23. Case on Joint Liability Imposed on De facto Representative of a Corporation

[23-2(A) KCCR 884, 2010Hun-Ba307, October 25, 2011]

In this case, the Constitutional Court held that the part of a provision of the former Tourism Promotion Act, which automatically imposes criminal penalty on the corporate body for the offence committed by one of its employees in relation to the business, is unconstitutional. The Court, however, held that the other part of the same provision of the same Act, which punishes a corporate body forthe offence committed by its representative, is not against the Constitution.

Background of the Case

Petitioner, a corporate body established for the purpose of attracting foreign tourists and acquiring foreign currency, has been operating a casino. The Jeju District Court convicted the petitioner of "not observing the regulations for casino operators since Chung ○○, the petitioner's vice president who is actually responsible for the management of that casino, allowed nationals to enter that casino and to gamble in that place." The petitioner filed an appeal with an appeals court (Jeju District Court, 2009No361) and, while the case was pending, also moved the court to request a constitutional review of the provision at issue, Article 80 of the former Tourism Promotion Act (hereinafter, the "Instant Provision"). Upon dismissal, the petitioner filed this constitutional complaint pursuant to Article 68 Section 2 of the Constitutional Court Act.

In the instant case, the petitioner contends that its vice president, Chung ○○, is 'an agent, an employee or other servant' of the petitioner and thus, only the part 'an agent, an employee or other servant of corporate body' of the Instant Provision requires the Constitutional Court's determination for the judgment on the original case and that the part is against the Constitution. The appeals court incharge of the petitioner's original case, however, rejected the petitioner's

motion to request for the Constitutional Court's review on the same part of the Instant Provision stated above on the ground that the part does not satisfy that relevance requirement (That court appears to have regarded that vice-president, Chung ○○, as 'the representative' of petitioner).

Summary of Decision

The Court, in a 7 to 1 opinion, held that the part of 'an agent, an employee or any other servant of a corporate body' of Article 80 of the former Tourism Promotion Act (hereinafter, the "Part of Employee of Instant Provision"), which imposes the same penalty on the corporation when its 'servant or others' violates Article 78 Section 7 of the same Act in relation to the business, is unconstitutional. However, the Court, in a 5 to 3 opinion, found that the part of 'the representative of corporate body' of Article 80 of the former Tourism Promotion Act (hereinafter, the "Part of Representative of Instant Provision"), which imposes the same penalty on the corporation when its 'representative' violates Article 78 Section 7 of the same Act in relation to the business, is constitutional based on the grounds below.

1. Part of Employee of the Instant Provision

A. Court Opinion

It is inconsistent with the rule of law and the rule of responsibility in criminal punishment derived from the principle ofnulla poena sine legefor the government, without setting forth any provision on the structure of decision-making or action that would justify the blame on the corporation, i.e., without stipulating any responsibility attributed to the corporation for the effect of the wrongdoing committed by the servant or others, to inflict criminal punishment on that corporate body simply because its employee, etc. committed a crime related to his or her duties, which is imposing criminal penalty for another person acts regardless of responsibility in the crime.

B. Dissenting Opinion of One Justice

In my view, it is compatible with the principle of statutory interpretation in conformity with the Constitution if we interpret the Part of Employee of the Instant Provision as a criminal punishment that can be imposed only when a vicarious or supervisory negligence is made. Under the premise stated above, the Part of Employee of the Instant Provision cannot be regarded as a violation of the rule of responsibility in criminal punishment.

2. Part of Representative of the Instant Provision

A. Court Opinion

A corporate body acts through its organization and thus, once itappoints a representative, the legal effect of conduct of that representativeshall belong to that corporate body so that it must be liable for any illegal act committed by its representative. The corporate body's liability for its representative's violation of regulations shall be considered to be one for its own violation of that regulation, namely a direct liability, and thus, that entity should be liable for an intentional offence if its representative intentionally commits an offence, and also be liable for negligence if its representative negligently violates a regulation. The Part of Representative of Instant Provision, therefore, is not inconsistent with the rule of responsibility in criminal punishment because it requires the responsibility of the representative to punish to corporation. In this case, the 'representative' of a corporate body includes a person in charge of actual management of business of the corporate body at issue who represents that entity regardless of his or her official title.

B. Dissenting Opinion of Three Justices

The Majority considers a criminal offense committed by a representative as one committed by the corporate body. This, however, not only is at odds with our legal system which makes a distinction between an individual and a corporate body, but also disregards the

independent decision-making process and the ways of action of such corporate body. According to the majority opinion, a person in charge of actual management of the business and representing a corporate body, regardless of his or her official title, should be deemed 'representative' of such corporate body. But it follows that the person's conduct must be deemed as the corporate body's conduct even when that person commits an offence for his or her own private interest and also by ignoring the requirements under the law as to the decision- making process and ways of action of the legal entity. This would lead to the unfair consequence of making the corporate body, a victim, liable for the offence. Furthermore, if the corporate body is held responsible for intentional wrongdoings, through the intentional wrongdoings of the representative, this would effectively admit that a corporation is capable of committing intentional crimes.