The meaning of Article 19(1) and (3) of the Special Act on Balanced National Development, and Article 17(3) of the Enforcement Decree of the former Special Act on Balanced National Development that the Minister of Knowledge Economy publicly announces pursuant to Article 6(1)3(c) of the former Enforcement Decree of the Special Act on Balanced National Development “the partial transfer of a factory producer to another local government for the inducement of enterprises relocating to provinces

Articles 1, 19(1) and (3) of the Special Act on Balanced National Development, Article 17(2) and (3) of the former Enforcement Decree of the Balanced National Development Act (amended by Presidential Decree No. 24441, Mar. 23, 2013)

[Defendant-Appellee] The Head of Dong-gu Office (Attorney Kim Young-young, Counsel for defendant-appellee

Gongju Market (Seoul General Law Firm, Attorney Ahn Jin-jin, Counsel for defendant-appellant)

Daejeon High Court Decision 2010Nu2133 decided January 27, 2011

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. A. Article 19(1) of the Special Act on Balanced National Development (hereinafter “Special Act on Balanced National Development”) provides that “The State and local governments may provide financial and administrative support, etc. where a company located in an area prescribed by Presidential Decree in view of population density, industrial location, industrial clustering, etc. in the Seoul Metropolitan area is relocated to a provincial area by taking into account the population density, industrial cluster, etc.” Article 19(3) provides that “The State and local governments may provide the State and local governments with detailed matters, such as the subject of support and procedures therefor, shall be prescribed by Presidential Decree. According to such delegation, the Enforcement Decree of the Special Act on Balanced National Development (amended by Presidential Decree No. 2441, Mar. 23, 2013; hereinafter “Enforcement Decree of Balanced National Development Act”) provides that “The Minister of Knowledge Economy shall consult with the head of the relevant central administrative agency on the payment of land, etc. to a local government pursuant to Article 17(2) of the same Act, and provide “The Minister of Knowledge Economy shall provide for the payment of education and training subsidy”.

In addition, Article 19(1) and (3) of the Balanced National Development Act and Article 17(3) of the Enforcement Decree of the Act on Balanced National Development (amended by Ordinance of the Ministry of Knowledge Economy No. 2009-335, Jan. 4, 2010; hereinafter “standards for financial support”) provides for the requirements for enterprises eligible to receive State subsidies in connection with the attraction of enterprises by local governments into local governments under Article 6. In other words, Article 6(1) of the Act on Financial Support (hereinafter “the provision of this case”) provides that “The State’s subsidies under this criteria shall be granted in cases where local governments attract enterprises falling under all of the following subparagraphs.” Article 6(1)1 provides that “The State’s subsidies shall not be granted in cases where the government relocates its headquarters or real estate business to an enterprise to which the government is relocated, or the standards for relocation of its headquarters or real estate business to a local government for at least 3 years under Article 9(1) and 60-2(1) of the Enforcement Decree of the Restriction of the Restriction of Special Taxation Act shall not be granted to the State’s.

B. However, Article 2 subparag. 5 of the Financial Support Standards provides that “Partial transfer” refers to the continuation of a previous business or expanded business by closing a factory at the former location and moving the factory to another place, but does not specifically specify the scope of a mobile producer, and the same applies to “the criteria for partial transfer of a factory.”

However, in principle, the above subsidy system applies to cases where an enterprise located in the Seoul Metropolitan Area relocates its factory, head office or research institute to a provincial area, and where a company intends to establish a new local branch factory without relocating the facilities or human resources placed in the existing metropolitan area factory, head office or research institute, it is exceptionally eligible for subsidy only when it covers some local areas, and thus, the partial relocation of producers and the establishment of a new local branch factory should be substantially distinguished.

In addition, the principle regarding the relocation of a company in the Seoul Metropolitan area under subparagraph 3 of the instant provision to a provincial area is to relocate the entire factory, head office, or research institute, and in the case of a partial relocation, only the factory is recognized, and thereby, a part of the factory in the existing Seoul Metropolitan area should be closed. In ordinary, the term “productiond” is used in a sense that it refers to a series of continuous manufacturing processes from raw materials or parts to the production of goods through processing, assembling, etc., and thus, if transferred facilities fall short of such standards, it cannot be deemed as a “standards for partial relocation of a factory” subject to subsidies.

The Balanced National Development Act intends to contribute to enhancing regional competitiveness and balanced development between regions by facilitating the relocation of factories, etc. from regions where population is overpopulated, industrial cluster, etc. through financial and administrative support, and financial and administrative support is a discretionary act. The relocation of factories, etc. subject to support should be in line with the legislative purpose of the Balanced Development Act, which is enhancing regional competitiveness and balanced development between regions (see Supreme Court Decision 2010Du26339, Sept. 29, 201). The instant provision was amended by Ordinance of the Ministry of Knowledge Economy No. 2009-335, Jan. 4, 2010; thus, in cases where a company relocates its factory, head office or research institute to a provincial area other than wholly moving its factory, head office or research institute to a local area, it appears that the relocation of factories, etc. subject to support does not affect the legislation of the Balanced National Development Act.

In full view of the contents of the relevant laws and regulations regarding subsidies for relocating companies in Seoul Metropolitan Area as well as the need to divide the relocation of factories, etc. into provincial areas and the establishment of new factories, etc. in local areas, the purpose and content of balanced national development and guidelines for subsidies for promoting relocation of factories, and the process of amendment to the provisions of this case regarding changes in the recipients of subsidies, etc., “the partial transfer of factories” under the “Standards for Partial Transfer of Factories” shall be construed and applied to cases where a company closes all existing factories in Seoul Metropolitan Area, etc., where population congested, industrial clusters, etc. are located in the Seoul Metropolitan Area, etc., and relocates them to provincial areas, thereby easing the population density or concentration of industrial facilities in the Seoul Metropolitan Area, etc., while expanding the concentration of local economy by relocating its production capacity to local areas, which may bring about a balanced development between regions. Accordingly, even if a partial transfer of facilities and facilities among the factory production lines or a transfer of the entire number of production lines, such cases are very small in the scale of its relocation, which does not affect the determination of subsidies and economic balanced development.

2. According to the reasoning of the lower judgment and the evidence duly admitted, ① the Plaintiff, a corporation that is engaged in the manufacture, sale, etc. of steel products with air conditioners, had a factory site in the instant agro-industrial complex located in Sinju in order to establish a sub-industrial complex with a narrow-scale factory located in Sinju to move to the instant industrial complex located in Sinju. ② The Plaintiff’s factory’s manufacturing process of air conditioners, such as cutting raw materials, cooling pressure, heat treatment, heating pressure, product pressure, etc., was conducted through the process of cutting raw materials, cutting, heating (4 parts, 6 parts, 20 parts), 3 parts for heat treatment, 11 parts for products cutting, 4 parts for products cutting, etc., and 65 employees were placed in the Sinju factory. ③ According to the Plaintiff’s relocation plan to the agro-industrial complex, the Plaintiff’s factory could remain remaining in the Sinju factory.

Examining these facts in light of the legal principles as seen earlier, the manufacturing facilities that the Plaintiff moved to the Plaintiff’s factory are not the entire product manufacturer, but part of the facilities, the size of which is smaller than the size of the facilities, and the ratio of the transferred employees is not less than 7% of the entire factory employees and is merely 4. Thus, the relocation of the above facilities and employees is extremely weak to substantially reduce population congestion or industrial facility concentration problems in the Seoul Metropolitan area, etc., and to substantially induce the economic activation of the local economy. Accordingly, the Defendant’s disposition of this case, which rejected the Plaintiff’s application for the location subsidy, does not constitute “the partial transfer of a factory to the producer of the factory,” as stipulated in the “Standards for partial transfer of the factory,” does not constitute “the case where the Plaintiff’s application for the location subsidy is partially transferred” under the Balanced Development Act, or there is no

3. The court below held that the disposition of this case by the defendant, which rejected the plaintiff's application for site location subsidy, is legitimate, on the premise that "the case of a partial transfer of a factory to a producer of the same kind of product" under "the criteria for partial transfer of a factory" is limited to the case of a partial transfer of a factory to a local area in which the entire manufacturer of the same product is closed and the transfer of a factory to a local area is not limited to "the criteria for partial transfer of a factory". The part of the judgment of the court below regarding the meaning of "the criteria for partial transfer of a factory" among the judgment of the court below is not appropriate in light of the above legal principles, but the decision of the court below that the defendant's rejection of this case

4. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Shin Young-chul (Presiding Justice)