[Policy Pulse] Company or Individual: Who Should Bear Criminal Responsibility?

Lawyer Park Suman

Under Korean criminal law, corporations are not held criminally liable. Only natural persons can be subject to criminal punishment. Even if a company executive or employee offers a bribe or rebate, it is the individual who carried out the act who is punished; the company itself does not bear criminal responsibility. This is explained by the principle of culpability, which is based on the subjective awareness of intent or negligence. However, there are doubts as to whether this logic adequately reflects the realities of how companies operate today.

In practice, many crimes that become problematic are not individual deviations, but occur as an extension of company work. Individuals pursue goals set by the company, and the company, in turn, gains approvals or business results. While individuals who contribute to these results are rewarded, if problems arise, the company escapes responsibility and only the individual is punished. This is the so-called "cutting off the tail" structure.

Other countries have made different choices. In 1909, the United States Supreme Court recognized corporate criminal liability in the New York Central & Hudson River Railroad Company case, where a corporate agent had offered a rebate. Many European countries also designate corporations as subjects of criminal punishment. This approach holds organizations accountable for crimes at the organizational level.

Korea, too, has already adopted a similar mindset in the field of administrative law. Under joint penal provisions, not only the individual who violates the law but also the corporation in a supervisory position can be punished. Whether to assign responsibility for legal violations solely to individuals or to share it with organizations is ultimately a matter of policy choice.

The Constitutional Court has held that violations of the law by a corporate representative can be seen as acts of the corporation, but not those of regular employees. However, in modern companies, it is difficult to view the actions of employees as the result of truly independent decisions, free from organizational directives and performance structures.

My own professional experience makes these issues even clearer. While working at a domestic shipyard, there was a case where a contract for offshore drilling equipment, ordered by a European energy company, was terminated after construction delays. The client accepted the subsea support structure but refused to take delivery of the completed drilling equipment. While overseas arbitration was ongoing, the equipment was left abandoned in the shipyard's heavy zone. Since ownership of the equipment belonged to the client, the shipyard could not dispose of it, and as a result, the heavy zone was rendered unusable for a long period.

This was a situation where the crime of damaging property could have been an issue, as it involved diminishing the utility of another's property. However, under Korean criminal law, only individuals can be the subject of such a crime. The client corporation could not be punished from the outset, and it was practically difficult to punish any individuals on the client's side. In the end, criminal liability remained a void, and compensation discussions only began after the intention to raise an administrative law violation was communicated.

The humidifier disinfectant case is similar. Individuals such as company representatives were criminally punished, but the companies themselves, including foreign firms, were not held criminally liable. There are still doubts as to whether an investigation focused on individual punishment led to sufficient compensation for victims. Whether or not to recognize corporate criminal liability is not simply a matter of criminal law theory. It is a societal choice about how to design organizations and responsibility. Companies operating overseas need to recognize that if a corporation is subject to criminal punishment, there are significant restrictions on approvals, investment, and financing across the board.

It now seems necessary to revisit the discussion of whether pointing only to individuals as the answer to the question "Who is the criminal?" truly aligns with reality and justice.

Lawyer Park Suman