2018Guhap71342, revocation of restrictions on participation, recovery, etc.

1. A stock company;

B Representative Director

2. B

[Judgment of the court below]

The Minister of Science and ICT

Government Legal Service Corporation (Law Firm LLC)

Attorney Cho Jin-hwan

Litigation performers shall be commercialized;

May 3, 2019

July 26, 2019

1. All of the plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

The defendant's disposition of restricting participation in national research and development projects for one year (period: July 13, 2018. 201. 7. 2019. 7. 12) against the plaintiff, and the disposition of imposing additional monetary sanctions of KRW 53,00,000,000, which is imposed against the plaintiff corporation A, shall be revoked.

1. Details of the disposition;

A. The plaintiff A Co., Ltd. (hereinafter referred to as the "Plaintiff Co., Ltd.") is a company that develops and manufactures IP cameras, video processing copiers and storage devices, etc. for security purposes, and the plaintiff B is the representative director of the plaintiff Co., Ltd.

B. On December 2016, the Plaintiff Company entered into an agreement with the Special Research and Development Zone Promotion Foundation (hereinafter “Foundation”) which was delegated by the Defendant to carry out research and development projects (hereinafter “instant agreement”) for the purpose of carrying out the said task (hereinafter “instant task”) under the name of the task, namely, “the development of a system to prevent and reduce fire based on visual video technology (hereinafter “instant task”). The relevant major contents of the instant agreement are as follows.

Article 3 (Payment of Project Costs) ① The Foundation shall pay Government contributions out of the project costs of the instant task as a deposit account recorded in the Request for Project Costs (hereinafter referred to as “management account”) submitted by the Plaintiff Company when entering into an agreement. Article 4 (Management and Use of Project Costs) ① The Plaintiff Company shall, as prescribed by the Regulations on the Handling of Research and Development Projects under the jurisdiction of the Ministry of Science, ICT and Future Planning, establish a separate account so that it may prove the accounting management used separately from the funds of the Government or entities other than the Government, the participant enterprise’s contributions, etc., as follows; and the deposit interest shall be used only for the research and development re-investment and other similar purposes otherwise (hereinafter referred to as “the Plaintiff Company”). The amount used by the Plaintiff Company in violation of the standards for appropriation of project costs by item of attached Table 3, and the method for direct use by item of attached Table 5, and the amount used for modification of project costs by item of paragraph (3) for any purpose other than that of the Plaintiff Company’s research and development project for 20 years other than that of the Plaintiff Company.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1, 2, Eul evidence Nos. 1 and 3, and the whole pleadings

A. Summary of the plaintiff's assertion

1) Claim against the principle of statutory reservation

Article 45 of the Regulations on the Handling of Research and Development Projects in Science and Technology under the jurisdiction of the Ministry of Science and ICT as a ground for disposition. The instant disposition is unlawful against the principle of statutory reservation.

2) The non-existence of grounds for disposition

On December 30, 2016, the Plaintiff transferred KRW 23,00,000, and KRW 30,000,000 from each management account to the Plaintiff’s corporate account on January 26, 2017, but ① on December 30, 2016, KRW 23,00,000 (hereinafter “the primary remittance”) remitted on December 30, 2016 (hereinafter “the primary remittance”) was 12,647,536, 100,500 (the project cost was 10,352,464) with the purchase and development cost of the parts, and the advance payment cost of the parts was 0,00,00,000 (the project cost was 10,352,464,000,000 won were 0,000 won, 20,000,000 won were 30,07,000 won were 20,000 won were 7.

3) The assertion of deviation and abuse of discretionary power

In light of the fact that the plaintiffs faithfully performed the task of this case, such as "ordinary" and "74.0 of the evaluation results after the execution of the task of this case", and the plaintiffs have continuously been faced with research and development in difficult financial circumstances. The plaintiffs can cope with major crisis in the progress of the project due to the disposition of this case, and the plaintiffs are not able to use the project funds separately from funds for other purposes, but are not used for other purposes, the disposition of this case violates the principle of proportionality because it is too harsh.

(b)as shown in the separate sheet of relevant laws and regulations;

C. Determination

1) Determination on the assertion of violation of the principle of statutory reservation

A) Article 11-2(1)5, (7), and (9) of the Framework Act on Science and Technology (hereinafter “the Framework Act”) provides for the restriction on participation in national research and development projects, the recovery of all or part of the project funds contributed or subsidized, the imposition and collection of additional monetary sanctions not exceeding five times the amount used for purposes other than the original purpose, etc. of research and development projects shall be prescribed by Presidential Decree. Article 27(1)5, (7), and (9) of the former Regulations on the Management, etc. of National Research and Development Projects delegated by the Act (amended by Presidential Decree No. 27482, Sept. 5, 2016; hereinafter “the Management Regulations”) provides for the period for which participation in national research and development projects is restricted, the recovery of project funds contributed or subsidized, and the imposition and collection of additional monetary sanctions not exceeding five times the amount used for the purposes other than the original purpose, and provides for necessary matters concerning the period of restriction on participation by grounds for restriction on participation, detailed criteria for recovery of project funds by reason, and guidelines for treatment of research and development project funds.

B) According to the evidence evidence evidence No. 2, the instant disposition is clearly based on the law and the management regulations delegated by law, and it cannot be deemed that the instant disposition is not based on the law and regulations, on the ground that it is stated in the relevant administrative rules provisions in the instant disposition, since it is clearly based on the law and regulations delegated by law, and it is not based on the law and regulations, since it is stated in the relevant administrative rules provisions in the instant disposition, it is not reasonable to conclude that the instant disposition is not based on the law and regulations.

2) Determination as to the non-existence of grounds for disposition

In full view of the following circumstances, it is reasonable to view that the Plaintiffs used each of the above remittances for purposes other than the original purpose while performing the instant task, in full view of the evidence presented earlier, evidence Nos. 5, 8, and 3 as well as the overall purport of the arguments and records Nos. 5, 3 as well as the evidence No. 5, 8, and 3. Therefore, the Plaintiffs’ assertion on this part is without merit.

A) The Plaintiff Company remitted the amount of 1 and 2 remittance to each Plaintiff Company’s corporate account (agricultural Cooperatives, Account Number: 317-01-01-0367-01, hereinafter “Corporation account”). Since the project cost is very difficult to manage and supervise if it is mixed with other accounts, it should be directly disbursed from the management account without going through other accounts, etc., and between the moment it is transferred to other accounts and the moment it is transferred to other accounts, it should be deemed that the act of use is complete.

B) Since Article 4(2) of the Convention appears to refer to "amount not proven" as the object of recovery under Article 4(2) of the Convention, it cannot be deemed that there is evidence of the fact transferred to another account and used for its original purpose. Thus, it is evident that there is no evidence of the fact transferred to another account.

3) Determination of the assertion of abuse of discretionary power

A) Whether a punitive administrative disposition deviates from or abused the discretionary power under the social norms ought to be determined by objectively examining the content of the offense, the purpose of the public interest to achieve the disposition, and all the relevant circumstances, and by comparing the degree of infringement on the public interest and the disadvantages suffered by an individual (see, e.g., Supreme Court Decision 2004Du3854, Apr. 14, 2006). If the criteria for a punitive administrative disposition are prescribed in the form of Presidential Decree or Ordinance of the Ministries, the criteria for disposition do not conform with the Constitution or laws, or, unless there are reasonable grounds to believe that a punitive administrative disposition in accordance with the above disposition criteria is considerably unreasonable in light of the content of the offense, and the content and purport of the relevant statutes, the disposition should not be readily determined that the disposition deviates from or abused the discretionary power (see, e.g., Supreme Court Decision 2007Du6946, Sept. 20, 207).

B) Based on the above legal principles, in light of the following circumstances acknowledged by comprehensively taking into account the facts acknowledged as a health team, the entire purport of the arguments, and the following circumstances, the Plaintiffs were returned project funds used for purposes other than the original purpose, and even if considering the circumstances that the outcome of the instant task was not bad, it cannot be deemed that there was an error of deviation from or abuse of discretionary power on the instant disposition. Accordingly, the Plaintiff’s assertion on this part is without merit

(1) Research and development expenses to be paid to a research institute are paid to support national research and development projects to promote the national economic development, enhance the quality of life of the people, and contribute to the development of human society by innovative science and technology, and strengthening national competitiveness. The public interest to be properly disbursed according to the payment purpose and purpose is highly high. Furthermore, the use of research and development expenses paid by a research and development project operator for any purpose other than its original purpose is highly likely to lead to the insolvency of national research and development projects, and thus,

(2) The plaintiffs asserted that 12,647,536 won out of the primary remittance amount shall be paid in advance for the purchase and development cost of parts and 14,00,50 won (10,352,464 won as project cost) shall also be paid to the KCAC at the cost of purchase and development cost of parts. However, according to the records of entry into the corporation account, 12,647,536 won spent at the corporate account on 12,30.30, 12,647,536 won is deemed to be paid in the personnel expenses of the researchers (D, E,F, and G) who participated in the instant task, and it shall not be deemed that the funds were actually disbursed in advance for the purpose of 00,000 won out of the private funds to be borne by the plaintiff company pursuant to the instant agreement, and it shall not be deemed that the funds were actually disbursed in advance for 10,000 won out of the funds that were actually disbursed by the plaintiff company (hereinafter referred to as 20, 10,0060).

(3) The plaintiffs asserted that the second remittance amount was used in 12,647,536 won as the wages of researchers (D, E, F, and G) who participated in the instant task, and 17,000,500 won as the expenses for the purchase of parts and the pre-payment of development costs. However, the plaintiffs asserted that the second remittance amount was used in 12,647,536 won as the wages of the researchers (D, E, F, and G) who participated in the instant task, but the plaintiff company transferred the amount equivalent to 3,267,70 won to G as well as other similar or similar circumstances referred to in paragraph (2) of the above paragraph, and the second remittance amount was merely 2,00,000 won as the expenses for the instant task. In addition, it is difficult to deem that the second remittance amount was actually used for the purpose of the project.

(4) The instant disposition is an appropriate means to recover the portion of the research and development funds paid to the Plaintiff Company with respect to the instant task, to restrict the Plaintiffs who committed an offense from participating in the national research and development project for one year, and to impose additional monetary sanctions, and to impose sanctions on using research and development funds for any purpose other than the intended purpose, and to induce research institutes and persons in charge of research and development performing the future national research and development project to use research and development funds in line with

(5) Article 27(1) [Attachment 4-2](d) and 2.2(b)(a) of the Management Regulations and Article 45(1)5(5) of the Management Rules provide that where the amount used for other purposes is less than 20 percent of research and development expenses for the pertinent year, the period of restriction on participation shall not exceed three years, and where the relevant amount has already been restored to the research and development fund account, the period of restriction on participation may be reduced to at least one year. However, among the total project expenses under the Convention in this case, the ratio of KRW 270 million out of the total project expenses under the agreement in this case to KRW 53 million is about 19.6% (round 27, 2017, the amount equivalent to KRW 30,000,000,000, and the period of restriction on participation in this case’s account is much more than the amount of the aforementioned disposition imposed on February 27, 2017.

(6) Article 27(11) [Attachment 5] of the Management Regulations and Article 45(11) [Attachment 1] 5(5) of the Management Rules provide that the detailed criteria for the recovery of project costs for each reason shall be recovered within the total amount of contributions for the pertinent year when research and development costs are used for any purpose other than the original purpose. The defendant takes a disposition to recover only 53,000,000,000, which corresponds to the project costs used for the purpose other than the original purpose within 200,000,000. The restitution disposition also is determined to have been reasonably calculated within the scope of the criteria for the disposition.

(7) Article 27-4(1) [Attachment 6] and Article 45-3(1) [Attachment 11-2] 5 of the Management Regulations provide that "standards for imposing additional monetary sanctions in cases where the amount used for research purpose is more than 50 million won but not more than 100 million won" shall be 25 million won + 50 million won in excess of 50 million won. In accordance with the above provisions, the additional monetary sanctions imposed in relation to the instant agreement shall be 28 million won + 25 million won in excess of 50 million won. In accordance with the above provisions, the additional monetary sanctions imposed in relation to the instant agreement shall be the same as the additional monetary sanctions imposed in the instant disposition.

(8) In light of the aforementioned facts, it is difficult to see that each of the above dispositions standards per se conforms to the Constitution or laws, and in light of the aforementioned recognized facts, the instant disposition is not deemed significantly unreasonable in light of the content and purport of the relevant laws and regulations.

3. Conclusion

Since the plaintiffs' claims are without merit, all of them are dismissed. It is so decided as per Disposition.

For the transfer of judge;

Judges Lee Lee Jae-chul

Judge Powers Governing Authority