Private Taking Case

[21-2(A) KCCR 562, 2007Hun-Ba114, September 24, 2009]

In this case, the Constitutional Court held that the contested provision, which is the part of a 'project operator' in Industrial Sites and Development Act, Article 22 Section 1 stipulates that private corporations may expropriate properties that are necessary for industrial complex developments, referring Article 16 Section 1 Item 3 of the Act, did not infringe on the right to property etc.

Background of the Case

Governor of Chungnam Province, on July 31, 2004, approved and announced the development project of 'Second Tangjeong GeneralLocal Industrial Complex', encompassing 2,113,759㎡ of Tangjeong-Myeon, Asan City and designating ○○ Electronics as a project operator. Petitioners were owners of lands that were located in the development area. ○○ Electronics attempted the negotiation to purchase the lands with petitioners. When the negotiation was failed, however, it initiated the condemnation proceeding with Chungnam Province Land Tribunal. On May 22, 2006, Chungnam Province Land Tribunal ruled to condemn the lands and buildings. Petitioners filed a case seeking to cancel the above taking disposition of Chungnam Province Land Tribunal in Daejeon District Court on July 24, 2006 (Daejeon District Court, 2006 Gu-Hab 2239). While the case is pending, petitioners also filed a motion to request for the constitutional review on the part of 'project operator' (hereinafter, the "Instant Provision") of Article 22 Section 1 of the 'Industrial Site and Development Act' (hereinafter, "ISDA") with regard to ISDA, Article 16 Section 1 Item 3, alleging the Instant Provision that permits private corporations to expropriate lands necessary for industrial complex developments infringed on the right to property (Daejeon District Court, 2005 Ah 163). After the motion was denied on September 19, 2007, petitioners filed this constitutional compliant on October 29, 2007.

Provision at Issue

Industrial Sites and Development Act (Revised Dec. 29, 1995 by Act No. 5111)

Article 22 (Land Expropriation)

(1) A project operator (excluding a project operator under the provisions of Article 16 (1) 6; hereafter the same shall apply in this Article) may expropriate or use land, buildings, things fixed to the land, rights thereto excluding ownership, mining claims, fishery rights, or rights concerning the use of water (hereinafter, referred to as "land, etc."), which are necessary for executing the industrial complex development project concerned.

Article 16 (Operators of Industrial Complex Development Projects)

(1) An industrial complex development project shall be implemented by a person who is selected according to the development plan as designated by the authority to designate industrial complexes from among persons falling under any of the following subparagraphs:

1.~2. (intentionally omitted)

3. A person who wishes to install facilities adequate for the relevant development plan and to move therein, or a person who is deemed capable of developing an industrial complex in accordance with the relevant development plan, if such person meets the requirements prescribed by Presidential Decree;

Summary of the Decision

The Constitutional Court, in a 8 to 1 vote, held that the part of a 'project operator' under Article 22 Section 1 of the 'Industrial Site and Development Act' with regard to Article 16 Section 1 Item 3 of the Act, stipulating that private corporations may expropriate properties that are necessary for industrial complex developments, does not infringe on the right to property, thereby not violating the Constitution, for the following reasons:

1. Court Opinion

A. Whether private corporations can be eligible to expropriate for

industrial complex developments

Article 23 Section 3 of the Constitution stipulates the possibility of the expropriation of properties under the condition of just compensation, not limiting the eligibility for expropriation. This provision focuses on whether the taking complies with public necessity, and whether the compensation for the taking is just, not on whether the person exercising eminent domain power should be a governmental body or a private corporation. There would be not significant differences in determining public necessity and condemnation scope in the event of either a public institute, such as the State, may directly take properties or a private corporation may take properties under the condition of the permit of a public institute. Therefore, there would be no reasons to limit the eligibility for takings into a public institution, such as the State.

The development of industrial complexes may require a large-scale capital investment in these days. If a project operator of industrial complex developments is limited only to the State or local governments, limited budgets may cause difficulties in promoting the development project. If public development system is the only available option, development of industrial complex is likely to end up wasting resources due to imbalance of demands for development. On the other hand, if a corporation is allowed to develop an industrial complex directly, it would promote the participation of corporations. Therefore, it would be implied that it is not unconstitutional to stipulate that a private corporation can be qualified as a project operator, and it is reasonable for legislators to enact the instant provision that allows private corporations to take lands required to implement the project.

B. Whether the Industrial Complex Development Project satisfies the Public Necessity

The legislative purpose of the instant provision is to contribute to the sound development of national economy by promoting the balanced national land planning and steady industrial development through the smooth supply of industrial location and reasonable

industrial arrangement, proposing to stimulate the industry decentralization and to activate local economy. If industrial location is smoothly supplied, it would promote the construction of industrial complex that would lead economic development and growth. Besides, the economic growth through the development of industrial complex has been the fundamental foundation of the social and cultural development of our society. Considering that economic growth has significantly improved the living standard of the national community,the importance of industrial complex developments would be ascertained.

It should be considered that the provisions of the Act regulate the project operator that conduct the industrial complex development project lest the initial public interests that are expected to be achieved through the construction of industrial complex can be neglected because of over-focusing on profits of private corporations. Therefore, the instant provision would satisfy the requirement of "public necessity" under Article 23 Section 3 of the Constitution.

C. Whether the Principle of Prohibition of Excessive Restriction is violated

The above discussion on the public necessity of the instant provision suggests the legislative purpose of this instant provision. Under the instant provision, a project operator may purchase lands at the market place despite the negotiation for taking the lands is failed with land owners. Because it promotes the smooth proceeding of the project, the instant provision would be an efficient means to accomplish the legislative purpose. The instant provision cannot be found to excessively restrict the right to property of petitioners considering provisions stipulating as follows: a project operator is obliged to negotiate faithfully with land owners and interested parties with regard to the compensation for the lands; the right of repurchase would be arisen if the designated lands are exempted from the industrial complex or lose the value as an industrial complex; project operators are required to pay just compensation to the those whose land was taken; the proceeding for condemnation should correspond to the principle of due process; our legal system provides substantial legal remedies, such as administrative proceedings, for the possible errors in

the condemnation disposition; and the scope of condemned lands should not be unreasonably broad beyond the necessity. Considering the importance of public interests, which are sound development of the National economy, decentralization of industry, and stimulation of local economy, it cannot be found that the instant provision disregard the balance between public interests and private interests.

D. whether the Principle of Equality is infringed

The instant provision allows eminent domain power without requiring certain prerequisites for taking lands prior to condemnation, while other Acts prescribe some requirements. However, the instant provision, unlike other Acts, pursues public interests, such as the development of industrial complexes, growth of national and local industry, creation of jobs, decentralization of industry, and balanced development of national lands. In addition, the Act imposes the obligation to negotiate faithfully with land owners and interested parties on a project operator. Therefore, the instant provision is not arbitrarily discriminative and does not violate the principle of equality.

2. Dissenting Opinion of One Justice

The expropriation by a private corporation demands intensive legislative measures to secure the public necessity of the taking and to revert the benefits from taking to the public in order to justify such expropriation, because it is more difficult to promote public interests through a private taking, compared to a public taking where the State leads the condemnation to benefit the public. For instances, some institutional arrangements, such as measures to guarantee continuous restitution of the development benefits caused by such expropriation or public use the business profit derived from such expropriation or the mandatory job quota system providing for local residents should be added, thereby sharing the fruits of expropriation with all members of the community including the ones taking and being taken. Without these legal and systematic remedies, private takings pertinent to the instant provision, would not comply with the value of the guarantee of the right to property of our Constitution.

Even if a private corporation is given the eminent domain power under the instant provision, it would be possible to find solutions to minimize the danger to lose the ownership of lands only with the project operator's unilateral mind, such as the legal requirement to set the certain ratio of land purchasing prior to condemnation proceedings. Since such legislative consideration on modifying the loss of the property right of land owners lacks in the instant provision, it does not conform to the spirit of the prohibition of excessive restriction of the Constitution.