Prosecution Appeals to Supreme Court Against Tada's 1st and 2nd Trial Acquittals in 'Illegal Call Taxi Operation Controversy'

Former SoCar CEO Lee Jae-woong (left) and former VCNC CEO Park Jae-wook are entering the Seoul Central District Court in Seocho-gu, Seoul, on August 25 to attend a trial regarding the illegal controversy surrounding Tada, related to violations of the Passenger Transport Service Act. Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Kim Daehyun] As the prosecution appealed against the second-instance acquittal of former executives of the vehicle-hailing service 'Tada,' which was embroiled in controversy over 'illegal call taxi operations,' the illegality of Tada will receive a final judgment from the Supreme Court.

On the 6th, the prosecution filed an appeal with the Seoul Central District Court Criminal Appeal Division 1-1 (Presiding Judges Jang Chan, Maeng Hyun-mu, Kim Hyung-jak), which heard the second trial of former Socar CEO Lee Jae-woong, former VCNC CEO Park Jae-wook (VCNC being a former subsidiary of Socar and the operator of Tada), and the corporations Socar and VCNC, on charges of violating the Passenger Transport Service Act.

On the 29th of last month, the appellate court ruled not guilty for Lee and others, as in the first trial. It stated, "Users agreed to the terms of use for the van rental service, 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 use are a kind of disposition document, so a van rental contract was concluded between Tada users and Socar."

It further explained, "Tada cannot be regarded as having substantially operated a passenger transport business simply because it appeared similar to Kakao Taxi and others," and "The relevant enforcement ordinance in effect at the time explicitly permitted the arrangement of drivers when renting vans with a seating capacity of 11 to 15 passengers."

Moreover, it pointed out, "It had become an established lawful business form for car rental companies to rent vehicles including drivers," and "Tada combined IT and advanced communication technology with this service, but the mere combination of IT technology cannot immediately render a previously lawful driver arrangement service illegal." The court also considered that Lee and others had undergone legal reviews by law firms for several years before the service launch and had held dozens of 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 appellate court ruling, former 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 systems," 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 with drivers. The prosecution judged that the Tada service constituted 'illegal call taxi operations' prohibited under the Passenger Transport Service Act and brought Lee and others to trial.

Lee's side argued that the Tada service was not transporting passengers but was a concept of 'rental cars with drivers,' and thus did not violate the law.