Constitutional Court Rules "Academy Act Provision on Refund of Tuition Fees Due to Simple Change of Mind by Students Is Constitutional"

The Constitutional Court has ruled that the current law provision requiring academies to refund tuition fees even when a student requests a refund due to a 'simple change of mind' does not violate the Constitution.

According to the legal community on the 3rd, the Constitutional Court upheld the constitutionality of the part of Article 18, Paragraph 1 of the "Act on the Establishment, Operation, and Private Tutoring of Academies" (Academy Act) concerning the refund of tuition fees, which states, "If a learner is unable to continue attending, the academy operator shall refund the tuition fees received from the learner."

Constitutional Court Grand Bench. Photo by Jinhyung Kang aymsdream@

Additionally, the Constitutional Court also upheld the constitutionality of the part of Paragraph 2 of the same article, which delegates the determination of reasons for refund and refund amounts to a Presidential Decree, specifically regarding the phrase "if a learner is unable to continue attending" in Paragraph 1.

Student A registered at a certified real estate agent academy operated by B in December 2018, paying approximately 1.87 million KRW for about one year’s tuition and 180,000 KRW for textbooks, covering until October 25, 2019.

However, in January 2019, A requested a refund stating that they could no longer attend the academy. When B refused, A filed a lawsuit demanding a refund of the tuition fees.

During the first trial, B petitioned the court for a constitutional review, arguing that the relevant provisions of the Academy Act violated the constitutional principle of clarity and infringed on the freedom of contract, but the petition was dismissed.

The first-instance court ruled partially in favor of A, ordering B to refund part of the prepaid tuition fees. B appealed and again requested a constitutional review from the second-instance court, but the petition was dismissed or rejected again, leading B to file a constitutional complaint directly with the Constitutional Court.

In the second trial for the tuition refund lawsuit, some of B’s appeal reasons were accepted, but the court still ruled partially in favor of A. B appealed again, but the Supreme Court dismissed the appeal, finalizing the judgment.

The Constitutional Court, with a unanimous opinion from all justices, upheld the Academy Act provision that includes even cases of simple change of mind as valid reasons for tuition fee refunds.

The Court stated, "The phrase 'if a learner is unable to continue attending' as stipulated in the current law can be reasonably understood to include not only unavoidable reasons such as illness or relocation but also all cases where the learner cannot continue attending due to reasons on the learner’s side, including a simple change of mind," and found that the provision does not violate the principle of clarity.

Furthermore, the Court held, "If the parties to the tutoring contract were allowed to freely decide on the refund of tuition fees and refund amounts, the risk of contract termination could be unfairly transferred to the learner, who is in a relatively disadvantaged position compared to the academy operator," and thus found no infringement of the freedom of contract.

B also challenged the provision (Article 18, Paragraph 2 of the Academy Act) delegating the determination of specific refund reasons and refund amounts to a Presidential Decree, but the Constitutional Court ruled, "The delegation clause does not violate the principle of legal reservation because the law directly stipulates essential matters such as the occurrence conditions and subjects of the refund obligation, while delegating only detailed and technical matters such as refund reasons and refund amounts to the Presidential Decree considering various circumstances."

The Constitutional Court dismissed B’s constitutional complaint against the Academy Act Enforcement Decree provisions, stating that it is not subject to constitutional complaints under Article 68, Paragraph 2 of the Constitutional Court Act, which applies when the unconstitutionality of a 'law' applied in a trial is at issue.

A Constitutional Court official stated, "This is the first ruling by the Constitutional Court on the relevant provisions since the 1999 amendment to the law added reasons on the learner’s side for tuition fee refunds."