Three Reasons Why the Court Acquitted Tada (Comprehensive)

Socar-Tada User Lease Agreement Recognized
"No Intentional Illegality as Law Firm Conducted Legality Review Before Service Launch"

Lee Jae-woong, CEO of Socar (right), and Park Jae-wook, CEO of VCNC / Photo by Jin-hyung Kang aymsdream@

[Asia Economy Reporter Jin-gyu Lee] The court ruled that a lease contract was established between Socar and Tada users, deeming the Tada service a "legal rental car." It also found no intentional illegality, noting that legality reviews were conducted by a law firm before the Tada service was launched.

On the 19th, Judge Park Sang-gu of the Seoul Central District Court Criminal Division 18 acquitted Socar CEO Lee Jae-woong and VCNC CEO Park Jae-wook, who were indicted for violating the Passenger Transport Service Act.

The main grounds for the court's judgment that the Tada service is legal include ▲ the establishment of a lease contract between Socar and Tada users ▲ the legislative intent of the "exception clause" in the Enforcement Decree of the Passenger Transport Service Act ▲ and the legality review conducted through a law firm before the Tada service launch.

The biggest issue in this case was whether a lease contract could be considered established between Socar and Tada users. If such a lease contract is established, Tada can be regarded as a legitimate rental car service; otherwise, it should be considered an illegal call taxi.

Previously, the prosecution argued that the Tada service was essentially a call taxi and sought a one-year prison sentence for CEOs Lee and Park. They claimed that Tada violated Articles 4 and 34 of the Passenger Transport Service Act. According to these provisions, passenger transport operators such as taxis or buses must obtain a license from the Minister of Land, Infrastructure and Transport, and paid transportation services using rented commercial vehicles are prohibited.

In response, Tada argued, "Article 18 of the Enforcement Decree, an exception clause to Article 34 of the Passenger Transport Service Act, allows driver mediation for those renting vans with 11 to 15 seats," asserting their innocence. They also emphasized that they operated a rental car business with drivers, similar to existing rental car companies.

The court viewed Tada as a legitimate rental car service. It recognized the van lease contract electronically established through the mobility platform between Socar and Tada users as a "short-term van lease" with a Tada driver arranged, and ruled that the Tada service does not constitute unlicensed call taxi operations. Ultimately, Tada was regarded as a "rental car service based on a mobile platform."

Judge Park explained, "The Tada service is a series of contracts where users do not drive themselves but rent a van driven by a Tada driver arranged by Socar through minute-based reservation calls to enhance mobility convenience. It is reasonable to see a short-term lease contract established between the user and Socar."

Regarding the prosecution's claim that Tada violated the Passenger Transport Service Act because it is essentially a call taxi, the court stated, "Interpreting the law to include van lease contracts with driver mediation like the Tada service under the scope of punishable offenses excessively expands or analogizes criminal law provisions, violating the principle of legality and thus cannot be permitted."

The court also cited the legislative intent of the exception clause in Article 18 of the Enforcement Decree of the Passenger Transport Service Act as a basis for acquittal. Judge Park said, "Considering the expansion of punishment exceptions for promoting vehicle sharing and deregulation, and the unique nature of mobility services where short-term rentals and Tada driver mediation occur simultaneously, it cannot be evaluated that economic effects of paid passenger transport have occurred."

Furthermore, the court pointed to the absence of intentional illegality, noting that legality reviews were conducted before the Tada service launch. Judge Park stated, "Legality reviews were conducted through law firms before the Tada service launch, and there appears to have been no discussion of illegality during consultations with officials from the Ministry of Land, Infrastructure and Transport. The increase in Tada users despite higher fares than taxis reflects market choice."