Whether Article 35 of the former Act on the Budgeting and Management of Subsidies applies to indirect subsidy program operators and indirect subsidy programs that prohibit the use of, transfer, exchange with, or lending of, or offering as security, any property acquired with, a subsidy or the utility of which increased without approval from the head of a central government agency after completion of a subsidy program (negative

Articles 2 (see Article 2 of the current Subsidy Management Act) and 35 (see Article 35 (1) and (3) of the current Subsidy Management Act) of the former Act on the Budgeting and Management of Subsidies (Amended by Act No. 10898, Jul. 25, 2011)

Supreme Court Decision 2015Da247257 Decided November 15, 2018 (Gong2019Sang, 4)

Seoul High Court Decision 200Na1448 delivered on August 1, 200

Ulsan District Court (Attorney Jeong-hee, Counsel for the defendant-appellant)

Gwangju High Court Decision 2014Na13616 decided June 17, 2015

The judgment below is reversed, and the case is remanded to the Gwangju High Court.

The grounds of appeal are examined.

1. As to the ground of appeal on the main defense of this case

The lower court determined that the instant subsidy was not A&A corporation, but the instant indirect subsidy program operator, and rejected the Defendant’s defense against safety, which the Plaintiff was disqualified as a party to the instant lawsuit by subrogation of A&A corporation, based on the determination that the instant subsidy was an A&A corporation and A&A corporation’s A&C corporation (hereinafter “A&C”).

The allegation in the grounds of appeal is the purport of disputing the determination of the lower court’s fact-finding, and is merely an error in the selection of evidence and fact-finding which belong to the exclusive jurisdiction of the lower court. Furthermore, even if examining the reasoning of the lower judgment in light of relevant legal principles and records, the lower court did not exhaust all necessary deliberations as alleged in the grounds of appeal, or did not err by exceeding the bounds

2. As to the assertion of misapprehension of legal principles as to the scope of application of Article 35 of the former Act on the Budgeting and Management of Subsidies (Amended by Act No. 10898, Jul. 25, 2011; hereinafter “former Subsidy Act”).

(a) Article 35 of the former Subsidy Act provides, “The owner of a subsidized project shall not use, transfer, exchange, or lend, or provide as security, important property acquired with a subsidy or the utility of which increased, for any purpose that violates the purpose of the grant of the subsidy, even after the completion of the subsidy program in question, without the approval of the head of the central government agency.”

Meanwhile, Article 35 of the former Subsidy Management Act (amended by Act No. 10898, Jul. 25, 2011; amended by Act No. 13931, Jan. 28, 2016; hereinafter “Subsidy Act”) provides that “A subsidy program operator or indirect subsidy program operator shall clarify the present value and increase in material property prescribed by Presidential Decree (hereinafter “material property”) acquired with a subsidy or indirect subsidy or the utility thereof increased, as prescribed by Presidential Decree, and shall report the present status thereof to the head of a central government agency or the head of the relevant local government,” and Paragraph (3) of the same Article provides that “A subsidy program operator or indirect subsidy program operator shall not, without the approval of the head of the relevant central government agency after the completion of the relevant subsidy program, engage in any of the following activities with respect to material property without the approval of the head of the relevant central government agency:

B. In full view of the nature of Article 35 of the former Subsidy Act, the regulatory structure and method of the former Subsidy Act and the legislative intent of Article 35 of the former Subsidy Act regarding “indirect subsidy and indirect subsidy program operators” and “indirect subsidy and indirect subsidy program operators, etc., it shall be deemed that Article 35 of the former Subsidy Act does not apply to indirect subsidy program operators and indirect subsidy program operators (see Supreme Court Decision 2015Da247257, Nov. 15, 2018).

C. Nevertheless, the lower court determined that Article 35 of the former Subsidy Act applies to an indirect subsidy program operator, and determined that the act of offering the instant building acquired by an indirect subsidy program operator as security to the Defendant without the approval of the competent Do governor is null and void as an act of disposal in violation of Article 35 of the former Subsidy Act, and accordingly, the registration of creation of a neighboring building in the Defendant’s name as to the instant building should also be revoked as the cause of invalidation.

In so determining, the lower court erred by misapprehending the legal doctrine on the scope of application of Article 35 of the former Subsidy Act, thereby adversely affecting the conclusion of the judgment. The Defendant’s ground of appeal assigning this error is with merit.

3. Conclusion

The judgment of the court below is reversed without examining the remaining grounds of appeal by the defendant, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jo Hee-de (Presiding Justice)