Former SoCar CEO Lee Jae-woong (left) and Park Jae-wook, CEO of Tada operator VCNC [Image source=Yonhap News]
[Asia Economy Reporter Kim Daehyun] The current and former executives of the vehicle-hailing service "Tada," which was embroiled in controversy over "illegal call taxi operations," were acquitted again in the second trial.
On the afternoon of the 29th, the Seoul Central District Court Criminal Appeal Division 1-1 (Presiding Judges Jang Chan, Maeng Hyun-mu, Kim Hyung-jak) acquitted former Socar CEO Lee Jae-woong, VCNC CEO Park Jae-wook (a subsidiary of Socar and the operator of Tada), and the corporations Socar and VCNC of charges of violating the Passenger Transport Service Act, just as in the first trial.
The main issue was how to legally interpret the act of Tada users requesting and using vans from Socar through the Tada app. The appellate court stated, "Users agreed to the terms of service for van rental, including driver arrangement, through the Tada app, registered as members, and then made reservation requests to use the Tada service," adding, "The agreed terms of service are a kind of disposition document, so a van rental contract was concluded between Tada users and Socar."
Furthermore, "Tada cannot be considered to have substantially operated a passenger transport business simply because it appeared similar to Kakao Taxi and others," and "The relevant enforcement ordinance at the time explicitly allowed the arrangement of drivers when renting vans with a seating capacity of 11 to 15 passengers," the court explained.
It continued, "It was an established lawful business practice for car rental companies to rent vehicles including drivers," and "Tada combined this service with IT and advanced communication technology, but the mere combination with IT technology cannot immediately render a previously lawful driver arrangement service illegal." The court also took into account that former CEO Lee and others had undergone legal reviews by law firms for several years before the service launch and had numerous consultations with the Ministry of Land, Infrastructure and Transport and the Seoul Metropolitan Government, which had responded that the service was lawful.
Immediately after the verdict, CEO Park said tearfully, "Not only we but also employees, partners, and investors have suffered greatly for three years since the indictment," adding, "I hope this result will alleviate some of that pain." He also said, "I hope there will be no setbacks caused by laws and regulations," and "I hope that this kind of incident will not happen to other startups from today onward."
Previously, Tada was a service where users could call an 11-passenger van with a driver via a smartphone application. VCNC, a subsidiary of Socar and the operator of Tada, rented cars from Socar and then rented them out again to customers along with drivers. The prosecution judged that the Tada service constituted "illegal call taxi operations" prohibited under the Passenger Transport Service Act and brought former CEO Lee and others to trial.
The defense argued that the Tada service was not transporting passengers but was a "rental car with a driver" concept and did not violate the law. The first trial accepted their argument and acquitted them in February 2020, and the second trial dismissed the prosecutor's appeal on this day as well.
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