Disability Organization Supplied Finished Products Without Direct Production... Court Rules Revocation of Certification Justified

"The association is the producer...
Supplying finished products is not a justifiable reason"

The court has ruled that the government's decision to revoke the 'direct production certification' of a disability organization that supplied products purchased from other companies, rather than producing them directly, is justified.

According to the legal community on October 27, the 5th Administrative Division of the Seoul Administrative Court (Presiding Judge Lee Jeongwon) recently ruled against the plaintiff in a lawsuit filed by the Korea Association of the Deaf against the Korea Small & Medium Business Distribution Center, seeking to overturn the revocation of its direct production certification.

The Korea Association of the Deaf, an organization established to promote the rights and welfare of the deaf, had obtained direct production certification for a total of 20 items, including 14 types of garment business locations and 6 types of machinery and electronics business locations, in accordance with the Act on the Promotion of Purchases of Small and Medium Enterprise Products and Support for Market Expansion. However, the Korea Small & Medium Business Distribution Center found that the association had supplied finished products purchased from other companies. As a result, it revoked all direct production certifications and imposed a six-month restriction on new applications.

In response, the association argued, "The entity legally regarded as a small or medium-sized enterprise is not the association itself but its garment business locations, so the revocation should be limited to those specific locations." They also asserted, "There were justifiable reasons for subcontracting production in order to meet delivery deadlines."

However, the court did not accept the association’s arguments. The court stated, "The entity that received the direct production certification is the association itself. The garment and machinery business locations are merely branches of the association and cannot be regarded as separate, independent entities," adding, "It is difficult to consider the revocation of the direct production certification as unlawful."

The court further noted, "It appears that the association entered into contracts and violated its obligations despite being fully able to anticipate the difficulty of directly producing sportswear," and concluded, "There are no justifiable circumstances in this case."

Regarding the association's claim that the relevant provision of the Market Expansion Support Act is unconstitutional because it infringes on the freedom of occupation and the right to equality of disability organizations, the court also rejected this, stating, "It cannot be said that the constitutional duty to protect people with disabilities has been disregarded or excessively restricted, nor can it be considered a violation of the principle of proportionality."