A court has ruled in favor of GM Korea Co., the South Korean unit of General Motors Co., in a lawsuit filed against the government's decision to retrieve its subsidy provided for a facility the carmaker disposed of in 2019, sources said Monday.

The suit was filed by GM Korea to annul the labor ministry's order for the company to return 2.23 billion won ($1.86 million) of residual value from a total of 3.25 billion won of state subsidy it received for building and operating a technology institute in Gunsan, about 275 kilometers southwest of Seoul.

The project was funded under the country's national human resource development plan for 2007-09.

The ministry's order came after the automaker sold the institute to another company in May 2019 while disposing of the Gunsan plant with local auto parts makers as part of GM's global reorganization program.

GM has claimed that it is not obliged to return the subsidy as the company operated the technology institute for more than six years according to related regulations.

According to the labor ministry's rules, firms that run a training facility subsidized by the state in consortium do not have to return the subsidy after six years of operation.

The government claimed GM Korea misinterpreted the rules, but the Seoul Administrative Court recently ruled in favor of GM Korea, saying the company did not violate the Subsidy Management Act as it disposed of the facility nine years after receiving the financial aid.

The labor ministry has appealed the ruling. (Yonhap)