The case holding that Article 4, Article 7 (2) 3 and 6, and Article 12 (5) of the Incheon Metropolitan City Ordinance on the Sale, etc. of Land for Profit-Making Business is illegal because it constitutes a municipal ordinance concerning state affairs without delegation of statutes, or violates higher statutes, or violates higher statutes, or infringes on market enforcement authority beyond the scope of checks.

Articles 9 and 22 of the Local Autonomy Act

Incheon Metropolitan City Mayor (Law Firm Shin, Attorneys Choi Young-sik, Counsel for the plaintiff-appellant)

The Incheon Metropolitan Council (Attorney Park Jae-won, Counsel for the plaintiff-appellant)

October 29, 2009

The re-resolution of the Ordinance concerning the sale, etc. of the land for profit-making business of Incheon Metropolitan City, which was made by the defendant on November 1, 2007, is null and void. Litigation costs shall be borne by the

The same shall apply to the order.

1. Re-resolution of the Municipal Ordinance;

The following facts can be acknowledged in light of the whole purport of the pleadings in the statements of Gap evidence 1-1, 2, Gap evidence 2, Gap evidence 3-5, and Eul evidence 3-2.

A. The Defendant passed a resolution on September 18, 2007 and transferred the Ordinance to the Plaintiff. The Plaintiff demanded re-resolution on the ground that some of the contents of the Ordinance were in violation of the statute, but the Defendant, on November 1, 2007, re-resolutioned and finalized the Ordinance as the original bill.

B. The Ordinance was enacted for the purpose of prescribing necessary matters concerning the sale, etc. of sites for business for profit-making projects promoted by the Mayor of Incheon Metropolitan City (Article 4), and stipulates the implementation of development projects within free economic zones (Article 7(2)), the sale price (Article 12), foreign-capital invested companies eligible for special cases concerning sale and loan (Article 19).

2. Whether each of the draft ordinances violates Acts and subordinate statutes;

(a) Article 4 of the Ordinance

Article 4(1) of the Ordinance of this case provides that "the matters concerning the method of implementing the development project within the free economic zone shall be specified separately for the development project within the free economic zone," and Article 4(2) provides that "the development project to be implemented within the free economic zone shall be implemented with the classification of the projects in each subparagraph, such as urban development projects under Article 3 of the Urban Development Act (Article 1), etc." and Paragraph (3) provides that "the sale, etc. of sites developed within the free economic zone shall be governed by the relevant

According to the provisions of Articles 3, 4, 7, 9, 10, 12, 14, and 29 of the Act on Designation and Management of Free Economic Zones (hereinafter “Free Economic Zones Act”), the authority of a Mayor/Do Governor, such as confirmation and modification of a development plan for free economic zones, designation and cancellation of a free economic zone, approval and modification of an implementation plan prepared by a development project operator, public notification of completion inspection, type of business to be retired, and suspension of business of a free economic zone, shall belong to the Minister. In light of the contents and intent of the provisions of the Act, the affairs concerning each development project conducted within a free economic zone shall be deemed to constitute State affairs, and the affairs related thereto shall be deemed to be delegated to an agency in the position of a national administrative agency.

Meanwhile, according to Articles 3 and 9(1) of the Free Economic Zone Act, and Article 8(2)6 of the Enforcement Decree of the Free Economic Zone Act, a development plan for a free economic zone shall take precedence over other development plans, while an implementer who conducts a development project within a free economic zone shall obtain approval for an implementation plan, as the said development plan is accompanied by a plan for the use, profit-making, management and disposal of the land and facilities created by the development project, so the sale, etc

Therefore, Article 4 of the Ordinance of this case constitutes a provision of municipal ordinances without delegation of statutes concerning state affairs. In particular, Article 4 (3) of the Ordinance excluded the preferential application of development plans for free economic zones, which goes beyond the limit of the legislative authority of the Ordinance or is illegal

(b) Article 7(2) of the Ordinance

(1) Subparagraph 3

Article 7 (2) 3 of the Ordinance provides for the transfer of land to a project executor, occupant enterprise, or support institution within a logistics complex under Article 13 of the Act on the Development and Operation of Logistics Facilities (hereinafter referred to as the "Distribution Facilities Act") where the land can be sold by free contract.

However, Article 13(2) of the Distribution Facilities Act provides that "property owned by the State or a local government in the site for the construction of a logistics terminal may be sold to a logistics terminal operator by a private contract, notwithstanding the State Property Act, public property and Commodity Management Act, and other statutes."

In light of the fact that a contract for the lease or sale of public property is the principle of competitive bidding (Article 29(1)3 of the Public Property Act; hereinafter “Public Property Act”), Article 7(2)3 of the Ordinance provides that the scope of persons eligible to sell a site by a free contract shall be extended to occupant enterprises and support institutions in addition to the logistics terminal operators under Article 13(2) of the Distribution Facilities Act, and the land subject to the lease or sale of public property shall not be limited to “the site for the construction of a logistics terminal,” so that the land can be sold beyond the scope of sale of public property by means of a free contract under Article 13(2) of the Distribution Facilities Act.

Therefore, Article 7(2)3 of the Ordinance of this case is unlawful as it violates Article 13(2) of the Distribution Facilities Act.

(2) No. 6

Article 7 (2) 6 of the Ordinance provides for cases where the Mayor deems it necessary to promote the regional economy and reports to the Council where a site can be sold by free contract.

However, Article 38(1)28 of the Enforcement Decree of the Public Property Act provides that “Where the head of a local government sells public property to attract a factory or research facility of a company that intends to regularly employ at least 30 employees or to procure at least 30% of raw materials in the relevant area as a manufacturer that meets the standards set by the head of the local government to revitalize the regional economy” can sell public property under a private contract.

Article 7 (2) 6 of the Ordinance stipulates that "a manufacturer shall be sold by a private contract to revitalize the regional economy" as stipulated in Article 38 (1) 28 of the Enforcement Decree of the Public Property Act and "a factory or research facility of an enterprise that intends to procure at least 30 employees at the same time or at least 30% of raw materials in the relevant area" shall be deemed to be "a case where the Mayor deems it necessary and reports to the Council". Thus, it exceeds the regulatory scope of the above Enforcement Decree.

Therefore, Article 7(2)6 of the Ordinance of this case is unlawful as it violates Article 38(1)28 of the Enforcement Decree of the Public Property Act.

(3) No. 7

Article 7(2)7 of the Ordinance stipulates that it is inevitable for the Mayor to make a free contract in light of the location, shape, etc. of the site subject to sale in cases where the land can be sold through a free contract. Article 38(1)23 of the Enforcement Decree of the Public Property Act stipulates that “Where it is difficult to affix a competitive bid in view of the location, form, purpose, etc. of the property or it is inevitable to make a free contract due to the purpose or nature of the contract, the local government’s ordinances stipulate the contents and scope thereof.”

Although Article 38 (1) 23 of the Enforcement Decree of the Public Property Act provides for the matters delegated by Article 40 of the Incheon Metropolitan City Ordinance on Public Property, the plaintiff's assertion that the Ordinance in this case is unlawful because Article 7 (2) 7 of the Ordinance in duplicate. However, the duplicate provision of the Ordinance does not constitute a violation of the upper law, and the plaintiff'

In addition, Article 38 (1) 23 of the Enforcement Decree of the above Act delegates the contents and scope of a negotiated contract to ordinances where it is inevitable to conclude a negotiated contract. Article 7 (2) 7 of the Ordinance of this case provides that "where the market is particularly recognized," according to delegation, it shall not be deemed that it violates the above Enforcement Decree provision.

Therefore, Article 7 (2) 7 of the Ordinance of this case is not illegal as a provision within the scope of statutes.

(c) Article 12 of the Ordinance

(1) Paragraph 4

Article 12 (4) of the Ordinance of this case provides that a site may not be sold at a cost lower than the cost of development even when it is sold below the appraisal price.

The Plaintiff asserts that Article 12(4) of the Ordinance violates Article 16 subparag. 1 and subparag. 2 of the Guidelines for Development of Free Economic Zones (hereinafter “Development Guidelines”) so that a site may be sold below the development cost in certain cases. However, the development guidelines are administrative rules enacted without delegation of the Act and subordinate statutes, which do not fall under the superior statutes of the Ordinance of this case, and Article 42 of the Enforcement Decree of the Public Property Act provides that “the development cost shall be set at the minimum limit of the sale price.” Thus, the Plaintiff’s assertion in this part

(2) Paragraph 5

Article 12(5) of the Ordinance of this case provides that where the Mayor intends to enter into a contract on the transfer of ownership, such as the sale of at least ten billion won at a price below the appraised price by a free contract, he/she shall submit a written contract, etc. to the Council for resolution. Article 3 of the Ordinance of this case provides that the scope of application of this Ordinance is the assets to be disposed of for sale in housing projects and land development projects of a local government-directly operated enterprise.

The acquisition and disposal of important property of a local government shall undergo a resolution of the local council (Article 39(1)6 of the Local Autonomy Act, Article 7(1) of the Enforcement Decree of the Public Property Act), and the head of a local government shall establish a management plan for the acquisition and disposal of important public property every year and obtain a resolution of the local council (Article 10(1) and (2) of the Public Property Act, Article 7(1) of the Enforcement Decree of the same Act

Local Public Enterprises Act shall obtain a resolution of the local council on the acquisition and disposal of important assets of a local government-directly operated enterprise with its budget, but if a resolution of the local council on the budget is obtained, it shall be deemed that there is a resolution of the local council on the acquisition and disposal of important assets under the Local Autonomy Act or the Public Property Act (Article 40 of the Local Public Enterprises Act). The land for sales purpose of a local government-directly operated enterprise is excluded from important assets of a local government-directly operated enterprise which shall be subject to a resolution of the local council (proviso of Article 4

In light of the fact that the Local Public Enterprises Act preferentially applies to a local government-directly operated enterprise (Article 6) and the Local Autonomy Act or the Public Property Act, and the language and text of Article 40 of the Local Public Enterprises Act and Article 41(1) of the Enforcement Decree of the Local Public Enterprises Act, and the purport of this provision to enable a local government-directly operated enterprise to flexibly respond to changes in the business environment, the acquisition and disposal of land for sale excluded from important assets of the local government-directly operated enterprise shall not be deemed separately subject to the resolution of the local council pursuant to the Local Autonomy Act or the Public Property Act.

In addition, Article 39 (1) 8 of the Local Autonomy Act provides that the local council's resolution on the acquisition and disposal of important assets of a local government-directly operated enterprise shall be made with respect to the imposition of obligations other than the budget or the waiver of rights except as otherwise provided for in the statutes and ordinances. As seen earlier, the local government-directly operated enterprise has already provided for in the local government-directly operated enterprise laws

In addition, Article 12(5) of the Ordinance of this case only requires a resolution of the local council when transferring ownership at a price below 10 billion won at a price below the appraised price by a free contract for a local government-directly operated enterprise. However, Article 40 of the Local Public Enterprises Act and Article 41(1) of the Enforcement Decree of the same Act excludes the acquisition and disposal of the land for sales purpose of a local government-directly operated enterprise from the resolution of the local council. The Ordinance of this case already limits the cases where the land for sales purpose of a local government-directly operated enterprise can be sold at a price below the negotiated contract and appraised price (Article 7(2) and Article 12(3) of the Ordinance Draft), and there is no special circumstance to regulate the land for sales purpose of a local government-directly operated enterprise directly established and operated by Incheon Metropolitan City separately from other local government-directly operated enterprises. In concluding a contract for sale, etc., it seems that the council actively participated in the conclusion of the contract of the market, which is an executive agency, thereby infringing the market authority.

Therefore, Article 12 (5) of the Ordinance violates Article 40 of the Local Public Enterprises Act and Article 41 (1) of the same Act, and infringes on the market's authority to execute the project beyond the scope of checks. Therefore, it is illegal.

D. Part concerning special cases concerning sale of land, lease, etc. under Article 19(4) of the Ordinance

Article 19(4) of the Ordinance of this case provides that a foreign-invested enterprise which is the executor of a development project implemented within a free economic zone shall meet the same standards as those for tax reduction and exemption under the Restriction of Special Taxation Act required for the foreign-invested enterprise to obtain the special case of land sale

Article 16(5) of the Free Economic Zone Act provides that "The State and local governments may use, profit from, lend or sell state-owned or public property owned by the State or local governments to development project implementers or relocating foreign-capital invested companies through a free contract, notwithstanding the provisions of the State Property Act, public property and Commodity Management Act and other Acts," thereby granting local governments the right to lease or sell public property through a free contract, but the development project implementers do not provide for specific standards that can be granted such special provisions.

In full view of the legislative intent of Article 16(5) of the Free Economic Zone Act and the fact that the management of public property is the autonomous affairs of a local government, the Free Economic Zone Act does not purport to exclude the determination of the qualification standards, etc. for foreign-invested enterprises eligible for granting special cases concerning the sale, etc. of public property in compliance with the actual circumstances of the local government. Thus, it is difficult to deem that Article 19(4) of the Ordinance of this case violates higher statutes or infringes on the essential part of the authority to execute the head of the local government (the subject to the regulation of Article 19(4) of the Ordinance of this case does not include state property

Therefore, the plaintiff's assertion that the above provision is illegal by deviating from the limit of the legislative authority is without merit.

3. Conclusion

As seen above, as long as some provisions of the Ordinance of this case violate the law, the re-resolution of the Ordinance of this case shall be denied in its entirety. Thus, the plaintiff's claim of this case is justified, and the costs of lawsuit are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Cha Han-sung (Presiding Justice)