[The Editors' Verdict] Innovation and Administrative Punishment

The Tada service, launched in October 2018, is a service where consumers rent a car through a smartphone application and a driver comes along with it. It has developed into a ride-sharing service used by 1.7 million people, with advantages such as no ride refusals and no unnecessary conversations with drivers. However, the taxi industry viewed Tada as illegal taxi operations and reported it to the prosecution. On the 10th, the prosecution demanded a one-year prison sentence for the CEO of the company operating Tada on charges including violation of the Passenger Transport Service Act. Fortunately, the court acquitted the CEO at the sentencing hearing on the 19th, but the Tada ban bill is still pending in the National Assembly, leaving business risks.

Here, criminal punishment is academically called administrative punishment. Administrative punishment imposes penalties found in criminal law?such as death penalty, life imprisonment, imprisonment, detention, fines, detention without imprisonment, fines, and confiscation?for violations of administrative obligations. For example, in the above case, Article 92 of the Passenger Transport Service Act stipulates that a person who brokers a driver in violation of Article 34, Paragraph 2 of the same Act shall be punished by imprisonment for up to two years or a fine of up to 20 million won. Although administrative punishment is stipulated in various administrative regulatory laws, unlike other administrative sanctions, it applies the general provisions of criminal law, is imposed through criminal procedure law, and ultimately depends on court rulings.

In principle, punishment is the most severe and serious sanction held by the state and should only be used as a last resort when other sanctions cannot address illegal acts. However, administrative punishments are invariably stipulated in various economic regulatory laws. Yet, it is questionable whether many acts subject to administrative punishment are serious antisocial acts that can only be addressed through criminal penalties. A representative example is the Data 3 Laws, created to lead innovation in the Fourth Industrial Revolution era. The Personal Information Protection Act imposes imprisonment and fines for about 30 acts, including cases where an information and communication service provider collects personal information without user consent, provides personal information to a third party without the data subject’s consent, continues to use or provide personal information to a third party despite requests to suspend processing, fails to destroy personal information, or fails to take necessary measures to ensure the safety of personal information, resulting in loss, theft, leakage, forgery, alteration, or damage.

However, violations related to consent procedures are not considered highly punishable. Therefore, it is more appropriate to use administrative agencies’ corrective recommendations or fines rather than immediately imposing criminal penalties. Also, imposing penalties even when a breach occurs due to negligence in taking personal information safety measures is excessive. It is difficult to find cases in other countries where such acts are subject to criminal penalties.

More fundamentally, excessive administrative punishment under economic regulatory laws causes a phenomenon of administrative dependence on the judiciary or judicialization of administration, where matters originally to be judged by administrative agencies as policy decisions are left to judicial institutions such as prosecutors and courts. Tada is such a case. In policy legislation, policy judgments considering economic and social impacts should take precedence over simple legal or illegal determinations based on wording. This not only prevents excessive burdens on the judiciary but also aligns with the principle of separation of powers.

There have been many criticisms of over-criminalization and penal absolutism in economic regulation. Although some improvements have been made, they are still unsatisfactory. It should be noted that when attempts at innovation hesitate in the face of the risks of administrative punishment, the damage inevitably returns to the state and its people. To attempt innovation without the risk of personal detention or becoming a criminal record, it is time for bolder efforts toward decriminalization and changes to other administrative and economic sanctions.

Seong-Yeop Lee, Professor at Korea University Graduate School of Technology Management, Deputy Director of Cyber Law Center