 years, compensation may be made against the residual value of the buildings completed within 10 years before the expiry of the land lease.
Article 35. When the term of the land lease comes to an end, the lessee shall return the certificate to the issuing authority and cancel the registration of the right to use land.
Article 36. The lessee who wishes to extend the term of land lease shall apply to the lessor for approval to extend the period of land lease 6 months before the expiry of the term.
In this case he shall re-enter into a contract for leasing the land, follow the necessary procedures and receive a reissued certificate for the use of land.
Article 37. When the term of the lease expires, the lessee shall withdraw the structures, facilities and other appurtenance on the land at his own expense and clear the land, in accordance with a request from the lessor.
Article 38. The right to use leased land shall not be cancelled during the period of the lease.
Should it be necessary to cancel the right to use land during the period of the lease owing to unavoidable circumstances, the lessor shall obtain consent from the lessee six months before and offer the lessee other land of the same conditions or pay proper indemnity for any losses incurred.

Chapter 6. Penalties and Settlement of Disputes

Article 39. If a lessee illegally uses land without the certificate for the use of land, or changes the use of land or transfers or mortgages the right to use land without approval, he shall be fined, have the facilities on the land confiscated or be required to restore the land to its original state, and the contract for transfer or mortgage be declared null and void.
Article 40. In case of a failure to invest 50 per cent of the total sum of investment during the period prescribed in the contract for the leasing of land, or to develop the land as contracted, the lessee may be deprived of the right to use land.
Article 41. If the lessee disagrees with the penalty imposed on him, he may appeal to an institution senior to the one that has imposed sanctions or file a suit with an appropriate court within 20 days of the receipt of the notice of penalty.
Article 42. Disagreements arising in leasing land or transferring and mortgaging leased land to a third party shall be settled through consultation.
In case of failure in consultation, they shall be settled through arbitration or legal procedures provided by the DPRK, or may be taken to an arbitration body in a third country for settlement.


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