Seoul High Court Decision 200Na14488 delivered on August 1, 200

Jeju Special Self-Governing Province Governor (Law Firm KNC, Attorneys Gyeong-Gyeong, Counsel for defendant-appellant)

October 31, 2012

Jeju District Court Decision 201Guhap1072 Decided June 27, 2012

1. The defendant's appeal is dismissed.

2. The costs of appeal shall be borne by the Defendant.

1. Purport of claim

The defendant confirmed that Article 2 of the Addenda to the Ordinance on the Establishment of Jeju Special Self-Governing Province (Ordinance No. 809 of Jeju Special Self-Governing Province) promulgated on December 7, 2011 is null and void.

2. Purport of appeal

The judgment of the first instance shall be revoked. The lawsuit of this case shall be dismissed.

1. The details of the promulgation of the Municipal Ordinance;

A. The Plaintiff is a legal entity that sells drinking spring water, and the Defendant is the head of the Jeju Special Self-Governing Province, and the Jeju Special Self-Governing Province Development Corporation (hereinafter “Development Corporation”) is a local public enterprise established by the Jeju Special Self-Governing Province by investing 100% in accordance with Article 146 of the Local Autonomy Act, Article 49 of the Local Public Enterprises Act (see above relevant Acts and subordinate statutes), and Ordinance on the Establishment

B. On December 16, 1997, the Plaintiff entered into the Framework Agreement on Jeju Triang Water Trade with the Development Corporation, and revised it on December 16, 2002 on one occasion.

C. On December 15, 2007, the Plaintiff again entered into the Jeju Fisheries Sales Convention (hereinafter “instant Convention”) with the Development Corporation, which mainly deals with the following matters (hereinafter “A” and “B” refer to the Development Corporation and the Plaintiff respectively).

(1) Article 2 (Details and Apportionments) (1) of the Table contained in the main sentence of this Convention provides that “A” shall take exclusive charge of all the manufacturing activities of products (hereinafter referred to as “production activities”) and “B” shall take full charge of all their sale activities (hereinafter referred to as “sale activities”). Article 3 (Period of Convention) provides that the term of purchase shall be three years from the date of conclusion of this Convention pursuant to the terms and conditions of automatic extension under Article 3 (Period of Convention), and shall be extended every year if the purchase plan under Article 6 (2) is implemented. Article 5 (Price) ① The supply price of products may be determined annually after consultation with “A” and “B”: Provided, That if necessary according to market price fluctuations, the term “A” and “B” agree on the three-year purchase plan from the date of cancellation to the date of termination of this Convention, and if any inevitable cause, such as substantial changes in market conditions or lack of supply, etc., the other party may be notified of the purchase plan for each of the following three-year period of 10 years and 20 years thereafter:

D. On October 201 and November 28, 2011, the Defendant promulgated a partial amendment of the Ordinance on the Establishment of Jeju Special Self-Governing Province Development Corporation (hereinafter “instant Ordinance”) which newly establishes Article 20(3) of the Jeju Special Self-Governing Province Ordinance as follows by Article 809 of the Jeju Special Self-Governing Province Ordinance on December 7, 201 (hereinafter “instant Ordinance”) (Article 1 and Article 20(1) below are the existing provisions).

The purpose of this Ordinance is to contribute to promoting the welfare of residents and the development of local communities through the efficient implementation of various projects by establishing the Jeju Special Self-Governing Province Development Corporation pursuant to Article 137 of the Local Autonomy Act and Article 49 of the Local Public Enterprises Act (hereinafter referred to as the "Act").The Corporation shall carry out the following projects in order to achieve the purpose under Article 1.

E. On the ground that the Development Corporation is obligated to comply with Article 20(3) of the instant Ordinance newly established around December 12, 2011, it notified the Plaintiff that the instant agreement will be terminated as of March 15, 2012.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 6, 7, 12, Eul evidence Nos. 1 and 10, the purport of the whole pleadings

2. Determination on this safety defense

A. The defendant's main defense

Article 2 of the Addenda to the instant Ordinance, which the Plaintiff seeks confirmation of invalidation, is not directly deprived of the Plaintiff’s status under the instant agreement without intervention in the enforcement act, and the extinguishment of the Plaintiff’s status is due to the termination of the development project agreement. The aforementioned Addenda provisions are merely a kind of mutually advantageous transitional provision that grants a grace period to the Plaintiff, which is a private consignment business entity under the previous private contract, to comply with the general tendering procedure under Article 20(3) of the instant Ordinance. Accordingly, Article 2 of the Addenda to the instant Ordinance does not constitute

B. Determination

The issue of whether a certain act of an administrative agency can be the subject of an appeal cannot be determined abstractly and generally. In a specific case, an administrative disposition is an enforcement of law with regard to specific facts conducted by an administrative agency as the subject of public authority, which directly affects the rights and obligations of the people. The decision should be made individually by taking into account the content and purport of the relevant Act and subordinate statutes, the subject, content, form, and procedure of the act, the actual relation between the act and the disadvantage suffered by interested parties, such as the other party, and the principle of administration by the rule of law and the attitude of the administrative agency and interested parties related to the pertinent act (see Supreme Court en banc Decision 2008Du167, Nov. 18, 2010

In light of the above legal principles, the term of validity of the instant agreement, which was entered into by a private contract prior to the enforcement of the instant Ordinance, was expired on December 15, 201, and was automatically extended pursuant to Article 3 of the instant agreement. Article 20(3) of the instant Ordinance provides that the selection of a private entity shall be based on a public tender, and Article 2 of the Addenda provides that the former operator of domestic sales of drinking spring water, despite the enforcement of this Ordinance, shall be deemed a domestic sales business entity of drinking spring water under this Ordinance until March 14, 2012. Since maintaining the status of a domestic sales business entity of drinking spring water after March 15, 2012, maintaining the status of the Plaintiff, which was inconsistent with Article 20(3) of the instant Ordinance, has been formed, and the development corporation, in fact, has a duty to comply with Article 20(3) of the instant Ordinance, shall be deemed to be an uneasible one of the reasons for cancellation of the instant Ordinance to the Plaintiff.

3. Whether Article 2 of the Addenda to the Ordinance of this case takes effect

A. The plaintiff's assertion

(1) Article 20(3) of the Ordinance of this case only stipulates that a development project operator shall select a private consignment business operator after the enforcement of the Ordinance of this case, and Article 2 of the Addenda of the Ordinance of this case provides that Article 20(3) of the Ordinance of this case shall also apply to the agreement of this case which was lawfully concluded prior to the enforcement of the Ordinance of this case, even before the enforcement of the Ordinance.

(2) Notwithstanding the proviso of Article 22 of the Local Autonomy Act, Article 2 of the Addenda to the instant Ordinance was newly established without statutory delegation and abused the legislative power of the instant agreement, which directly regulates the instant agreement belonging to private areas.

(3) Article 2 of the Addenda to the instant Ordinance retroactively deprives the Plaintiff of his status as a business operator under the instant agreement, and thus, violates Article 13(2) of the Constitution prohibiting the deprivation of property rights by retroactive legislation.

(4) Article 2 of the Addenda to the instant Ordinance violates the principle of proportionality or the principle of excessive prohibition, as it excessively infringes the Plaintiff’s private interest compared to the public interest to be achieved thereby.

B. Determination

(1) Article 20(3) of the Ordinance of this case provides that the selection of a private consignment business operator shall be made by means of a public tender, Article 1 of the Addenda provides that this Ordinance shall enter into force on the date of its promulgation, and Article 2 of the Addenda provides that a former business operator of drinking spring water in Korea shall be deemed a domestic seller of drinking spring water under this Ordinance until March 14, 2012, notwithstanding the enforcement of this Ordinance. Article 2 of the Addenda provides that the transitional provision on the enforcement of Article 20(3) of the Ordinance is a transitional provision on the enforcement of Article 20(3). Since the term of validity of the Convention entered into before the enforcement of the Ordinance of this case is automatically extended pursuant to Article 3 of the Convention after the enforcement of the Ordinance of this case is in violation of Article 20(3) of the Ordinance, it shall be interpreted as a domestic seller of drinking spring water by March 14, 2012, who is selected as a general tender pursuant to Article 20(3) of the Ordinance of this case.

However, inasmuch as Article 20(3) of the instant Ordinance provides that “the selection of an operator to be entrusted to the private sector” shall be based on a public tender, the extension of the term of validity of the instant agreement pursuant to Article 3 of the instant Convention is merely an extension of the term of validity of the instant agreement, and it cannot be deemed as a violation of Article 20(3) of the instant Ordinance because it does not mean “the selection of a business operator.” Nevertheless, Article 2 of the Addenda to the instant Ordinance stipulates that “the domestic sales business operator of spring water, which was previously drinking, shall be deemed a business operator of domestic sales of spring water by March 13, 2012, is inconsistent with the language and text of Article 20(3) of the

(2) Article 22 of the Local Autonomy Act provides that "Local governments may enact municipal ordinances with respect to the affairs thereof within the scope of statutes: Provided, That when they determine matters or penal provisions with respect to the restriction on the rights of residents, the imposition of obligations on residents, they must be delegated by law." When they enact municipal ordinances with respect to the restriction on the rights of residents, the imposition of obligations on residents, or penal provisions, they shall be delegated by law without examining the nature of the municipal ordinances, and the municipal ordinances without such delegation shall be null and void (see Supreme Court Decision 2006Do52, Dec. 13, 2007).

As seen earlier, the Development Corporation is a local public enterprise established by investing 100% in Jeju Special Self-Governing Province pursuant to Article 146 of the Local Autonomy Act, Article 49 of the Local Public Enterprises Act, and the Ordinance on the Establishment of Jeju Special Self-Governing Province. In light of its form and content, the instant agreement entered into by the Development Corporation as the subject of private economy on an equal footing with the Plaintiff, which is the other party, is identical to a contract between private persons. Therefore, except as otherwise provided in relevant statutes, the principle of private autonomy and freedom of contract, etc. is equally applicable. However, where Article 2 of the Addenda of the instant Ordinance, stipulated by the Defendant, which is the 100% investor of the Development Corporation, applies to the instant agreement entered into before the establishment of Article 20(3) of the instant Ordinance, if the purchase plan is implemented, the period of the agreement automatically extended, and thus, Article 2 of the Addenda of the instant Ordinance does not stipulate otherwise in terms of delegation of the Local Autonomy Act and the Local Public Enterprises Act.

In addition, Article 12 of the Local Autonomy Act provides that "any person who has an address within the jurisdiction of a local government shall be a resident of the local government," and Article 171 of the Commercial Act provides that "the address of the company shall be the seat of the head office," and the plaintiff is not a resident of Jeju Special Self-Governing Province because the head

Therefore, Article 2 of the Addenda to the Ordinance of this case applies Article 20 (3) to the plaintiff who is not a resident and imposes a duty to restrict the rights and impose a duty on the plaintiff. Thus, it shall be deemed illegal as it is contrary to the provisions of the Local Autonomy Act.

(3) As such, Article 2 of the Addenda to the instant Ordinance, without any need to examine the remainder of the Plaintiff’s assertion, is inconsistent with Article 20(3) of the instant Ordinance and its language and text, and is in violation of the Local Autonomy Act, and its illegality is objectively obvious and objectively null and void.

4. Conclusion

Therefore, the plaintiff's claim shall be accepted with due reason, and the judgment of the court of first instance is just in conclusion, and the defendant's appeal is dismissed as it is without reason, and it is so decided as per Disposition.

[Attachment Form 5]

Judges Lee Jin-Gyeong (Presiding Judge)