Case on Land Transaction Permit System

[1 KCCR 357, 88Hun-Ka13, December 22, 1989]

A. Background of the Case

In this case, the Court upheld Article 21-3 Section 1 of the Act on the Utilization and Management of National Land, under which the government required permission for land transactions in order to control land speculation and nation-wide land price increases.

Article 21-3 Section 1 of the Act on the Utilization and Management of National Land states that the parties to a transaction concerning property located in a regulated area must apply for and receive approval of the governor of that province. Article 31-2 Item 1 of the same Act punishes transactions entered into without such permission with a fine up to five million won or imprisonment up to two years.

The petitioner was taken to court on the charge of selling, and thereby making profits from forests located in regulated areas without the approval of the governor. While this trial was pending, the petitioner requested constitutional review of the statute, and the court granted the motion and referred the case to the Court.

B. Summary of the Decision

The Court upheld Article 21-3 Section 1 of the Act on the Utilization and Management of National Land that imposed the land transaction permit system in certain areas, and also upheld Article 31-2 the same Act, which prescribed punishment for violations thereof. The reasoning is as follows.

The Act on the Utilization and Management of National Land does not regulate all privately owned areas: it is limited to properties vulnerable to speculation and drastic increases in price. It also regulates each area up to five years only. Exercise of the right to dispose of the property is not completely prohibited, but approved without fail as long as the purpose, the size, and the price of the transaction meet the requirements. If not, one can appeal the decision. In light of these facts, the land transaction permit system does not negate private property but merely restricts it. Therefore, it does not infringe upon

the essence of property rights nor violates the principle against excessive restriction.

Meanwhile, all transactions including those concerning land within the restricted areas first require an agreement between the parties, before they can apply for the approval of the authority. The penalty provisions may have some problems in their wording, as a loose interpretation may allow the punishment of those who have reached some type of agreement to seek the required approval in the future. However, such loose interpretation can be prevented by the supplementary interpretation of judges using common sense and logic; thus, this is not sufficient to constitute a violation of the rule of clarity.

Justice Lee Shi-Yoon was of the opinion that though the land transaction permit system provided in Articles 21-2 through 21-4 of the Act restricts the right of land ownership such as the right to dispose or acquire, it does not violate the essence of the right to property since wrongfully granted disapprovals can be subjected to a judicial review, and the right to file a request for purchase can be exercised after such disapproval. However, granting a disapproved land owner the right to compel the state to purchase the land violates the principle of just compensation in Article 23 Section 3 of the Constitution. Imposing any criminal punishment on unauthorized land transactions without removing this unconstitutional element from the land transaction permit system violates the rule against excessive restriction, and thus violates the Constitution.

Justices Han Byung-Chae, Choe Kwang-Ryool, and Kim Moon-Hee were of the opinion that Articles 21-3 Section 1, Article 21-2, Sections 3 and 7 of Article 21-3, and Articles 21-4, 21-5 and 21-15 of the Act on the Utilization and Management of National Land are inseparable from one another and must be reviewed together. Since Article 21-15 violates Sections 1 and 3 of Article 23 of the Constitution, the entire statute is unconstitutional. In order to avoid confusion, however, the Justices provided the dissenting opinion that they would not give immediate effect to their decision but simply call for the legislature to amend Article 21-15 within a considerable period. Furthermore, their opinion was that the Article 31-2 penalty provisions are premised on the unconstitutional land transaction permit system, and therefore must be declared unconstitutional immediately.

Justice Kim Chin-Woo agreed to the opinion of the three Justices above, but adhered to a simple decision of unconstitutionality, finding no legal hiatus or social confusion anticipated by the invalidation of Article 31-2 of the Act on the Utilization and Management of National Land or Article 21-3 concerning the land

transaction permit system, and thus it is unnecessary to call for revision by the legislature.

C. Aftermath of the Case

The press reported that this decision was the first to recognize the public concept of land ownership (Joongang Daily, December 22, 1989), or that the judiciary, taking into account the serious land problems, made a progressive departure from the conservative line that it takes in comparison to the executive or the legislative branches (Hankyoreh Newspaper, December 23, 1989). Yet others surmised that the licensing system and its penalty provisions were problematic in terms of legal principles, but were justified by the realistic consideration that it is an effective policy measure to prevent land speculation. They urged that those problems identified by the Court be solved in the future enforcement of the Act (Hankook Ilbo, December 23, 1989).

Thereafter, the Act on the Utilization and Management of National Land was amended to the “National Land Planning and Utilization Act” by Act No. 6655 on February 4, 2002, while the land transaction permit system was regulated under Article 117 of the Act. It is now regulated under Article 10 of the “Act on Report on Real Estate Transactions, etc.,” which was enacted by Act No. 13797 on January 19, 2016.