The Functional Transformation of Courts: Taiwan and Korea in Comparison 9783737004909, 9783847104902, 9789863501084, 9783847004905

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Global East Asia

Volume 3

Edited by Chun-chieh Huang

Advisory Board: Roger Ames (Hawaii), Don Baker (Columbia), Carl Becker (Kyoto), Michael Friedrich (Hamburg), David Jones (Kennesaw), Bent Nielsen (Copenhagen), Jörn Rüsen (Essen), Kirill O. Thompson (Taipei), John Tucker (Carolina), Ann Waltner (Minnesota) The volumes of this series are peer-reviewed.

Jiunn-rong Yeh (ed.)

The Functional Transformation of Courts Taiwan and Korea in Comparison

With 6 figures

V&R unipress National Taiwan University Press

This book series is subsidized in part by, and published in cooperation with, the Institute for Advanced Studies in Humanities and Social Sciences, National Taiwan University.

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Bibliographic information published by the Deutsche Nationalbibliothek The Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data are available online: http://dnb.d-nb.de. ISBN 978-3-8471-0490-2 (Print, without Asia Pacific) ISBN 978-986-350-108-4 (Print, Asia Pacific only) ISBN 978-3-8470-0490-5 (e-book) ISBN 978-3-7370-0490-9 (V&R eLibrary) You can find alternative editions of this book and additional material on our website: www.v-r.de © 2015, V&R unipress GmbH, Robert-Bosch-Breite 6, 37079 Göttingen, Germany / www.v-r.de © 2015 by National Taiwan University Press, Taipei, Taiwan All rights reserved. No part of this work may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage and retrieval system, without prior written permission from the publisher. Printed in Germany. Cover image: 1. The Supreme Court of the Republic of Korea. © If you have any comment on this picture, leave it at user discussion: Pectus Solentis; 2. The Original Constitution of the Republic of Korea. © Rheo1905; 3. Constitution by 1946 National Assembly China at Nanking. © Historical Illustrations of the Republic of China (中華民國史畫); 4. Taipei, Taiwan: “Judicial Yuan”, The Highest Judicial Organ of the ROC. © CEphoto, Uwe Aranas. Printed and bound by CPI buchbuecher.de GmbH, Zum Alten Berg 24, 96158 Birkach, Germany. Printed on aging-resistant paper.

Contents

Jiunn-rong Yeh 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Part I: Courts in Constitutional and Administrative Adjudications Jiunn-rong Yeh 2 Court-ordered Apology: The Function of Courts in the Construction of Society, Culture and the Law . . . . . . . . . . . . . . . . . . . . . . . . .

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Jong-ik Chon 3 The Effect of Constitutional Adjudication on the Judicial Branch: The Relationship between the Constitutional Court and the Ordinary Court .

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Wen-Chen Chang 4 The Evolution of Administrative Adjudication in Taiwan: A Model of Judicial Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Seong-Wook Heo 5 The Judicial Review Criteria in Korean Administrative Litigation: The Proportionality Principle in Korean Administrative Law and Democratic Accountability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Part II: Courts in Civil and Commercial Adjudications Chung-jau Wu 6 The Law-making Function of the Court and the Necessity for a Second Amendment for Taiwanese Law of Contracts: An Observation from Leading Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

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Contents

Jinsu Yune 7 Judicial Activism and the Constitutional Reasoning of the Korean Supreme Court in the Field of Civil Law . . . . . . . . . . . . . . . . . . . 123 Ching-Ping Shao 8 Beyond Uncertainty: Lower Courts’ Defiance in Insider Trading Cases . 139 Hyeok-Joon Rho 9 Enforcement against Wrongdoing Directors: The Role of the Courts in Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163

Part III: Changing Courts with Civil and Criminal Procedural Reforms Kuan-Ling Shen 10 The Role of the Courts in Civil Disputes in Taiwan

. . . . . . . . . . . 187

Kang-Jin Baik 11 Civil Disputes in Korea and the New Role of the Court . . . . . . . . . 215 Rong-Geng Li 12 From an Inquisitorial to Adversarial System: The Recent Development in Criminal Justice of Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . 239 Kuk Cho 13 The Exclusion of Illegally Obtained Confessions, Electronic Communications and Physical Evidences in Korea . . . . . . . . . . . . . 267 Contributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301

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1

Introduction

Courts in Asian new democracies: Taiwan and South Korea The expansion of judicial power has been witnessed globally. Courts have entered into the center stage of comparative studies in legal and political institutions.1 In a constitutional democracy, courts are expected to independently resolve disputes in accordance with law, to place checks and balances on political powers, and to safeguard individual rights and freedoms. Even in a dictatorial or authoritarian government, courts may still function to exercise social control, sustain governing legitimacy, oversee the bureaucracy, or ensure market commitments.2 A rich body of literature has attested a critical role of courts during the process of democratization in which courts may safeguard reform consensus, steer transitional agenda, facilitate political dialogue or protect minority interests.3 These various functions of courts have attributed to the judicialization of governance across jurisdictions.4 Consequently, efforts at creating new courts, undertaking judicial reforms, providing trainings for judges and 1 See, e. g., Alec Stone Sweet, Governing with Judges: Constitutional Politics in Europe (2000); Tom Ginsburg, Judicial Review in New Democracies: Constitutional Courts in Asian Cases (2003); Ran Hirschl, Towards Juristocracy: The Origins and Consequences of the New Constitutionalism (2004); Consequential Courts: Judicial Roles in Global Perspective (Diana Kapiszewski et al. eds., 2013); Asian Courts in Context ( Jiunn-rong Yeh & Wen-Chen Chang eds., 2014). 2 See Tamir Moustafa & Tom Ginsburg, Introduction: The Function of Courts in Authoritarian Politics, in Rule by Law: The Politics of Courts in Authoritarian Regimes 1 (Tom Ginsburg & Tamir Moustafa eds., 2008). 3 See, e. g., Ginsburg, supra note 1; Hirschl, supra note 1; Jiunn-Rong Yeh & Wen-Chen Chang, The Changing Landscape of Modern Constitutionalism: Transitional Perspective, 4 Nat’l Taiwan U. L. Rev. 145 (2009). 4 See, e. g., Administrative Law and Governance in Asia: Comparative Perspectives (Tom Ginsburg & Albert H.Y. Chen eds., 2009) (discussing global phenomena of judicialization pertaining administrative governance and focusing particularly on such phenomena in Asian jurisdictions); The Judicialization of Politics in Latin America (Alan Angell et al. eds., 2005); The Judicialization of Politics in Asia (Björn Dressel ed., 2012).

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lawyers, and enacting or revising laws related to the exercise of judicial powers and judicial procedure have all been rendered.5 The global expansion of judicial powers makes no exception to Asia. Most noticeable is the judicial expansion in tandem with unprecedented political and legal reforms that have occurred in the two Asian new democracies – Taiwan and South Korea.6 Having shared a great deal of similarities in Japanese colonization and post-World War II developments, both Taiwan and South Korea became fastgrowing economies in the mid-1980s and underwent successful democratic transitions in the late 1980s and 1990s.7 In response to these profound political and economic transitions, a series of legal and judicial reforms were also undertaken.8 In Taiwan, constitutional reforms were undertaken seven times in the 1990s and 2000s. Political offices were opened for free elections on a basis of equal suffrage. As a result, government power was peacefully shifted to the long-time opposition party in 2000, and then swung back to the former ruling party in 2008. The Constitutional Court, the Council of Grand Justices vested with the exclusive power of invalidating unconstitutional laws, has functioned effectively, having produced a record in which about thirty to forty percent of challenged statutes or administrative regulations were ruled unconstitutional.9 Since the late 1990s, large-scale judicial reforms have been implemented to strengthen judicial powers, improve civic, criminal and administrative procedures as well as to enhance citizen’s access to the courts.10 These reforms include the major revisions to the Administrative Appeals Act and the Administrative Litigation Act in 1998 and the promulgation of the Administrative Procedure Act in 1999.11 In 2000, both civil and criminal procedure codes were provided with significant revisions. The revision in the Civil Procedure Law was to improve judicial efficiency and obligate courts and litigant parties for better preparation before trials.12 The Criminal 5 See, e. g., Asian Courts in Context, supra note 1. 6 See, e. g., Wen-Chen Chang, Courts and Judicial Reform in Taiwan: Gradual Transformations Towards the Guardian of Constitutionalism and Rule of Law, in Asian Courts in Context, supra note 1, at 143; Jongcheol Kim, Courts in the Republic of Korea: Featuring a Built-in Authoritarian Legacy of Centralization and Bureaucratization, in Asian Courts in Context, supra note 1, at 112. 7 See Jiunn-Rong Yeh & Wen-Chen Chang, The Emergence of East Asian Constitutionalism: Features in Comparison, 59 Am. J. Comp. L. 805 (2011). 8 See Chang, supra note 6; Kim, supra note 6. 9 Yeh & Chang, supra note 7, at 808. 10 See Chang, supra note 6, at 159–63. 11 Jiunn-Rong Yeh, Democracy-driven Transformation to Regulatory State: The Case of Taiwan, 3 Nat’l Taiwan U. L. Rev. 31, 41 (2008). 12 See Kuan-Ling Shen, The Role of the Courts in Civil Disputes in Taiwan, in The Functional Transformation of Courts: Taiwan and Korea in Comparison 187 ( Jiunn-rong Yeh ed., 2015).

Introduction

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Procedure Law was revised to add a few adversarial features into the inquisitional system.13 Additional reforms continued in the 2000s. For example, in 2010, the Fair and Speedy Trial Act was enacted to resolve the problem of prolonged criminal trials. The Judge Act was promulgated in 2011 to diversify the recruitment of judges and further ensure judicial independence. The proposal to adopt jury trials is currently under consideration.14 Similarly, South Korea revised the Constitution in 1987, paving the ground for large-scale political and legal reforms. By 1993, the former opposition was elected to the presidency and became the first civilian leader, and since then the government powers have shifted among various political parties. The Constitutional Court was created in 1988. Like its counterpart in Taiwan, the South Korean Constitutional Court also frequently ruled against the government.15 To enhance judicial checks and balances with the exercise of government powers, the Administrative Litigation Act was amended in 1994 to create an administrative court at the first instance in Seoul – the national capital – and expedite the process for individuals to sue government agencies at the courts.16 The Administrative Procedure Law was enacted in 1996 and revised twice in subsequent government reforms.17 In 2002, the Civil Procedure Law was provided with significant revisions that introduced the pre-trial system and concentration of trial.18 The substantial revision to the Criminal Procedure Law was undertaken in 2007 to further ensure due process protection of criminal defendants and improve the criminal procedure.19 Most noteworthy was the introduction of a quasi-jury system to a limited category of criminal trials in 2008.20 The reform on legal education, in which American-style law schools were introduced to replace 13 See Rong-Geng Li, From an Inquisitorial to Adversarial System: Recent Development in Criminal Justice of Taiwan, in The Functional Transformation of Courts, supra note 12, at 239. 14 See Jiunn-rong Yeh & Wen-Chen Chang, Introduction: Asian Courts in Context: Tradition, Transition and Globalization, in Asian Courts in Context, supra note 1, at 1; Chang, supra note 6. 15 Yeh & Chang, supra note 7, at 807. 16 See Tom Ginsburg, Dismantling the “Developmental State”? Administrative Procedure Reform in Japan and Korea, 49 Am. J. Comp. L. 585 (2001); Hee-Jung Lee, Administrative Litigation in Korea: Structures and Roles in Judicial Review, in Litigation in Korea 175, 177 (Kuk Cho ed., 2010). 17 Jongcheol Kim, Government Reform, Judicialization and Development of Public Law in the Republic of Korea, in Administrative Law and Governance in Asia, supra note 4, at 101, 107–08; Daein Kim, Korean Administrative Cases in ‘Law and Development’ Context, in Litigation in Korea, supra note 16, at 199, 205–06. 18 Youngjoon Kwon, Litigating in Korea: A General Overview of Korean Civil Procedure, in Litigation in Korea, supra note 16, at 1, 4. 19 See Kuk Cho, The Reformed Criminal Procedure of Post-democratization South Korea, in Litigation in Korea, supra note 16, at 58. 20 See Kim, supra note 6, at 116–18.

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traditional undergraduate law degree, was also undertaken in the hope to produce more capable judges with diverse backgrounds.21 Nearly three decades have passed since the unprecedented transition to democracy in Taiwan and South Korea. The judicial reforms implemented in tandem with democratic transitions have taken root in both countries and begun witnessing significant impacts on the operation and function of courts. What are the up-to-date pictures of courts in the respective jurisdiction? In what ways and to what extents have the function of courts been fundamentally altered? Have the perception of courts, judges and lawyers been changed? How is the relationship between courts, political institutions, citizens and the society? What varied functions, if any, do courts serve in diverse areas such as politics, administration, civil and commercial disputes or criminal law and social order? How may the comparisons between Taiwan and South Korea on the changing courts and judicial functions in the last decades shed light on the comparative study of law and courts in Asia and beyond? In order to explore these issues, we held a workshop at our College in June 2013 with the generous sponsorship of the Institute for Advanced Studies in Humanities and Social Sciences and the College of Law of National Taiwan University. Led by Professor Jong-Sup Chong, the former Dean of Seoul National University College of Law, a group of eminent judges and scholars from South Korea presented papers to the workshop. The colleagues in and outside our College were also invited to contribute papers. The chapters included in this book are substantial revisions to the original papers presented at the workshop. We are indeed very grateful to generous contributions by chapter authors from South Korea and Taiwan as well as those commentators and participants in the workshop.

Structure of the book Aside from the introduction, this book is divided into three parts, including (1) courts in constitutional and administrative adjudication, (2) courts in civil and commercial adjudication, and (3) changing courts with civil and criminal procedural reforms. Each part presents four chapters, two from Taiwan and two from South Korea. In Part I, we analyze prominent functions of courts in constitutional and administrative jurisdictions, which usually involve checks and balances with political branches, and balances between conflicting rights and values. Both Taiwan and South Korea created a constitutional court vested with the exclusive 21 Id. at 117.

Introduction

11

power in invalidating unconstitutional statutes. Both constitutional courts have been tasked with difficult constitutional challenges and proven to be more than capable of mediating even highly politicized disputes.22 Aside from the constitutional court, other courts such as the Supreme Court or the Administrative Court may also review constitutionality of rules and regulations on a case-bycase basis, and provide checks on the legality of administrative decisions. Four chapters in this part examine ways that these courts resolve conflicts and may cooperate or even compete with one another, and what particular interpretive methods or judicial policies – if any – these courts may employ in the course of dispute resolution. Part II considers the functions of courts in civil and commercial jurisdictions. Taiwan and South Korea are both advanced economies that developed recordhigh economic growths in the 1980s and survived economic crises in the late 1990s and 2000s. At the same time, Taiwan and South Korea inherited a Continental-style civil code that must be interpreted to adapt to new circumstances in a fast-changing market. The ways that the courts deliver such interpretive functions have significant impacts on the developments of market. Four chapters in this part explore whether some extents of judicial activism have occurred in Taiwan and South Korea through the exercise of creative interpretations or judgemade laws. Particularly in the area of commercial laws, courts are confronted with unprecedented challenges brought by new models of commerce with advanced technologies, and they must strike a delicate balance between free and fair market. In Part III, the significance and impacts of civil and criminal procedural reforms on the efficiency and quality of judiciaries in Taiwan and South Korea are examined. In the course of democratic transition, large-scale reforms on civil and criminal procedure have been implemented. It is particularly worth of exploring the impacts of those reforms on the judicial system and what new challenges, if any, they may have brought about. Four chapters in this part discuss the features of recent institutional reforms in civil and criminal procedures and provide their respective evaluation and assessment. In Taiwan and South Korea, civil procedural reforms were aimed at enhancing judicial efficiency while enlarge citizens’ access to the courts. The reforms on criminal justice were tailored to the strengthening of human rights guarantee particularly to the rights of criminal defendants. The overview of all book chapters and their main arguments will be briefed in the following.

22 See Yeh & Chang, supra note 7.

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Overview of book chapters Part I of this book includes Chapters 2 to 5 that endeavor to analyze the functions of constitutional and administrative courts in Taiwan and South Korea. In Chapter 2, Jiunn-rong Yeh explores the function of constitutional courts in the construction of society, culture and the law by examining the two constitutional cases in Taiwan and South Korea regarding the constitutionality of court-ordered apology. He argues that the two constitutional courts have developed two different models: reconciliation vs. modernization. In explaining the difference between the two constitutional courts, Yeh takes a contextual approach. In Taiwan, the Constitutional Court’s decision to sustain the constitutionality of courtordered apology was rendered in the context of severe political confrontation in which the Constitutional Court must endeavor to mediate all conflicting interests. In contrast, the decision of the South Korean Constitutional Court to rule against court-ordered apology was made in the early stage of democratization when the Constitutional Court strived to create its institutional authority and legitimacy by developing a modernization model based on the discourse of rule of law and constitutionalism. In Chapter 3, Jong-ik Chon analyzes the influence of the Constitutional Court on the ordinary courts of South Korea, with a particular focus on the interaction between the Constitutional Court and the Supreme Court. He argues that the tensions and conflicts between the Constitutional Court and the Supreme Court may result from the decisions of the Constitutional Court in which impugned statutes are found with limited unconstitutionality or limited constitutionality. As the application of such decisions usually requires further interpretations, the interpretive powers of the Supreme Court may collide with that of the Constitutional Court. To resolve such conflicts, he proposes to adopt a system of unimpaired constitutional complaint modeled on European constitutional courts by revising article 68(1) of Constitutional Court Act that excludes judgments of ordinary courts from constitutional review. In Chapter 4, Wen-Chen Chang recapitulates the development of administrative adjudication in Taiwan from both historical and institutional perspectives. According to her, administrative adjudication in Taiwan has developed into effective judicial checks and balances with the exercise of government powers despite the lack of administrative law reforms prior to the late 1990s. She argues that such a profound transformation has been rendered through the decades-long cooperation between administrative courts and the Constitutional Court. It has been in the agenda of the Constitutional Court to liberally construe the concept and application of administrative disposition in order to permit more cases to be brought before the administrative court. At the same time, the administrative court – albeit in a much more cautious fashion – also initiated a

Introduction

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liberal approach to the construction of its own jurisdictions, which was encouraged and supported by the Constitutional Court. The strong cooperation between the two courts has rendered a velvet transformation of administrative adjudication in the absence of legislative reforms in Taiwan. In Chapter 5, Seong-Wook Heo discusses how the principle of proportionality has been employed in administrative adjudication of South Korea to check and balance with administrative powers. He finds frequent applications of proportional principle in administrative cases, an indication of stronger judicial review on discretionary exercise of administrative powers. However, he cautions the reliance of proportional principle especially in the context of scientific uncertainty and considers alternatives. As courts may not be the most appropriate mechanism to engage in the consideration of all relevant factors demanded by the principle of proportionality, some deference must be given to the administrative branch. He thus concludes with a proposal to develop a more appropriate and sophisticated version of proportional principle by reconstructing the Chevron deference principle developed in the American administrative law. Part II of this book includes Chapters 6 to 9, aimed at analyzing how courts may be called upon to develop interpretations to adapt to fast-changing circumstances in the area of civil and commercial laws. In Chapter 6, Chung-jau Wu discusses the interpretive function of civil courts with a particular focus on conflicting cases regarding the statute of limitations. Having analyzed the leading cases on the statute of limitations, the types of performance irregularities and the rules of non-conformity performance, he finds that civil courts in Taiwan have made tremendous progress in clarifying the vagueness of legal terms in the Civil Code. Yet, he argues that such judge-made laws – however creative – still cannot undo the injustice resulted from legal vagueness or improves the insufficiency of the law. He thus urges the legislature to promptly make a second amendment to the law of obligation in the Civil Code that shall be consistent with the model of the unified European private law or the German Civil Code. In Chapter 7, Jinsu Yune discusses the recent trend of judicial activism demonstrated by the South Korean Supreme Court in the field of civil law. Having examined the leading cases on interpretive law-making, constitutional review of customary law, and the horizontal effect of human rights in the private sphere, he finds a strong indication of judicial activism in the Supreme Court. Although the Supreme Court does not possess the power of constitutional review, it has nevertheless frequently cited the Constitution to justify decisions and extended the use of constitutional reasoning to private disputes. To explain such judicial activism held by the Supreme Court, Yune takes an institutional approach. He argues that the conflict and competition between the Constitutional Court and the Supreme Court is the main cause of judicial activism in the Supreme Court of South Korea.

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In Chapter 8, Ching-Ping Shao examines the causes of difficulties in the judicial enforcement of insider trading law in Taiwan. He finds that although the insider trading law was promulgated in 1988, prosecutions against insider trading have been rare, and the conviction and non-reversal rates have been considerably low. Despite the recent reform in creating a specialized division in lower courts to deal with insider trading cases, the low enforcement has not been ameliorated. In view of him, the cause of such poor enforcement in insider trading cases may come from the potential expertise gap between the lower courts and the Supreme Court. He argues that more substantive discussions in the related issues are needed between the judges of the Supreme Court and their colleagues in the lower courts, and suggests the Supreme Court to refer to scholarly works in relevant cases as a starting point to channel better dialogues and overcome the conflicts of legal opinions in the judicial hierarchy. In Chapter 9, Hyeok-Joon Rho analyzes the role of courts in legal enforcement of wrongdoing directors in South Korea. Having studied the current situations, he finds that criminal punishment against wrongdoing corporate directors has been considerably more frequent than civil sanctions. He cautions that overcriminalization may produce injustice and undermine corporate governance, and that a balance between criminal prosecution and civil sanction must be struck. As the Korean civil and criminal courts have dealt with an increasing number of cases regarding errant directors, Rho argues that the courts should become more active in striking the balance, while the Korean legislature must consider reforming corporate laws to permit courts to provide even ex ante functions in the adjudication of major corporate transactions. Part III of this book presents Chapters 10 to 13 that examine the impacts of civil and criminal procedural reforms on the judicial systems of Taiwan and South Korea. In Chapter 10, Kuan-Ling Shen discusses the reforms of the Civil Procedure Law in Taiwan and analyzes the changing roles of the court after the reforms. Having provided an overview of the recent reforms, she finds that the courts have increasingly emphasized the importance of procedural interests, and that the judges are obligated to elucidate to litigant parties in order to avoid unpredictable decisions. Aside from objectively adjudicating over substantive rights, the courts are also required to pay respect to the autonomy of litigant parties on their decisions regarding the scope and conduct of proceedings. Another critical reform in the Civil Procedure Law is the introduction of courtconnected mediation to expand the scope of mandatory mediation, to facilitate the role of mediators, to create a new mediation system and most importantly, to transform first-instance litigation to mediation by the agreement of litigant parties. In view of Shen, these recent reforms have their unique strengths and weaknesses. In order to improve public confidence in the judiciary, further efforts must be rendered to enhance the quality of litigation system.

Introduction

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In Chapter 11, Kang-Jin Baik discusses the features of recent institutional changes in the civil procedure of South Korea and assesses their impacts on the operation of judicial system. Having introduced the brief history and guiding principles in the Korean civil procedure, he analyzes the new challenges to the course due to changing economic circumstances and technological advancement. In response, the recent institutional reforms of civil procedure included the introduction of the Electronic Litigation System enhancing the access to courts, profound changes to the alternative dispute resolution system, and active participation of judges in litigation process. While the impacts of these reforms remain to be seen, Baik concludes that the ability of judges in strategically employing new procedural devices would be critical to the success of the reforms. In Chapter 12, Rong-Geng Li analyzes a series of important reforms on criminal procedures in Taiwan. In order to transform the nature of criminal procedure from inquisitorial to adversarial, these reforms include certain main features such as the change in judge’s obligation to gather evidence, the examination of witness and expert witness by litigant parties, the adoption of plea bargaining, and last but not the least, the improvement of sentencing proceedings. Notwithstanding the reforms leaning towards an adversarial system, Li argues that some strong characteristics of the previous inquisitorial system still remain, and that there are still violations of the presumption of innocence and the burden of proof born by public prosecutors. He thus concludes with a strong call for further reforms and more studies on the impacts of these recently adopted reforms. In Chapter 13, Kuk Cho analyzes the “constitutionalization of criminal procedure” that has profoundly transformed the theory and practice of the Korean criminal justice system. The focus of such constitutionalization is placed on the recent adoption of exclusionary rules in criminal procedure by Korean courts and legislature. The reforms include three categories of the exclusions: (1) the exclusion of incriminating statements obtained in the process of illegal arrest or interrogation, (2) the exclusion of communications by illegal wiretapping, and (3) the exclusion of physical evidences obtained by illegal search-and-seizure. Notwithstanding the reforms, Cho criticizes that these recent reforms are still advantageous to law enforcement authorities. Yet, he remains hopeful that these exclusionary rules can provide better legal grounds for criminal suspects to challenge police misconducts.

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Conclusion: similarity, difference and challenge It is evident that the expansion of judicial power has taken a firm ground in both Taiwan and South Korea. The active judicial involvements in various constitutional, administrative, civil, commercial and criminal jurisdictions have been strongly witnessed in both countries. The phrase of “judicial activism” has been – in varying extents – employed to describe constitutional, administrative, civil, and criminal courts of Taiwan and South Korea. The courts in Taiwan and South Korea have transformed from a traditional third-party arbiter to an active participant, a creative interpreter, or even a strategic institutional player in the process of dispute resolutions encompassing political, economic, civil, commercial and criminal cases. Time and again, the courts are called upon to resolve contentious disputes and tested their capacities as well as wisdoms. Of all comparative features in the judicial systems of Taiwan and South Korea, competitive or cooperative relationship between collegial or hierarchical courts and the impacts on the operation of judicial system deserves a special attention. In South Korea, the competitive relationship between the Supreme Court and the Constitutional Court has been discussed in Chapter 3 and Chapter 7. As contentious as it may be, the competitive relationship between the Supreme Court and the Constitutional Court has – in unintended and unexpected ways – caused the embrace of judicial activism by the two courts, especially the Supreme Court. Interestingly however, in Taiwan, it has been through the cooperation between the administrative court and the Constitutional Court that the expansion of administrative adjudication was made possible. Chapter 4 has vividly demonstrated how the cooperative model has rendered a velvet transformation of Taiwan’s administrative adjudication even in the absence of legislative reforms. It is also worthy of noting that the expertise gap between the lower courts and the Supreme Court – as Chapter 8 argues – may cause low conviction rates and a poor record in the enforcement of insider trading laws. In both Taiwan and South Korea, large-scale and serious procedural reforms have been recently implemented. While the impacts remain to be seen, these reforms – initiated by the legislature or the judiciary – are the crystallization of democratic transitions and constitutional reforms in both countries. It is thus little wonder that these reforms may be understood as “constitutionalization” or “judicialization” as courts are increasingly demanded to better ensure fundamental rights and freedoms, to provide stronger checks and balances with the exercise of government powers, and to more swiftly respond to social and economic challenges. With such ever-stronger demands for courts, new challenges undoubtedly lie ahead. The capacity of judges, quality of judicial decisions and public confidence in the judiciary represent just a few examples of those pressing improvements. The other option is to strengthen the alternative dispute reso-

Introduction

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lution system in order to strike a better balance between judicial and non-judicial dispute resolution systems. Unequivocally, the judicial reforms in both Taiwan and South Korea have been off a great start. The success of these reforms will have tremendous impacts on the development of courts and constitutionalism in Asia and around the globe. The journey to the strengthening of judicial powers in modern constitutional governance has never been easy, and it is our sincere hope that this book represents one of the important steps to lead such a journey far beyond.

References Angell, A., Schjolden, L., & Sieder, R. (Eds.). (2005). The judicialization of politics in Latin America. Basingstoke, UK: Palgrave Macmillan. Chang, W.-C. (2014). Courts and judicial reform in Taiwan: Gradual transformations towards the guardian of constitutionalism and rule of law. In J.-r. Yeh & W.-C. Chang (Eds.), Asian courts in context (pp. 143–182). Cambridge, UK: Cambridge University Press. Cho, K. (2010). The reformed criminal procedure of post-democratization South Korea. In K. Cho (Ed.), Litigation in Korea (pp. 58–86). Northampton, MA: Edward Elgar. Dressel, B. (Ed.). (2012). The judicialization of politics in Asia. New York, NY: Routledge. Ginsburg, T. (2001). Dismantling the “developmental state”? Administrative procedure reform in Japan and Korea. American Journal of Comparative Law, 49, 585–625. Ginsburg, T. (2003). Judicial review in new democracies: Constitutional courts in Asian cases. New York, NY: Cambridge University Press. Ginsburg, T., & Chen, A. H. Y. (Eds.). (2009). Administrative law and governance in Asia: Comparative perspectives. New York, NY: Routledge. Hirschl, R. (2004). Towards juristocracy: The origins and consequences of the new constitutionalism. Cambridge, MA: Harvard University Press. Kapiszewski, D., Silverstein, G., & Kagan, R. A. (Eds.). (2013). Consequential courts: Judicial roles in global perspective. New York, NY: Cambridge University Press. Kim, D. (2010). Korean administrative cases in “law and development” context. In K. Cho (Ed.), Litigation in Korea (pp. 199–218). Northampton, MA: Edward Elgar. Kim, J. (2009). Government reform, judicialization and development of public law in the Republic of Korea. In T. Ginsburg & A. H.Y. Chen (Eds.). Administrative law and governance in Asia: Comparative perspectives (pp. 101–126). New York, NY: Routledge. Kim, J. (2014). Courts in the Republic of Korea: Featuring a built-in authoritarian legacy of centralization and bureaucratization. In J.-r. Yeh & W.-C. Chang (Eds.), Asian courts in context (pp. 112–142). Cambridge, UK: Cambridge University Press. Kwon, Y. (2010). Litigating in Korea: A general overview of Korean civil procedure. In K. Cho (Ed.), Litigation in Korea (pp. 1–30). Northampton, MA: Edward Elgar. Lee, H.-J. (2010). Administrative litigation in Korea: Structures and roles in judicial review. In K. Cho (Ed.), Litigation in Korea (pp. 175–198). Northampton, MA: Edward Elgar.

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Moustafa, T., & Ginsburg, T. (2008). Introduction: The function of courts in authoritarian politics. In T. Ginsburg & T. Moustafa (Eds.), Rule by law: The politics of courts in authoritarian regimes (pp. 1–22). New York, NY: Cambridge University Press. Sweet, A. S. (2000). Governing with judges: Constitutional politics in Europe. New York, NY: Oxford University Press. Yeh, J.-R. (2008). Democracy-driven transformation to regulatory state: The case of Taiwan. National Taiwan University Law Review, 3, 31–59. Yeh, J.-R., & Chang, W.-C. (2009). The changing landscape of modern constitutionalism: Transitional perspective. National Taiwan University Law Review, 4, 145–183. Yeh, J.-R., & Chang, W.-C. (2011). The emergence of East Asian constitutionalism: Features in comparison. American Journal of Comparative Law, 59, 805–839. Yeh, J.-r., & Chang, W.-C. (2014). Introduction: Asian courts in context: tradition, transition and globalization. In J.-r. Yeh & W.-C. Chang (Eds.), Asian courts in context (pp. 1–74). Cambridge, UK: Cambridge University Press. Yeh, J.-r., & Chang, W.-C. (Eds.). (2014). Asian courts in context. Cambridge, UK: Cambridge University Press.

Part I: Courts in Constitutional and Administrative Adjudications

Jiunn-rong Yeh

2

Court-ordered Apology: The Function of Courts in the Construction of Society, Culture and the Law

1

Introduction

Recently, a Taiwanese fishing boat was raided by a Filipino coast guard vessel, resulting in one fisherman’s death. As public outcry suddenly erupted, the government of Taiwan demanded an official apology from the Philippine Government within 72 hours. Very often, Korean and Taiwanese people demand that the Japanese Government apologize for the harm they caused to “comfort women” during World War II. Also, in 2001, the Japanese Government requested a sincere apology from the U.S. Government and from a U.S. Navy submarine for an accident that killed nine members and students on board the Japanese vessel Ehime Maru.1 Apologies have been an important measure to remedy harms in many societies, East and West, ancient and contemporary. When a person has said something that may cause harm to another’s reputation, an apology may help to eliminate injury, prevent antagonistic behavior, and repair damaged relationships.2 Failing to apologize following injury is sometimes regarded as a deeply disrespectful act and thus becomes a second injury. Interestingly, in many Asian countries, courts have been used as a mechanism to force a wrongdoer to apologize. More interestingly, court-ordered apologies in defamation cases have triggered constitutional debates on the wisdom of this judicial function. In Hong Kong, a paraplegic felt insulted by a taxi driver and the court ordered the defendant to apologize to him.3 Earlier in Japan, court-ordered apologies also

1 On February 9, 2001, the USS Greeneville, a U.S. navy submarine, surfaced on a training maneuver near Hawaii and accidently hit the Ehime Maru, a Japanese high school training ship. Nine members on board the Ehime Maru died. See Stephanie Strom, Sub Incident Erodes Trust in Japan Chief and the U.S., N.Y. Times, Feb. 18, 2001, http://www.nytimes.com/2001/02/ 18/world/sub-incident-erodes-trust-in-japan-chief-and-the-us.html. 2 See Jonathan R. Cohen, Advising Clients to Apologize, 72 S. Cal. L. Rev. 1009, 1019–23 (1999). 3 See Ma Bik Yung v. Ko Chuen, [2001] 4 H.K.C. 119 (C.F.A.) (Hong Kong).

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triggered constitutional issues.4 Both in Taiwan and Korea, the constitutional courts were requested to rule whether court-ordered apology is constitutional when the defendant doesn’t really feel sorry in defamation charges. These cases are controversial, on the one hand because they touch upon the constitutional concern of freedom of speech and freedom of conscience. On the other hand, the meaning of “face” and apology stand out in the context of Asian culture. Taiwanese and Korean constitutional courts, while facing the same issue, rendered completely opposite rulings. Whereas Taiwan’s Constitutional Court embraces the function of the court-ordered apology, the Korean Constitutional Court ruled court-ordered apology as unconstitutional for its infringement of freedom of conscience.

2

Court-ordered apology cases in Taiwan and South Korea

2.1

Taiwan’s case

The year 2000 marked a year of new beginnings for Taiwan, as for the first time, the long-time opposition party, Democratic Progressive Party (DPP), trumped the ruling party, Kuomintang (KMT), in the presidential election and accomplished the first regime change in the history of Taiwan. The newly elected Chen Shui-bian administration was vulnerable due to relative inexperience and an aggressive reform agenda in the minority government. In 2001, a magazine – The Journalist – reported that Vice President Annette Lu Hsiu-lien made a phone call to the media and disclosed information against the President. The DPP regime led by President Chen became even more turbulent, and distrust prevailed within the government and DPP. Vice President Lu claimed that the report was unfounded and sued The Journalist for defamation. After the long trial, the district court ruled in favor of the Vice President, and ordered The Journalist to compensate for her loss. Included in the compensatory measures was for the magazine company to publish an open apology in 18 newspapers, and broadcast on 14 television channels, according to Article 195, paragraph 1 of the Civil Code of Taiwan. The Article prescribed: For any unlawful offense against the body, health, reputation, freedom, credibility, privacy, chastity of an individual, or aggravated unlawful infringement on other [personal] legal interests, the injured individual may petition for proper monetary com4 See Saiko¯ Saibansho [Sup. Ct.] July 4, 1956, Sho¯ 18 (o) no. 1241, 10 Saiko¯ Saibansho minji hanreishu ¯ 785 ( Japan).

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pensation. Those whose reputation is injured may further petition for proper disposition to restore that reputation.

Based on the latter part of the provision, an individual whose reputation is injured may ask the court to render proper disposition, including a court-ordered apology, to restore his reputation in addition to monetary compensation. As a result, the defendants had to publish the full text of the court’s decision in Taiwan’s four major newspapers. Facing the defendants’ resistance, the court even drafted the apology for the defendants when they refused to obey the ruling.5 Such decision was upheld by the Supreme Court upon the defendants’ appeal.6 The defendant petitioned the Constitutional Court to review the constitutionality of the Civil Code provision. In fact, court-ordered apologies are not new to Taiwan. Since 1929, the Civil Code has authorized victims of defamation to petition for proper disposition, and the courts have sanctioned the plaintiff ’s petition from time to time.

2.2

Korean case

A similar case occurred earlier in Korea. In 1988, a Korean newspaper company Dong-a Ilbo published a story about Kim Song-hi, a former Miss Korea. Kim brought a civil suit against Dong-a Ilbo, its president and the Chief Editor of Women Dong-a for compensation and apology, arguing that her reputation was damaged by the report. Article 764 of the Korean Civil Code states: “The court may, on the application of the injured party, order the person who has impaired another’s fame to take suitable measures to restore the injured party’s fame, either in lieu of, or together with damages.” In theory and in precedent, an order of notice of apology had been generally accepted as a suitable measure to restore the plaintiff ’s reputation, and had been understood to be enforceable through substitute enforcement.7 Prior to ruling on the case, the publisher asked a Seoul district court to petition the Constitutional Court to review the constitutionality of Article 764 of the Korea Civil Code. The publisher claimed that the statutory apology requirement is unconstitutional as it infringed freedom of conscience and freedom of the press. When the publisher’s motion for constitutional review was denied by the court, it directly petitioned the Constitutional Court. 5 See High Court, Civil Division, 91 Shang No. 403 (2002) (Taiwan). 6 See Supreme Court, Civil Division, 93 Tai-Shang No. 851 (2004) (Taiwan). 7 See Constitutional Court [Const. Ct.], 1989Hun-Ma160, Apr. 1, 1991, (1991 KCCR, 3) (S. Kor.) [hereinafter 1989Hun-Ma160].

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2.3

Judgment and reasoning in comparison

The approach adopted by these two courts was actually very similar. They all framed the issue as an infringement of freedom, and examine the constitutionality of the concerned statute by referring to the principle of proportionality. Interestingly, these two courts made very different judgments. In 2009, the Constitutional Court of Taiwan rendered its J.Y. Interpretation No. 656 and held the disputed article to be constitutional, only suggesting that the court in civil defamation litigations should “carefully weigh in the severity of the unlawful infringement on the [personal] interest against the contents of the imposed expression before rendering a proper decision.”8 The Korean Constitutional Court, on the contrary, held that the state-ordered apology was an excessive and unnecessary restriction of constitutional rights. The Court believed that forcing a reluctant person to apologize to the plaintiff in a news column violates the defendant’s constitutionally protected freedom of conscience. Looking at the reasoning of these two rulings, we found at least three major divergences. 2.3.1 Freedom of speech vs. freedom of conscience The first difference between the two judgments is the basis of right infringement. While in J.Y. Interpretation No. 656 Taiwan’s Constitutional Court derived its reasoning from the basis of freedom of speech, the Korean judgment ruled instead on the basis of freedom of conscience. The Constitutional Court of Taiwan included the freedom of silence (or freedom to withhold expression) in constitutionally protected freedom of speech and suggests that a court-ordered apology may violate the freedom of speech. The Court stated: While the State may impose limitations on the freedom to withhold expression in accordance with the law, given that there may be a wide variety of causes to withhold, the inner beliefs and values that concern morality, ethics, justice, conscience, and faith are essential to the spiritual activities and self-determination of individuals, and are indispensable to maintain and protect the individual sovereignty and [personal] integrity.9

The Korean Constitutional Court took the route of freedom of conscience. The Court first elaborated the content of the freedom of conscience to include “those values or judgments in inner thoughts affecting one’s formation of personality.” 8 J.Y. Interpretation No. 656 (2009) (Taiwan). 9 Id.

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The Court further stated that the freedom of conscience protects freedom of inner thoughts from the state’s intervention of people’s ethical judgment of right or wrong, and also protects people from being forced by the state into making public their ethical judgments. In line with this reasoning, the Constitutional Court viewed a court-ordered apology as compelling an individual admitting no wrong on his part to confess and apologize for his conduct, “distort[ing] his conscience and forc[ing] a dual personality upon him by ordering him to express what is not his conscience as his conscience.” Therefore, a court-ordered public apology cannot be a constitutionally permitted form of appropriate measures for restoring the tarnished reputation as stipulated in the Korean Civil Code. 2.3.2 Rights conflicts vs. state-imposed restriction The second difference lies in the formation of the issue. In the Korean case, the Court deemed the court-ordered apology as a state action that infringed the rights of citizens. As a result, the approach of the Court was to examine the state regulation under the constitutional requirement of proportionality. In contrast, in the eyes of Taiwanese Constitutional Court, a court-ordered apology is a legal measure for the purpose of protecting another right – the right to reputation. This measure has been taken as the proper disposition to restore reputation in judicial practice and precedents. In the beginning of the reasoning, the Constitutional Court of Taiwan stated that court-ordered apology is for the fulfillment of the right to reputation. It reasoned, “The right to reputation, necessary in the realization of human dignity, aims to maintain and protect the individual sovereignty and [personal] integrity.” The Court further suggested that the purpose of the disputed Civil Code provision “is to maintain the reputation and to protect the [personal] rights of the injured party.” As a result, the constitutionality of a court-ordered apology depends on the purpose of restoring reputation and the limits to the freedom of conscience under the principle of proportionality. 2.3.3 Necessary remedy vs. improper measure The two courts are divergent in the assessment of the reasonableness of the courtsanctioned apology. The Constitutional Court of Taiwan took court-ordered apologies as a proper and necessary means to restore reputation. First, considering that monetary compensation may not be sufficient to restore harms to reputation, the Court held that the objective of Article 195 was justifiable. The Court stated:

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In light of the fact that individual cases concerning the injury of reputation vary and [that] monetary damages may not necessarily be sufficient to compensate or restore [the injured] reputation, it is a justifiable objective to authorize the court to render proper disposition.10

Second, the Court suggested that court-ordered public apology does not exceed the scope of necessity when the court, taking the circumstances into account, deems it to be a proper disposition.11 Taiwan’s Constitutional Court, however, did not leave the measure unconstrained. The Constitutional Court reasoned that a court-ordered apology can be rendered only if the court should find such measures as having the offender bear all expenses for the publication of a clarification statement, a note on the injured party’s judicial vindication, or the contents of the court judgment, in whole or in part, are still not sufficient to warrant the restoration of the injured party’s reputation; provided that the court has weighed in the severity of damage to the reputation, the identity of both parties, and the offender’s economic status.12

In other words, although courts can constitutionally order an offender to apologize, they should carefully consider and take the measure only when no other effective measures are available. Furthermore, if a court-ordered public apology has the effect of humiliating the defendants, it may exceed the scope of necessity and over-restrict a citizen’s freedom of silence.13 For the Constitutional Court of Korea, a state-coerced apology is an improper and unnecessary measure. Formulating the court-ordered apology as a violation of freedom of conscience, the Court applied the principle of proportionality and held that a forced public apology is an excessive and unnecessary restriction of rights since monetary and other suitable forms of remedy are available. The Korean Court first questioned the effectiveness of court-ordered apology in restoring reputational harm. The Court suggested that if an apology were forcibly imposed by the state upon the media organization, it would not be made out of sincerity and would be meaningless to the victim. Therefore, a court-ordered apology is improper, precisely because it was coerced, and, as a result, insincere and meaningless. The Korean Court then addressed the question of necessity from a comparative perspective. The Court, noting the libel laws of several Western countries including the United States, set forth three alternatives to public apologies under the Korean Civil Code: (1) publication in media, such as newspapers and magazines, of the court opinions in civil libel cases at the defendant’s expense; (2) 10 11 12 13

Id. See id. Id. Id.

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publication in media, such as newspapers and magazines, of the court opinions against the defendant in criminal libel cases; (3) a notice of retraction of defamatory stories.14 The Court believed that these measures raise less constitutional issues and restrictions, proving that a court-ordered apology is not the least restrictive measure in restoring reputational harm. The Court even went on to argue that a coerced public apology is essentially a “retributive” measure, which is allowed in none of the so-called “advanced” or “civilized” nations of the world. As a result, whereas the Taiwanese Court declared Article 195 of the Civil Code constitutional, the Korean Court declared the court-ordered apology unconstitutional while leaving Article 764 of the Korean Civil Code intact.

3

Legal debates on court-ordered apology

The comparison of the two judgments in Taiwan and Korea reflects underlying legal debates.

3.1

The subject of review

One Taiwanese scholar Chien-Liang Lee suggests that it is confusing which subject was under constitutional review: the provision of the Civil Code, or the judgments of the court.15 Since the Civil Code article does not prescribe courtordered apologies, it is the courts that develop and apply the measures to force the defendant to apologize. Thus, what the Constitutional Court actually reviewed were the judgments and precedents instead of the Civil Code provision. The dissenting opinion delivered by two Constitutional Court Justices contended that the Court should not have reviewed ordinary courts’ opinion.16

3.2

Rights and restriction

The Constitutional Court of Taiwan suggested that the right infringed by the concerned provision was the freedom of silence, or the passive freedom to withhold expression. Scholar Chien-Liang Lee suggests that freedom of silence closely 14 See 1989Hun-Ma160. 15 See Chien-Liang Lee, Forced Public Apology and Constitutional Protection of Human Dignity: Balancing the Legal Interests of the Freedom to Withhold Expression and the Right of Reputation in Torts Cases – J.Y. Interpretation No. 656, 127 Taiwan L.J. 221 (2009) (in Chinese). 16 See J.Y. Interpretation No. 656 (2009) (dissenting, Justice Chi-Ming Chih) (Taiwan).

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involves inner spiritual movements and inner autonomy, which is the freedom of conscience. In other words, the passive freedom of silence, although related to the freedom of speech, is similar to the freedom of conscience. If freedom of conscience is the most protected right, it can be restricted only in very exceptional situations. Lee says that because of the close relationship between freedom of thoughts and human dignity, the freedom of silence should be absolute and unrestricted.17 The opinion of Lee echoed the judgment of the Korean Court, which derived its reasoning on the basis of freedom of conscience. However, a Korean scholar also disagrees with this approach. Dai-Kwon Choi argues that, if other courtordered sanctions, including injunctions or fines, are morally correct, a courtordered apology is not a matter of conscience. For freedom of conscience to be relevant, one has to show a strong moral conviction against the legal demand rather than merely unwillingness to follow the law. He further suggests that the defendant’s refusal to comply with the court’s order is perhaps because he thinks such an act is degrading. In that case, the issue is whether a court-ordered apology encroaches on one’s freedom of action, rather than one’s freedom of conscience.18 Even if freedom of conscience could be infringed by the court order, he further argues, the defendant as a corporation couldn’t possess such freedom.19

3.3

Necessary and proper

The criticism of J.Y. Interpretation No. 656 of Taiwan relates to the confusion between a statute and a judgment as the object of judicial review. Lee observes that the Constitutional Court first put the objective of the disputed statute under examination of proportionality and then recognized the legal authorization to make proper disposition as a justifiable objective. In this stage, the Court did not aim at the court-ordered apology. However, in the subsequent argument, the Court seemed to shift its focus from the statute itself to ordinary court’s interpretation of the disputed statute, and to examine whether ordinary court’s decision violated the principle of proportionality.20 Finally, Taiwanese Constitutional Court held the whole article constitutional. However, concerning its impact on the freedom of conscience, Lee suggests that the Court should have held the article partially unconstitutional. 17 See Lee, supra note 15. 18 See Dai-Kwon Choi, Freedom of Conscience and the Court-ordered Apology for Defamatory Remarks, 8 Cardozo J. Int’l & Comp. L. 205, 209–10 (2000). 19 Id. at 218. 20 See Lee, supra note 15.

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On the other hand, Korean scholars challenge the judgment of the Korean Court. They first question the effectiveness of an insincere apology in remedying psychological harm caused by defamation, and then question whether there are other sufficient and effective measures in restoring reputational harm. They believed that in Korean culture, a forced apology is a proper and necessary measure to restore reputational harm.

4

Cultural perspective on court-ordered apology

Court-ordered apologies are common in Asian countries. In addition to Taiwan and Korea, some other Asian countries prescribe court-ordered apology in their laws. In Japan, the court may, at the request of the victim, order a person who defamed others to effect appropriate measures to restore the reputation of the victim.21 In Singapore, the Libel Act suggests that apology can reduce the burden of compensation.22 In addition to legislations, courts in Asia order the offenders in defamation cases to apologize more often than in other jurisdictions. In Taiwan and Korea, court-ordered public apologies have been indeed a paradigmatic form of “appropriate measures” to restore reputation. However, a court-ordered apology in other jurisdictions has not been as common as in Asia. Some scholars thus join the debate through a cultural perspective.

4.1

Apology in the West

Apology is important in almost every culture, including Western societies. For example, in the United States, Congress apologized to Japanese Americans interned during World War II;23 Senator Trent Lott apologized for comments supportive of segregation;24 and a Boston’s Catholic Cardinal offered an apology to victims of sexual abuse when he resigned.25 In the United States, public apologies are played out on an open stage rather than, as in the case of private 21 See Civil Code, art. 723 ( Japan). 22 See Defamation Act, 1957, c. 75, § 10 (Singapore). 23 See Irvin Molotsky, Senate Votes to Compensate Japanese-American Internees, N.Y. Times, Apr. 21, 1988, http://www.nytimes.com/1988/04/21/us/senate-votes-to-compensate-japane se-american-internees.html. 24 See Sheryl Gay Stolberg, Under Fire, Lott Apologizes for His Comments at Thurmond’s Party, N.Y. Times, Dec. 10, 2002, http://www.nytimes.com/2002/12/10/politics/10LOTT.html. 25 See Laurie Goodstein, Archdiocese of Louisville Reaches Abuse Settlement, N.Y. Times, June 11, 2003, http://www.nytimes.com/2003/06/11/us/archdiocese-of-louisville-reaches-abusesettlement.html.

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apologies, behind the curtains of intimate relationships. They are not only a powerful means of healing relationships, but also a way to convey important social messages and teach valuable public lessons that private apologies cannot.26 The rule of public apologies differs profoundly from those of their private counterparts. However, monetary compensation is the primary remedy for defamation instead of apology.27 Basically, the U.S. legal system does not provide a mechanism to force reluctant defendants to accept responsibility by apologizing, despite some recent studies promoting court-ordered apologies.28 In the common law system, plaintiffs in defamation litigations sometimes ask for the offender’s public apology. However, the courts in the United States have been reluctant to order apologies. In Pennsylvania Human Relations Commission v. Alto-Reste Park Cemetery Association, the court did not permit the plaintiff ’s request for a forced public apology.29 In Woodruff v. Ohman, the court refused to order a forced apology for it may have significantly infringed the defendant’s belief.30 The United States District Court for the Eastern District of Pennsylvania, in the judgment of Frederick v. Shaw, rejected the plaintiff ’s request for an apology letter because it was without “legal basis.”31 In the U.S., a common reason to object court-ordered apologies is that they violate the First Amendment, which protects both the right to speak and not to speak. The Supreme Court grounded the right not to speak in the right to freedom of thought and conscience, and then expanded the doctrine to include the right to refrain from stating an objective fact. The right is not only shared by individuals, but also by legal persons.32

4.2

The culture of “face” in Asia

Some suggest that different attitudes toward court-ordered apologies derive from cultural contexts. For example, Choi states that in Korean culture, “an apology is both highly desirable and meaningful in a culture where it is demanded of a wrongdoer and where it facilitates dissolution of a dispute.”33 26 Brent T. White, Say You’re Sorry: Court-ordered Apologies as a Civil Rights Remedy, 91 Cornell L. Rev. 1261, 1267 (2006). 27 Louis Michael Seidman, Silence and Freedom 29 (2007). 28 White, supra note 26, at 1262–63. 29 See Pennsylvania Human Relations Commission v. Alto-Reste Park Cemetery Association, 306 A. 2d 881 (Pa. Sup. Ct. 1973). 30 See Woodruff v. Ohman, 29 Fed. Appx. 337 (6th Cir. 2002). 31 See Frederick v. Shaw, No. CIV. A. 92–0592, 1994 WL 57213 (E.D. Pa. Feb. 18, 1994). 32 See Riley v. National Federation of the Blind of North Carolina, Inc., 487 U.S. 781, 782 (1988). 33 Choi, supra note 18, at 211.

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In the culture of Taiwan and Korea, an apology facilitates resolution even if it is out of unwillingness. A forced apology is like “a slap in the face” for the ordered defendant, and thus has soothing effect on the defamed plaintiff.34 The tradition demands an apology from one who had initially offended another’s reputation, which indicates that an apology is sometimes irreplaceable in defamation disputes settlements.35 Especially in defamation cases, where the plaintiff felt hurt by the things said by the defendant, negative feelings are quite unlikely to be repaired by monetary compensation. The plaintiff might even feel insulted by just being handed a sum of money.36 According to Hahm Chaihark, “In Korean culture, getting an apology, when one’s reputation has suffered, is a crucial element for bringing the dispute to some kind of resolution . . . .”37 And “such an apology or the expectation that an apology will be forthcoming is what makes public discourse, and the disproportionate power wielded by the media, bearable, if not exactly civilized.”38 Because of the salience of apology in Korea culture, Dai-Kwon Choi argues, “there is nothing wrong with its being an important factor used to remedy defamation.”39 4.2.1 Apology as guilt/right and as relational reputation In the U.S court systems, an apology can be viewed as admitting guilt. Defendants would agree to pay a settlement but never admit to guilt. When someone does offer an apology, it often comes with a great deal of explanation. These explanations almost justify the wrongdoing and almost negate the impact of the apology. In Asia, an apology is not necessarily viewed as a basis for a guilty verdict. Most studies relate apology to the culture of “face” and relationships. One Korean scholar suggests: Unlike the Anglo-American concept of reputation as an individual right, however, Koreans perceive their interests in their reputations “in relation to the groups to which they belong.” In other words, instead of viewing a defamatory statement as a harm to the

34 Id. at 211–12. 35 Id. 36 Hahm Chaihark, Negotiating Confucian Civility Through Constitutional Discourse, in The Politics of Affective Relations: East Asia and Beyond 277, 287 (Hahm Chaihark & Daniel A. Bell eds., 2004). 37 Id. 38 Id. 39 Choi, supra note 18, at 220.

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“general social relations” of an individual, Koreans consider the statement a “loss of face” to the individual’s “familial” group, as based on their Confucian tradition.40

Saying that the “face” culture is rooted in Confucian culture is to say that countries significantly affected by Confucianism, such as Taiwan, Korea and Japan, incorporate the face culture. Therefore, apology seems more like a behavior to repair reputation within relationships, rather than an expression of guilt.

4.2.2 The function of apology and its requirements In the West, insincere apologies can be worthless.41 Lee Taft suggests: When the performer of apology is protected from the consequences of the performance through carefully crafted statements and legislative directives, the moral thrust of apology is lost. The potential for meaningful healing through apologetic discourse is lost when the moral component of the syllogistic process in which apology is situated is erased for strategic reasons.42

To Taft, the court-ordered apology is not just a moral wrong; it is valueless because it is insincere. Especially in private relationships, we are inclined to reject an apology when we sense it as insincere. Sometimes an insincere apology causes second harm for the victim. In other words, an apology has to be sincere in order to be meaningful in the West. Whether it is done in public may not be the primary concern. For some observers, for an apology to comfort the injured party, it must be sincere, or at least perceived to be sincere.43 Sincerity indicates that the offender has incurred a psychic “penalty” of anguish for the harm he caused and wants to have re-establish a friendly relationship, which implies that the harmful act will not recur. Sincerity usually means that an apology should be voluntary – made out of one’s free will. In general, the more an apology is coerced, the less meaning it carries, for less sincere apologies imply that less regret is being expressed. In other words, if the apology is not made out of the offender’s free will, but out of a court’s order, it would carry little meaning for the victim. In Asia, apologies sometimes are the highest form of humility, indicating a plea to repair a relationship. In order to repair a reputation, sincerity may not be the primary concern. It is more important that an apology be done in public. 40 Kyu Ho Youm, Libel Law and the Press in South Korea: An Update, 3 Contemp. Asian Stud. 1, 3 (1992). 41 See, e. g., Aaron Lazare, On Apology 117–19 (2004). 42 See Lee Taft, Apology Subverted: The Commodification of Apology, 109 Yale L.J. 1135, 1157 (2000). 43 Cohen, supra note 2, at 1017.

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Moreover, an apology can be understood as a mechanism to maintain social order. For an apology to “punish” the wrongdoer and educate the multitude, it has to be open. Therefore, in Asia, if an offender is unwilling to apologize, or only willing to do it in private, the victims of defamation usually ask the courts to ordered a public apology, either to compensate for the damage, or to seek revenge. If the practice of court-ordered apologies is rooted in culture, its constitutionality should be examined with cultural considerations in mind. Hahm Chaihark criticizes the Korean judgment, stating: By ignoring the social meaning of apology in Korean culture, and by describing the Korean, or East Asian, need for apology as something less than civilized, it seems to be adopting the unfortunate yet common perspective which regards things Korean as basically primitive, backward, and unrefined.44

5

The role of courts and judicial strategy

Legal debate does not reach a conclusion on the best answer to this case; cultural approaches may shed light on the difference between the West and Asia. However, none of them explain the divergent judgments in Taiwan and Korea. If Taiwan and Korea share the same Confucian culture and imported jurisprudence of freedom of conscience from the West, what is the reason for them to make contrasting judgments? Justice Pomeroy of Supreme Court of Pennsylvania provided another perspective: an institutional one. An apology is a communication of the emotion of remorse for one’s past acts. To order up that particular emotion, or any other emotion, is beyond the reach of any government; to assert the contrary is to advocate tyranny. If, perchance, the Commission, in ordering a public manifestation of remorse, should be indifferent as to whether remorse in fact exists but instead should desire only the outward act, then it would be either extracting a lie from those willing to lie (“I’m sorry,” but I’m really not) or asking the courts of this State to hold in contempt those who will not lie (“I’m not sorry and I will not say that I am”). Given the choice, I would rather hold in contempt the former, not the latter. But in my view the Commission should eschew purporting to order the expression of an emotion, whether or not the emotion is in fact entertained by the one so ordered.45

44 Chaihark, supra note 36, at 287. 45 Pennsylvania Human Relations Commission, 306 A. 2d at 891 (Pomeroy, J., concurring).

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What Justice Pomeroy stated is an institutional consideration on forced apology. To put it simpler, it is not and should not be the court’s job to implement the function of apology. Whether forced apology is unconstitutional could be related to the role and legitimacy of the court. We cannot but look into the concrete context of two cases and explore possible answers.

5.1

A court of reconciliation: Taiwan model

In the Taiwan case, the plaintiff was the newly elected Vice President, perhaps the most famous and powerful female in Taiwan. She represented the first partisan turnover in democratic transition, and also the first female president in the history of Taiwan. The opposition party, KMT, lost power for the first time and attempted to pin down DPP. On the other hand, political division inside DPP emerged after the winning of the presidential election. Vice President Lu became the target inside and outside DPP. The report of The Journalists became the first challenge that might have seriously undermined the already stumbling DPP government. For the Vice President and her party allies, it was important to eliminate all doubts in order to stabilize the turbulence. Monetary compensation would help little, so public apology became the most effective way to restore not only the face of the Vice President, but also the turbulence that the report triggered. However, The Journalists had been an independent magazine commenting on political issues and enjoying a high reputation for its objectivity and neutrality. The Journalists finally enjoyed more freedom of press after a long oppression of the media in the past authoritarian regime, and believed that the request for an apology was an act of revenge and humiliation. For the Constitutional Court at that time, on the one hand, it should guard the freedom of the media and prevent a powerful politician to use a court-ordered apology to suppress media freedom; on the other hand, if the court decided so, it may have further endangered the stumbling regime and endangered the valuable regime change after decades of efforts. On the other hand, another consideration for the Constitutional Court was whether to challenge the long-existing judicial practice, the discretionary power of ordinary courts, and perhaps the “face” culture in Taiwanese society. Considering all of the above elements, the court decided not to make a decision immediately. It took five years for the Court to make the decision since the day the petition was filed. In that way, the court could make a decision without too much pressure and protect itself from political attacks. After DPP lost ruling power in 2008 and the decision would no longer directly involved the incumbent,

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the Court delivered the interpretation in 2009. Interestingly, the freedom of the press after democratic transition had brought negative effects to the reputation and privacy of individuals and also the public at the time the decision was made. The Court then decided to interpret the law in a constitutional way (verfassungskonforme Auslegung). The Court held the disputed Civil Code provision as constitutional because in some situations measures other than court-ordered apology may not be sufficient to restore victims’ reputation. But the Court also limited the use of court-ordered apology to situations where it would not “induce self-humiliation to the point that human dignity is disparaged.”46 The Constitutional Court, however, did not clarify how to decide the effectiveness of other means in restoring reputation, nor did it explain when court-ordered apologies “induce self-humiliation to the point that human dignity is disparaged.” However, precisely because of this ambiguity, J.Y. Interpretation No. 656 did not challenge the long-existing practice in the court and in society, and risk of criticism was thus reduced. At the same time, by limiting the use of court-ordered apologies, the court attempted to preserve the freedom of speech and media to a certain degree. J.Y. Interpretation No. 656 was made carefully, with an eye to mediate all possible conflicts in the context, corresponding to the negotiated transition pattern of Taiwan’s democratic transition.

5.2

A court of modernization: Korea model

In the Korean case, the context was different from Taiwan. The plaintiff was a celebrity who had little influence in politics. Therefore, the Court was concerned less with direct political pressure and controversy, but was concerned more with the wider agenda of modernization. When the case was made in 1990, Korea’s democratization had just begun. What puzzled the Court was a choice between preserving the “culture” and legitimizing the practice of court-ordered apologies, or changing the practice and transforming into a more democratic and “advanced” country. Meanwhile, the Constitutional Court was trying to establish its legitimacy through the discourse of rule of law and constitutionalism. Perhaps considering the long suppressed freedom of the media in the past authoritarian regime, the Court chose the latter option. By framing the issue as an infringement of freedom of conscience, the Court emphasized that freedom of conscience is so important that it should not be limited unnecessarily. The Court compared the practice with those of the Western countries, saying that a courtordered apology is an uncivilized retributive measure and no longer existed in 46 J.Y. Interpretation No. 656 (2009) (Taiwan).

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the “civilized” nations of the world, with the single exception of Japan. The Court developed its reasoning mostly in the legal narratives; the Western liberal legal mechanisms of rule of law and constitutionalism allow no room for such a practice. Compared with all the academic discussions concerning this case, the reasoning of the court excluded the issue from deliberating the social and cultural underpinnings of the practice of apology. Hahm Chaihark criticized, saying: It is as if the Constitutional Court is saying that now Koreans need to move away from a culture in which apologizing matters so much to a culture that is able to convert the value of a reputation into monetary terms. By ignoring the social meaning of apology in Korean culture, and by describing the Korean, or East Asia, need for an apology as something less than civilized, it seems to be adopting the unfortunate yet common perspective which regards things Korean as basically primitive, backward, and unrefined.47

The strategy of the Court did contribute to the press and the Court itself. On the one hand, the judgment recognized the crucial institutional function of the press in a democratic society. Therefore, the media enjoyed more freedom than before. On the other hand, the Constitutional Court’s assertiveness was believed to “epitomize the restructuring process of rule of law in Korea.”48

6

Conclusion

In Taiwan and Korea, the culture of “face” was so prominent that it was integrated into the law. In both countries, the court has been used to enforce the “culture” of face. Courts were incorporated into the wider mechanism of social control. However, when the two constitutional courts reviewed the practice of courtordered apology, they reached very different conclusions. The reason behind this is not a legal or cultural one. Only if we contextualize two cases and examine them from an institutional perspective, are we able to develop a reasonable explanation. The earlier made Korean decision was done in the initial stage of democratization, when the Constitutional Court was part of the modernization plan and attempting to establish legitimacy through rule of law and constitutionalism. The Korean Constitutional Court thus bypassed the social and cultural meaning of apology and developed the reasoning from rights and proportionality, seeking to justify its decision from the “civilized” practice. In contrast, Taiwanese Constitutional Court considered immediate political tensions and the emerging negative impact of free media, and tried to compromise 47 Chaihark, supra note 36, at 287. 48 Youm, supra note 40, at 21.

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all interests. It strategically postponed the decision to avoid direct political attack, and struck a balance between protection of freedom of speech, social stability and judicial autonomy.

References Chaihark, H. (2004). Negotiating Confucian civility through constitutional discourse. In H. Chaihark & D. A. Bell (Eds.), The politics of affective relations: East Asia and beyond (pp. 277–308). Lanham, MD: Lexington Books. Choi, D.-K. (2000). Freedom of conscience and the court-ordered apology for defamatory remarks. Cardozo Journal of International and Comparative Law, 8, 205–224. Cohen, J. R. (1999). Advising clients to apologize. Southern California Law Review, 72, 1009–1069. Lazare, A. (2004). On apology. New York, NY: Oxford University Press. Lee, C.-L. (2009). Forced public apology and constitutional protection of human dignity: Balancing the legal interests of the freedom to withhold expression and the right of reputation in torts cases – J.Y. Interpretation no. 656. Taiwan Law Journal, 127, 221–232. (In Chinese) Seidman, L. M. (2007). Silence and freedom. Stanford, CA: Stanford University Press. Taft, L. (2000). Apology subverted: The commodification of apology. Yale Law Journal, 109, 1135–1160. White, B. T. (2006). Say you’re sorry: Court-ordered apologies as a civil rights remedy. Cornell Law Review, 91, 1261–1311. Youm, K. H. (1992). Libel law and the press in South Korea: An update. Contemporary Asian Studies, 3, 1–23.

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3

The Effect of Constitutional Adjudication on the Judicial Branch: The Relationship between the Constitutional Court and the Ordinary Court

1

Introduction

This article is about the effect of the newly adopted Constitutional Court to the ordinary courts system of Korea: especially the cooperation and tension between the Supreme Court and the Constitutional Court. Even though their conflicts do not occur very often and the contents of each dispute have been a little bit different, the mode of tension is remarkably similar with that of other countries, such as Italy, Spain and some eastern European countries, which have a constitutional court as an independent judicial body for judicial review. The current Korean constitution was enacted through the 1987 democratization movement, which was made in response to the fundamental rights violations of the last authoritarian regime. People hoped to have legal measures to protect their basic rights and to guarantee the separation of powers. The Congress made efforts to comply with such requirements. As a result, the constitution adopted the independent constitutional court system for judicial review and gave the people the right to raise constitutional complaints. The constitutional adjudication could guarantee the efficacy and normative nature of the constitution, protect fundamental rights, and safeguard the constitution by making sure that all of the government’s actions are executed within the realm of the constitutional order. Therefore, the adoption of constitutional adjudication means to try to realize the rule of law, and at the same time, to work as a check on other state organs, such as the legislative, administrative and judicial branches. According to constitutionalism, the Constitution is the supreme law of the land. All state power should be bound by it. State power is not free from the Constitution in any situation. In principle, not only legislative and administrative actions, but also judicial actions are bound by the Constitution, and as such, in principle, judicial actions are subject to judicial review. But Article 68(1) of the Constitutional Court Act excludes the constitutional complaint against decisions of the ordinary court. Thus, it is not possible to have a direct constitutional review on decisions of the court. Judicial review by the Constitutional Court on the

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ordinary courts is limited to judicial administration and judicial legislatives.1 That’s the reason that the decisions of the Constitutional Court of Korea have had limited effects on ordinary courts, and solving the conflicts between them has been difficult. The ordinary courts as well as the constitutional court have a responsibility to protect the basic rights of people and to guarantee that state organs abide by other articles of the constitution. For the last 25 years, they have worked in close cooperation to maintain their duties. But the Constitutional Court and the Supreme Court have confronted each other over some issues.

2

Background

2.1

History of constitutional adjudication

The Constitution of 1948, the first constitution of Korea after independence from the colonial rule of the Japanese Empire, introduced the constitutional adjudication system. Judicial power was vested in courts composed of judges. The courts were composed of the Supreme Court which was the highest court of the State and other lower courts (Article 76). The Constitution also separately established the Constitutional Committee and the Impeachment Court. The Constitutional Committee was regulated by Article 81(2–5) in Section V “The Courts” of the Constitution. But it was an independent and separate institution from the ordinary courts. It consisted of five Justices of the Supreme Court and five members of the National Assembly. The chairperson of the Constitutional Committee was the Vice-President. When the issue of whether or not statutes are constitutional arises in an ordinary court and it is relevant to the judgment of the original case, the judge shall request the Constitutional Committee to review the statute and proceed according to the Committee’s decision. The Committee’s jurisdiction was limited to deciding upon the constitutionality of statutes.2 The Supreme Court had the power to make a final review of the constitutionality or legality of administrative decrees, regulations or actions. The Constitution also established a separate institution for adjudication of impeachment cases. The 1 An example is the unconstitutional decision with respect to the Supreme Court’s rule, the enforcement regulation on judicial affairs and the administration of justice. “‘Governmental power’ stated in Article 68(1) refers to state measures by the legislative, executive and judicial branches of the government. Acts passed by law makers, orders enacted by Executive and rules legislated by the judicial branch are all subject to constitutional review, if they directly violate fundamental right of the people, even when they are not enforced by the government.” Constitutional Court, 1989Hun-Ma178, Oct. 15, 1990, (1990 KCCR, 2, 365, 370) (S. Kor.). 2 The Constitutional Committee reviewed six statutes and held two of them unconstitutional until they were abolished at 1960.

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judges of the Impeachment Court also consisted of five Justices of the Supreme Court and five members of the National Assembly. There were some reasons for adopting the constitutional adjudication system in these structures.3 Most of all, the founders had a distrust for judges as policy makers. They thought that judges were experts in the areas of civil and criminal law, but not in the area of public law. Though the main stream of the public law theory already changed from individualism and laissez-faire to accepting the importance of government’s intervention, the judges could not follow the new tendency of this legal theory. Additionally, the function of judges was limited to only applying the laws made by the legislature or the colonial government during the colonial era. Judges had been mere bureaucrats of the government for a long time. The founders thought that it could be justified only based on a traditional separation of power theory. According to the modern theory, each governmental branch was not independent, but interdependent, even the legislature and the court. Judges’ bureaucratic timidity would make them unlikely to take a broad and creative approach to the constitutional issues. One additional factor to the preference for a new kind of institution was the fact that the judiciary had been part of the colonial regime and was discredited and distrusted. The founders did not want to give so great a power as review and possible annulment of legislation in the institution. The Constitution of 1960, revised through the April 19 Student Revolution which caused the dictatorial government of the first president Lee Seung Man to collapse, adopted an independent constitutional court system. Although the Supreme Court and lawyers claimed to give the power of constitutional adjudication to the existing Supreme Court, many scholars’ opinion was to establish a European constitutional court to prevent dictatorship and protect human rights.4 The Constitutional Court had jurisdiction over judicial review of statutes, final interpretation of the constitution, competence disputes between state agencies, dissolution of a political party, impeachment, and disputes concerning the election of the President, the Chief Justice and Justices of the Supreme Court (Constitution, Article 83(3)). It consisted of nine justices to which the President, the Supreme Court and the Upper House each designated three. They were to serve for six years and three of them were to be replaced every two years. A supermajority of six justices was required for invalidation of a statute or acknowledgement of impeachment (Article 83(4)). The Constitutional Court Act 3 Yu Gin O, Memories of Constitutional Founding 41–42 (1981) (in Korean). 4 For a more detailed presentation, see Chong Jong Sup, The Establishment of the Constitutional Court in Korean Constitution of 1960, 36 Korean Journal of Law and Society 385 (2009) (in Korean).

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was made on April 17, 1961. But the May 16 Military Coup d’état prevented the law from coming into effect. Even though the institution existed only on paper, the system proved to be a good model of independent institution for constitutional adjudication. Public eagerness for democracy and basic rights protection was the main reason for the adaptation of the Constitutional Court. This experience lent good suggestion to the next movement for democracy and constitutional law scholars. The Constitution of 1963, enacted under a militant authoritarian regime, gave judicial review power to the Supreme Court. Article 102(1) of the Constitution provided that when an issue of whether or not a statute is in violation of a provision of the Constitution is a precondition of a trial, the Supreme Court shall have the power to make the final review of the constitutionality of that statute. The Supreme Court also had the power to determine whether or not a political party should be dissolved (Article 103). The jurisdiction over impeachment was given to the Impeachment Committee once again. The Committee consisted of three Justices of the Supreme Court and five members of the National Assembly. The head of the Committee was the Chief Justice of the Supreme Court (Article 62).5 This system would be a counteraction to the last one. In an authoritarian regime, the president and executive branch have higher power over other branches. The members of governing power groups wanted the judicial review system to be nominal. They did not want the policies and laws made by the government to be abolished by other institutions. The focus of the government was efficiency and unity. Economic growth assumed supreme importance. It inevitably brought negligence of the democratic process and the violation of basic rights of the people. Sometimes it even threatened the independency of the judiciary. The independent constitutional court system was not suitable to their basic ideas about government. But Judges continued to make efforts to preserve the independence of the court and exercise their competence of judicial review. For example, the Supreme Court decided that that Provision of Article 2 section 1 of the State Tort Liability Act6 was unconstitutional because it violated the property rights of soldiers and civilian employees of the military. In that decision, the Supreme Court also declared that the Provision of Article 59(1) of the Court Organization Act7 was 5 When the Chief Justice of the Supreme Court faces impeachment, the Speaker of the National Assembly becomes the chairperson. 6 According to the provision, members of the armed forces and civilian employees of the military who died in action or were injured in the performance of their official duties were barred from seeking damages from the state, in case they or their family had received indemnity in the form of accident compensation or annuity as provided by other laws. 7 The Provision provided that the attendance of 2/3 of the justices and the concurrent of 2/3 of

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unconstitutional. It said that the Provision violated the Supreme Court’s competence of judicial review.8 As this decision was totally opposite to the government’s policy, the executive and governing party thought that they should reform the court system and reorganize the member of the Supreme Court. It would be realized in the next Constitutional revision. President Park Chung Hee and the governing party tried to reconstruct the government organization in order to concentrate powers in the presidency and ensure a permanent seizure of power. They made a kind of palace coup in 1971 and revised the Constitution to establish a severe totalitarian regime. In the Constitution of 1972, the jurisdiction over judicial review was given to the Constitutional Committee. The Committee was composed of nine members appointed by the President. Three of them were appointed by nomination of the National Assembly and the other three by nomination of the Chief Justice of the Supreme Court. The Committee also had jurisdiction over dissolution of a political party and impeachment (Article 109). When the Committee makes a decision on the constitutionality of a law, a decision of impeachment, or a decision of dissolution of a political party, the concurrence of six or more members shall be required (Article 111). The procedures of judicial review were almost same as with the last Committee system. When the issue of whether or not statutes are constitutional arises in an ordinary court and it is relevant to the judgment of the original case, the judge shall request the Committee to review the statute and proceed according to the Committee’s decision. (The Constitutional Committee Act, Article 12(1)). A request by an inferior court was first reviewed by the Supreme Court, which could attach its own opinion when it forwarded the request to the Committee (id. Article 15(1) and (2)). The Supreme Court could cancel the inferior court’s request on an en banc decision, which was to be immediately told to the requesting court (id. Article 15(3) and (4)). Even though President Park’s government was collapsed, another military Coup d’état in 1980 caused the militant authoritarian regime to continue to exist until 1987. The Constitutional Adjudication system of the Constitution of 1980 was almost the same as that of the Constitution of 1972. It established the Constitutional Committee. The jurisdiction and the composition of the Committee were also similar with the previous Committee. By the revision of 1982, only a small number of provisions in the Constitutional Committee Act were changed.9 The Supreme Court still had the power of preliminary review and the present members was necessary for deciding statutes, administrative decrees, and regulations. 8 Supreme Court, 1970Da1010, June 22, 1971 (S. Kor.). 9 E. g., A court’s request for constitutional review had to be approved by a majority of the panel composed of more than two thirds of the Supreme Court justices. Constitutional Committee Act, Act No. 2530, Feb. 16, 1973, amended by Act. No. 3557, Apr. 2, 1982, art. 15(3) (S. Kor.).

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forwarded the request only when it also found the statute unconstitutional. The number of cases in the Constitutional Committee’s docket was dependent on the Supreme Court’s decision. In the 1970s and 1980s, the political situation was hostile to the constitutional adjudication. The governing political power groups thought that judicial review was unnecessary. The Constitutional Committee existed only in the provisions of the Act and remained a nominal body. As requests for constitutional review from the courts were screened by the Supreme Court, and there was no impeachment or political party dissolution case, the Constitutional Committee did not conduct any proceedings at all. Though changed a lot, the Constitution of Korea always had a constitutional adjudication system since 1948. But we can find only a few cases that have constitutional and political value and also importance. Full-scale constitutional review actually began when the current Constitutional Court was established in September 1988.

2.2

The Constitutional Court in the 1988 Constitution

The Constitution was revised in 1988 as a result of the democratization movement and people’s demands for free choice in deciding their own government and protection of their basic rights. The Constitution, like many European ones, provides for a double-headed judicial structure: the Constitutional Court and the Supreme Court. But the Constitutional Court, as a single and separated Court, must be distinguished from the Judicial Power branch – composed of the Supreme Court at its summit – and other lower courts. The Supreme Court and other lower courts are regulated by Chapter V, “the Courts” of the Constitution, after the National Assembly and the Executive, while the Constitutional Court is provided in Chapter VI, “the Constitutional Court.” This signified separation of both courts. The Constitutional Court is not considered a part of the Judicial Power. The Supreme Court has existed more or less in its present state since 1948. It is an institutional survivor of all political changes and conflicts that Korea has come through in the last 65 years. It is the highest court with the most paramount jurisdictions: civil, criminal, administrative, and military.10 The right to decision 10 Constitution Article 110(1) provides that court-martial may be established by special courts to exercise jurisdiction over military trials. The judges of court-martial are nominated by the Minister of National Defense and each Chief of Staff, and the administration of the courts is conducted by them. But, as the Supreme Court has the final appellate jurisdiction over courtsmartials except under extraordinary martial law, the court-martial is not totally separated from the judicial branch. The Court Organization Act provides only Patent Court, Family

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making in all cases by applying ordinary statutes belongs to jurisdiction of the ordinary court. As the court of last resort, the Supreme Court has the authority to review rulings rendered by all other lower courts. The main role of the Supreme Court is to provide standards for the interpretation of statutes. The Constitution also gives it the power to make a final review of the constitutionality or legality of administrative decrees, regulations or actions, when their constitutionality or legality is at issue in a trial (Article 107(2)). The Supreme Court, similar as other lower courts, consisted of career judges who look at the Supreme Court as the culmination of their professional career.They enter the judiciary at a very early age and are promoted to the higher courts largely on the basis of seniority, like many European civil law judges.11 The lower courts are ready to accept the authority of the Supreme Court and they should follow the case law made by the Court. Adjudication of constitutional conflicts requires interpreting and applying the constitutional texts. However, modern constitution provisions are seldom specific. As it contains broad programs for future action, the text is necessarily drafted in general and value-oriented language. Therefore, constitutional adjudication demands a greater degree of creativity and a higher sense of discretion than is required in judicial application of statutes of the ordinary court.12 But career judges’ training is usually centered on development of technical skills rather than policy-oriented interpretation of statutes. Therefore, the judiciary seems inadequately in charge of value-oriented, quasi-political functions involved in judicial review.13 The Constitution Court is a kind of foreign body compared with the ordinary courts. In contrast with Justices of the Supreme Court chosen from among career judges by the Chief Justice, the Constitutional Court is composed of Justices chosen from among any category of lawyers14 by the different political powers, the President, the Congress and by the Chief Justice of the Supreme Court. The Constitutional court is the sole court empowered to declare statutes unconstitutional and nullify statutes made by the Parliament. Judicial review of the Constitutional Court is accomplished through a concrete review procedure. When the issue of whether or not statutes are constitutional is relevant to the

11

12 13 14

Court and Administrative Court as categories for ordinary courts’ classification. Constitution (S. Kor.). Pedro Cruz Villaón, Conflicts between Tribunal Constitutional and Tribunal Supremo: A National Experience, in The Future of the European Judicial System in a Comparative Perspective 111, 112–13 (Ingolf Pernice et al. eds., 2006); Allan R. BrewerCarias, Judicial Review in Comparative Law 63 (1989). Lech Garlicki, Constitutional Court versus Supreme Courts, 5 Int’l J. Const. L. 44, 47 (2007). Brewer-Carias, supra note 11, at 62. Majority of them have come from career judges for the last 25 years.

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judgment of the original case, the ordinary court may make a request to the Constitutional Court, ex officio or by decision upon a motion by the party, for adjudication on the constitutionality of statutes (Constitutional Court Act, Article 41(1)).15 The request made by individual ordinary courts shall go through the Supreme Court, (id. Article 41(5)) but the Supreme Court does not have any competence to review and block the request. It is just an administrative process inside of the courts. The court’s decision to accept or reject the motion by the individual party is final and the party cannot appeal. But when the motion is rejected, the party may file a constitutional complaint with the Constitutional Court (id. Article 68(2)). In this case, all the provisions of adjudication on the constitutionality of statutes shall be applied to the review of this constitutional complaint. The so-called 68(2) Complaint, a kind of detour for judicial review, is made from past experiences when the judicial review was only nominal and when the ordinary court did not request the review to the Constitutional Court.16 The Constitutional Court is further called to decide competence disputes between state agencies, between state agencies and local governments, and between local governments. It also has jurisdiction over impeachment and dissolution of a political party (Constitution, Article 111). But the most noticeable competence of the Constitutional Court is jurisdiction over individual constitutional complaints. Any person who claims that his or her basic rights have been violated by an exercise or non-exercise of governmental power may file a constitutional complaint with the Constitutional Court. The introduction of the constitutional complaint system is valued as a remarkable reform of constitutional adjudication in that it extended standing to an ordinary, individual petitioner. But the judgments of the ordinary courts are not included in the complaint’s subject. This exception lies at the heart of the conflict between the Constitutional Court and the Supreme Court. Since the creation of the Constitutional Court, the Court has disposed of 23,674 cases including about 22,817 constitutional complaint cases. In 1,133 of those cases, the Constitutional Court pronounced that the laws were unconstitutional or upheld constitutional complaints.17 Due to such activities of the 15 When an ordinary court requests Constitutional Court adjudication on the constitutionality of statutes, the proceedings of the court shall be suspended until the Constitutional Court makes a decision: provided, that if the court deems the matter to be urgent, the proceedings other than the final decision may proceed. Constitutional Court Act, Act No. 2530, Feb. 16, 1973, amended by Act. No. 3557, Apr. 2, 1982, art. 42(1) (S. Kor.). 16 Gun Yang et al., Proposals for Revision of the Constitutional Court Act 371–72 (1999) (in Korean). 17 According to the Constitutional Court website, decisions rendered unconstitutional can be divided into the following categories until September 30, 2013. Constitutionality of law (constitutionality of statutes cases brought by ordinary courts) cases amount to 304 cases (234 unconstitutional cases, 55 unconformable to Constitution cases, 15 unconstitutional in

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Constitutional Court, it is estimated that the constitutional adjudication system is successful. The Constitutional Court, though established long after the Supreme Courts, has emerged as the most power and respectful institute in the government.18 But it also has a very complicated relationship with the Supreme Court. Sometimes the Constitutional Court decides a case concerning ordinary courts organization and court decision procedures. Positions taken by the Constitutional Court are substantially different from those preferred by the Supreme Court in some areas. Usually the ordinary courts, even the Supreme Court, follow these decisions made by the Constitutional Court. But, it can sometimes produce conflicts and disputes.

3

Impact of constitutional adjudication on the ordinary courts

3.1

Constitutional issues in ordinary court decisions

Notwithstanding exemption of ordinary court decisions from constitutional complaint, continuous judicial review by the Constitutional Court has had an impact on the ordinary courts. The number of issues raised in ordinary courts relating to the Constitution had increased, and so did the number of court decisions. The number of requests of the ordinary court to the constitutional court for constitutional review lodged before 2000 was between 10 to 20 cases per year. However, since 2000, the cases have increased to 20–40 cases per year.19 It means judges of ordinary courts have understood the importance of constitutional issues.20 certain context cases), a total of 261 with respect to Constitutional complaint based on Article 68(2) of the Constitution (170 unconstitutional cases, 59 unconformable to Constitution cases, 32 unconstitutional in certain context cases), a total of 129 cases with respect to Constitutional complaint based on Article 68(1) of the Constitution (76 unconstitutional cases, 34 unconformable to constitution cases, 19 unconstitutional in certain context cases). The number of upholding constitutional complaints cases amounts to 439. Constitutional Court of Korea, http://www.ccourt.go.kr (last visited Apr. 21, 2015). 18 In a survey of influence and confidence made by some newspapers, the Constitutional Court was found to have been located at the head of the government for the last ten years. 19 See Constitutional Court of Korea, supra note 17. Cases registered and adjudicated till October 16, 2013. 20 According to the explanation of Lech Garlicki, the process of judicial review is to examine whether a particular legislative provision is in conformity with the Constitution. In the vast majority of cases, the constitutional court should deal with other branches of law. The court must clarify what the constitution requires or forbids with respect to the legislative regulation of particular matters. This process is known as “constitutionalization of specific areas of law.” Once constitutional norms, principles and values become relevant to the application of specific statutes, ordinary courts must apply them. Judges must first establish the content of

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Not only has the number of requests for constitutional review increased, nowadays, constitutional issues are almost never excluded from important court decisions. For instance, with respect to the case of the removal of medical facilities used to prolong a patient’s life, the Supreme Court stated that a patient’s decision on choosing the means of maintaining his/her life and health, and the medical treatment he/she receives, are protected under Article 10 of the Constitution – that all citizens shall be assured of human dignity and worth, and have the right to pursue happiness. The Supreme Court said, Just as a patient’s approval is needed before performing any medical treatment that would infringe upon a person’s right, the patient’s decision must also be respected when it comes to the issue of whether he/she wants the continuation of the medical activity. When the patient demands the suspension of the medical activity, health care providers, in principle, must accept the patient’s request and look for other appropriate alternatives.21

The Supreme Court also declared: [T]here is sanctity to life. The right to life is the cornerstone for all the fundamental rights enshrined in the Constitution, and as such, can be considered as the most important, fundamental right. Hence, the decision to suspend medical treatment which is directly connected to the right to life must be made very carefully.22

In this way, the Supreme Court used the discussion on the Constitution as a basis for deducing the requirements for the suspension of medical treatment used to prolong a patient’s life.23 Moreover, with respect to the case of compensation concerning religious education in private schools, the Supreme Court stipulated that the Constitution be applied evenly in legal relations between private persons. The Court decided on the illegality of the action by weighing the freedom of religion of the students, the relevant norm, and this requires the simultaneous application of statutory and constitutional provisions. Garlicki, supra note 12, at 48–49. 21 Supreme Court, 2009Da17417, May 21, 2009 (S. Kor.). 22 Id. 23 “After a patient capable of decision-making is provided medical information directly from a medical practitioner, he must decide soberly as to the specific medical treatment based on the medical information and his own values.” “When a patient enters the irrecoverable death stage without providing prior medical instruction, the patient cannot be expected to express intention to demand change in treatment or discontinuance by exercising a right to self decision since he has no possibility of regaining consciousness. However, where, given the patient’s usual sense of values or belief, etc., it can be determined that a patient would choose discontinuance of life-extending treatment, where it objectively corresponds to the patient’s best interests if a patient had been given an opportunity to exercise a right to self decision, then his intention to discontinue life-extending treatment can be inferred. Such reasoning is rational and corresponds to social norms. Such an inference of a patient’s intention must be done objectively.”

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and the freedom of a founder or an educational foundation to establish and operate private schools.24 Sometimes, the decisions by ordinary courts have changed according to the positions taken by the Constitutional Court. The most representative example is the fact that the Supreme Court changed its position after the Constitutional Court’s decision. In the past, the Supreme Court used to take the position that acts of recording land owners, categories of land, etc. in a register was only for acquiring evidence without any legal effect, and the refusal to make changes in the register was not subject to an appeal.25 Therefore, the Supreme Court decided that the refusal to change the category of land in a land register was not a subject of judicial decision as an administrative action of a government agency. However, after the Constitutional Court decided to recognize such an act as an act of governmental power in Article 68(1) of the Constitutional Court Act,26 the Supreme Court changed its position and recognized it as a form of administrative action.27 The same can be said about cases concerning the measure rejecting the reappointment of a professor. In the past, the Supreme Court said: when the contract term of a university faculty has expired, and he/she does not enter into a reappointment contract, then he/she is relieved of his/her office without special procedure such as the decision to reject reappointment. When the appointer, upon deliberation by the personnel committee, notifies the faculty member that he/she is not reappointed, this action is merely a way to inform the faculty member of an obvious fact that he/she is relieved of his/her office due to the end of the contract term. This action is not subject to administrative lawsuit since it does not have any legal effect.28

On the other hand, the Constitutional Court accepted that the measure rejecting the reappointment of a professor is an act of government power, in Article 68(1) of the Constitutional Court Act, allowing it to be subject to constitutional review,29 and rendered an unconstitutional decision with respect to the professor 24 Due to a high school equalization policy pursuant to the school mandatory assignment system, “there will be conflict between school’s freedom of religious education and freedom of operation, and students’ passive freedom of religious activity and passive freedom of religious confession. Like in the above, where two conflicting basic rights exist within one legal relation, the problem should be resolved through an interpretation for practical harmony between the two basic rights by balancing interests under the circumstances of a specific issue. The final unlawfulness of a certain act should be determined in consideration of limitations in the exercise of the two basic rights, which are defined pursuant to the above consideration.” Supreme Court, 2008Da38288, Apr. 22, 2010 (S. Kor.). 25 Supreme Court, 1979Nu121, Feb. 12, 1980 (S. Kor.); Supreme Court, 1991Nu4126, Feb. 11, 1992 (S. Kor.); Supreme Court, 1991Nu1400, Sept. 24, 1991 (S. Kor.); Supreme Court, 1997Nu7325, Nov. 14, 1997 (S. Kor.). 26 Constitutional Court, 1997Hun-Ma315, June 24, 1999, (1999 KCCR, 11–1, 802) (S. Kor.). 27 Supreme Court, 2003Du9015, Apr. 22, 2004 (S. Kor.). 28 Supreme Court, 1996Nu4305, June 27, 1997 (S. Kor.). 29 Constitutional Court, 1991Hun-Ma190, May 13, 1993, (1993 KCCR, 5–1, 312) (S. Kor.).

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reappointment system at that time.30 The Supreme Court eventually changed its position and ruled that the notification of the end of contract term due to the rejection of reappointment was a form of governmental measure.31

3.2

Scope of appeals to the Supreme Court

Article 101(2) of the Constitutional Court stipulates, “The courts shall be composed of the Supreme Court, which is the highest court of the State, and other courts at specified levels,” while Article 102(3) states, “the organization of the Supreme Court and lower courts shall be determined by the Act.” The Constitution does not regulate any concrete context with respect to the hierarchy of the judicial decisions of the Supreme Court and the courts at all other levels. This issue is related to the scope of appeal to the Supreme Court. As the Supreme Court has disposed of a great amount of cases each year,32 the main task of the Supreme Court has been to limit the scope of appeal from other lower courts. The Congress has made special statues, which have provisions for the permission of appeals to the Supreme Court or simple procedures for decisions in the Supreme Court.33 In the case concerning these provisions, the Constitutional Court decided that the Provision of the Constitution which stipulates that the Supreme Court is the highest court does not necessarily mean that the Supreme Court must consider all the matters appealed to it. Matters of jurisdiction are to be determined in the Act under Article 102(3) of the Constitution. Hence, it was stated by the Constitutional Court that the Act can decide which cases the Supreme Court can decide as a first court or as an appeal court.34 30 “In light of the important functions assumed by universities in modern society and the request for minimum protection against an unjust deprivation of the status of university faculty members, the provision at issue in this case is undeniably in violation of the principle of statutory status of the teachers of Article 31(6) of the Constitution, as this provision lacks any objective standard applicable to a decision to not renew the employment, any opportunity to be heard on the part of a teacher whose employment is not being renewed, or a prior notice of the decision to not renew the employment, and, further lacks any institutional device to challenge a decision to not renew.” Constitutional Court, 2000Hun-Ma26, Feb. 27, 2003, (2003 KCCR, 15–1, 176) (S. Kor.). 31 “Assistant professors in public universities have the right to demand a fair and rational evaluation for their reappointment, since they have an expectation to be reappointed unless there is an exceptional situation. Rejecting their reappointment affects the legal relationship of the assistant professors, and thus, can be considered a governmental measure, which is subject to administrative adjudication.” Supreme Court, 2000Du7735, Apr. 22, 2004 (S. Kor.). 32 For example, the number of registered cases has been over 20,000 since 2004 and over 30,000 since 2009. Supreme Court of Korea, http://www.scourt.go.kr (last visited Apr. 21, 2015). 33 Act on Special Cases Concerning Procedure for Trial by the Supreme Court, Act No. 4769, July 27, 1994 (S. Kor.). 34 Constitutional Court, 1990Hun-Ma1, Jan. 20, 1995, (1995 KCCR, 7–1, 1, 10) (S. Kor.).

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Therefore, except for excluding an appeal concerning a review on the constitutionality or legality of administrative decrees, regulations or actions (Constitution, Article 107(2)), it is not constitutionally required that the Supreme Court must accept every appeal. The basic nature of a trial is fact-finding, interpretation and application of the law. The right to trial stipulated in the Constitution is “to guarantee that there is at least one round of deliberation concerning the related facts and law by a judge.” The constitutional right to trial does not mean that every case has to be given three rounds of deliberation with respect to the facts and law.35 Furthermore, the Constitutional Court decided that the right to trial does not necessarily include the right to appeal to the Supreme Court. However, such a limitation is subject to constitutional review based on the principle of equality. The Constitutional Court took the same position while determining the constitutionality on the provision limiting the appeal of cases involving small amounts of money.36 When reviewing the civil procedural code provision limiting the appeal of a provisional execution decision, the Constitutional Court again stated that the right to trial does not automatically mean the right to appeal every case, but it decided on the unconstitutionality of the provision based on the fact that it imposed unreasonable limitations without rational reason and thus violated the people’s right to trial.37 As shown above, the Constitutional Court in principle allows Congress to make legislative policy with respect to the internal relations between the Supreme Court and all the other levels of courts. However, the Constitutional Court also imposes certain limitations so that the legislature does not arbitrarily decide on the judicial structure of the judicial branch.

4

Conflicts between the Constitutional Court and the Supreme Court

4.1

Subject of conflicts

Article 107(2) of the Constitution provides that the Supreme Court shall have the power to make a final review of the constitutionality or legality of administrative decrees, regulations or actions, when their constitutionality or legality is at issue in a trial. It seems that by this provision the sub-statutory decrees and other legal norms of less than statutory dimension are excluded from the jurisdiction of the 35 Constitutional Court, 1990Hun-Ma25, Jun. 26, 1992, (1992 KCCR, 4, 343, 350) (S. Kor.). 36 Id. at 343. 37 Constitutional Court, 1991Hun-Ma8, Nov. 25, 1993, (1993 KCCR, 5–2, 396) (S. Kor.).

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Constitutional Court and left to the Supreme Court and other ordinary courts. But administrative rules and regulations can be included in the exercise of government power in Article 68(1) of the Constitutional Court Act. Thus, there are conflicts between the Constitutional Court and the Supreme Court concerning whether the Constitutional Court’s reviewing of administrative rules and regulations by way of constitutional complaint should be accepted from establishment of the Court.38 Article 45 of the Constitutional Court Act provides that the Constitutional Court shall decide only whether or not the requested statute or any provision of the statute is unconstitutional. The type of judgment on constitutionality, which this clause provides, seems to be a “simple” ruling of unconstitutionality or constitutionality. But the Constitutional Court has long departed from the choice of alternatives between full acceptance and rejection. Trying to avoid rulings of unconstitutionality which invalidate the statute, the Constitutional Court has sought to develop so-called “modified forms of holdings” such as limited constitutional, partially unconstitutional and nonconformity decisions with the constitution.39 The most controversial part of the constitutional jurisdiction is the one concerned with the limited constitutional or unconstitutional decisions. By these decisions, a decision on the constitutionality of a provision or statute is taken not in absolute terms, but in relation to a particular interpretation of the provision at issue. In the limited constitutional decision, the Court declares that the provision is constitutional only in so far as it can be interpreted in a certain way that is consistent with the Constitution. In the limited unconstitutional decision, the Court declares that only a certain interpretation of the law is unconstitutional. The law remains formally unchanged. Only the interpretation that has been declared unconstitutional can no longer be used in the ordinary courts. The problem is that for the Constitutional Court to render these decisions, it must first establish the interpretation of the provision. If the interpretation 38 Where the administrative decrees or other regulations are allegedly contrary to a higher but non-constitutional norm, such as a statute, the ordinary courts are equipped with experience and training to decide what to do about the issue. This is a traditional judicial function and there is no possibility of conflict. But when the issue is constitutionality, there can be problems of dividing jurisdiction. For example, the Constitutional Court may decide an issue one way when reviewing statutes, but the Supreme Court may decide on the same issue another way when reviewing administrative decrees. When a constitutional complaint against administrative rules and regulations is permitted, it is a matter of course that the same problems will keep coming up. If different courts are permitted to deal with same constitutional issues, there must be a way to solve the conflicts. See Herman Schwartz, The Struggle for Constitutional Justice in Post-Communist Europe 36–37 (2000). 39 When a decision is rendered to be nonconforming with the constitution, the provision or statute at issue remains in effect formally until it is abolished or amended by the legislators pursuant to the mentioned reasons of unconstitutionality in the decision. The legislators should be obligated to affirmatively cure the unconstitutionality of the statute.

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adopted by the Constitutional Court differs from one established in the cases of the Supreme Court and other ordinary courts, there should be a conflict.40 With respect to limited unconstitutional (unconstitutional in certain context) decisions, there have been conflicts between the position of the Constitutional Court and that of the Supreme Court. The Constitutional Court considers it as a form of unconstitutional decision, while the Supreme Court sees it as a form of legal interpretation, instead of an unconstitutional decision. Determining that partially unconstitutional decision is not binding upon the courts, the Supreme Court has applied the provisions of acts with certain interpretations which are already decided as partially unconstitutional by the Constitutional Court. The Constitutional Court stated that in such a case, when the people’s rights have been violated, court decisions can also be subject to constitutional complaints. The Constitutional Court can cancel a Supreme Court decision in that case.41 Therefore, in a limited way, the Constitutional Court is able to perform judicial review on court decisions. But the Supreme Court still does not accept the binding force of the limited unconstitutional decision of the Constitutional Court. Now, we will consider some cases in which both of the highest courts violently collide with each other. Some issues discussed in the cases have already been fixed, but there are still a lot of issues that remain unresolved.

4.2

Rules Implementing the Certified Judicial Scriveners Act case42

In this case, the Constitutional Court declared that Article 3(1) of the Rules implementing the Certified Judicial Scriveners Act was unconstitutional, violating the principle of equality and the freedom to choose one’s own occupation. The main issue was whether the Constitutional Court could review the constitutional complaint against rules and regulations lower than those of statutory dimension, which allegedly infringed one’s basic rights. The Constitutional Court decided that this kind of constitutional complaint could be accepted when the provisions or rules violate one’s rights directly without any other administrative action. 40 See, e. g., Enzo Cheli & Flippo Donati, Methods and Criteria of Judgment on the Question of Rights to Freedom in Italy, in Human Rights and Judicial Review: A Comparative Perspective 227, 235–41 (David M. Beatty ed., 1994); Garlicki, supra note 12, at 54–57. 41 “A court decision that applies a law which has been declared unconstitutional by the Constitutional Court can be subject to constitutional review under Article 68(1) of the Constitution, since the court decision violates Article 68(1) of the Constitution.” Constitutional Court, 1996Hun-Ma172, Dec. 24, 1997, (1997 KCCR, 9–2) (S. Kor.). 42 Constitutional Court, 1989Hun-Ma178, Oct. 15, 1990, (1990 KCCR, 2, 365) (S. Kor.).

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Someone who wants to prepare documents to present to a court or to the public prosecutor’s office, documents necessary for registration or application for registration or deposit, or documents delegated by other persons, must have a license of judicial scrivener. The license shall be granted to a person who passed the judicial scrivener’s license examination (the Certified Judicial Scriveners Act, Article 4(1)(ii)).43 The Act delegates that matters concerning certification and exam administration be determined by the Rules of the Supreme Court (Article 4 (2)). According to the provision, the Supreme Court made the Rules Implementing the Certified Judicial Scriveners Act (Supreme Court Rule No. 1108, February 26, 1990). Article 3(1) of the Rules provided that the Minister of Court Administration44 may administer the examination upon approval from the Chief Justice of the Supreme Court when he recognizes a need for additional judicial scriveners. The constitutional complaint against Article 3(1) of the Rules was filed by a complainant who worked as a clerk in a judicial scrivener’s office and an attorney’s office and was preparing to take the examination. He asserted: Article 3(1) of the Rules leaves to the discretion of the Minister of Court Administration whether the exam is administered. Due to this provision, the Supreme Court conducted only three examinations since the founding of this country. For the reason that only the retirees of the courts and the prosecutor’s offices suffice to meet the demand for judicial scriveners, the Minister of Court Administration has refused to administer any exam for a long time. Thus the provision of the Rules violate my right of equality by taking away the opportunity to take the examination granted by the statute.

The Minister of Court Administration replied that as Article 107(2) of the Constitution grants the Supreme Court the final reviewing power over the constitutionality of rules and regulations, and since the constitutional complaint which questioned the constitutionality of provisions of the Supreme Court Rule violated the provision, the complaint must be dismissed.45 43 The license shall also be granted to a person with seven or more years of experience in the ordinary courts, the Constitutional Court, or the Prosecutor’s Offices as a clerk or a higher position; secondly, to a person with more than five years of experience in the ordinary courts, the Constitutional Court, or the Prosecutor’s Offices as an administrator or a higher position, who had been certified by the Chief Justice of the Supreme Court as having necessary legal knowledge and the ability to carry out the tasks of a certified judicial scrivener. Certified Judicial Scriveners Act, Act No. 5180, Dec. 12, 1996, amended by Act. No. 8920, Mar. 21, 2008, art. 4(1)(i) (S. Kor.). 44 The Chief Justice of the Supreme Court shall exercise general control over the administrative affairs of the judiciary and shall direct and supervise officials in charge of judicial administration. The Chief Justice may delegate part of his or her executive and supervisory authority over judicial administrative affairs to the Minister of Court Administration. Court Organization Act, Act No. 3902, Dec. 4, 1987, amended by Act. No. 5462, Jan. 21, 1999, art. 9 (S. Kor.). 45 Adding that, he stated “Article 68(1) of the Constitutional Act provides that no one may file a constitutional complaint without having exhausted all relief process provided by other laws.

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The Constitutional Court rejected the argument of the Minister of Court Administration and recognized the rules of the Supreme Court as a proper subject of constitutional adjudication. Most of all, the Court declared Article 107(2) of the Constitution means that the Supreme Court has the final review power over the constitutionality of rules and regulations only when their constitutionality is at issue in a trial of ordinary court. It does not apply to a constitutional complaint filed on grounds that basic rights have been violated by rules and regulations directly without further government action. The “governmental power” subject to constitutional adjudication, as in Article 68(1) of the Constitutional Court Act, refers to all powers including legislative, judicial and administrative. Statutes enacted by the legislature, regulations and rules promulgated by the executive, and rules made by the judiciary may directly violate basic rights without awaiting any enforcement action, in which case they are immediately subject to constitutional adjudication.46

After deciding that the complaint satisfied the requirements for justiciability, the Constitutional Court moved to review the merits. The opinion of the Constitutional Court stated, in the Article 4(1) of the Certified Judicial Scriveners Act, the legislature intended to exclude the monopoly of the occupation by certain individuals or groups, especially retirees from courts or public prosecutor’s offices, and to open the opportunity fairly to all people according to the constitutional principle of equality. They wanted to allow anyone that passed the exam to choose and practice in the occupation of a judicial scrivener.

The Constitutional Court interpreted Article 4(2) of the Certified Judicial Scriveners Act as having not given the discretion to the Minister of Court Administration over whether the exam is administered, but as having only given competence to decide detailed matters of the exam, for example date and time, location, and the subjects, etc. It was against the legislature’s intent that Article 3 (1) of the Rules took away the opportunity to take the exam granted by the statute. Thus, the Court declared that the provision of the rules violated the right to equality and freedom of occupation of the complainant and other people who hope to become a certified judicial scrivener.47 After the pronouncement of the decision, the Supreme Court officially objected to it by publishing the report of the Constitution Research Group in the As the complainant can file a suit to the administrative court asking to implement an exam for judicial scriveners, this constitutional complaint must be dismissed.” 46 The Constitutional Court also did not accept the second argument of the Minister of Court Administration, saying, “the subject of the complaint is Article 3(1) of the Rules itself. It is different from non-administration of exam by the Minister of Court Administration which is subject to trial in the ordinary court. There is no relief process for an ordinary court in which one can file a suit against decrees and rules directly.” 47 There was dissenting opinion of one Justice.

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Ministry of Court Administration. The report asserted that Article 107(2) gives the Supreme Court and other ordinary courts the exclusive power to review rules and regulations lower than statutory dimension. It also said that as the rules and regulations can be subject to administrative litigation when they infringe upon basic rights, it is necessary to file a suit against them to the administrative court to satisfy the rule of exhaustion of prior remedies in Article 68(1).48 Whether Article 107(2) of the Constitution can be interpreted to give the Constitutional Court a review power on rules and regulations by a constitutional complaint process has been debated among scholars and lawyers since the establishment of the Constitutional Court.49 This decision made it clear that all instances of exercise of governmental power (including rules and regulations, especially the rules of the Supreme Court) can be challenged through constitutional complaints. After this decision, there were a lot of constitutional complaint cases concerning the unconstitutionality of rules and regulations now, lawyers generally accept the Constitutional Court position in this case. However, the position of this case concerning the review of rules and regulations has made clear the double jurisdiction problem in the Constitution of 1987. According to the opinion of the Constitutional Court in this case, the constitutionality of the rules and regulations can be reviewed in two ways. When their constitutionality is at issue in a trial of ordinary court, the Supreme Court and other ordinary courts have jurisdiction over the review. But when they directly infringe upon one’s basic rights, the Constitutional Court has to decide on their constitutionality. Where different tribunals deal with similar issues, there can be problems when there are conflicting opinions. But as judgments of the ordinary courts are excluded from the subject of the constitutional complaint, there is no supreme and final authority to solve this problem. For that reason, many scholars have raised the problem and argued for a revision of Article 107(2) of the Constitution.

4.3

Constitutional Review of the Supreme Court Decision case50

This is the first and only case in which the Constitutional Court struck down a judgment of the Supreme Court with the original administrative action. As Article 68(1) of the Constitutional Court Act excludes the ordinary courts’ judgments from the subjects of the constitutional complaint, the Constitutional 48 Constitutional Court, Twenty Years of the Constitutional Court of Korea 346 (2008). 49 See, e. g., Kim Chul Yong et al., Study of Legislation for Improvement of Constitutional Adjudication Procedures 268–73 (1993) (in Korean). 50 Constitutional Court, 1997Hun-Ma315, June 24, 1999, (1999 KCCR, 11–1, 842) (S. Kor.).

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Court must declare limitedly unconstitutional the provision as a precondition of annulment of the Supreme Court’s judgment. In the previous case,51 the Constitutional Court decided the provisions on transfer income tax, Articles 23(4) and 45(1) of the Income Tax Act, were limitedly unconstitutional. Transfer income tax is imposed on the income accruing from a transfer of assets, for example, on land or on buildings. The transfer income is calculated by the total income from the transfer of an asset minus the cost of acquisition. The main texts of Articles 23(4) and 45(1) of the Income Tax Act provided that the total income or the transfer value of the land is the standard public land price of that asset at the time of the transfer and the cost of acquisition is also the standard public land price of the asset at the time of acquisition. Provisos of the clauses allow a presidential decree to make exceptions and use the actual transaction price for the transfer value and the cost instead. However, the provisos themselves do not specify the scope of delegation to the presidential decrees and do not make clear when the actual transaction prices can be used to calculate the transfer income. According to the principles of statutory taxation and non-delegation doctrine in Articles 38, 59 and 75 of the Constitution,52 the important matters relating to the duty to pay a tax should be stated in the statute as explicitly as possible, and delegation of such matters to presidential decrees must be made with the scope specifically defined by the Act. The Constitutional Court stated that the provisos are measures to protect taxpayers from being at a disadvantage by use of the standard public land prices, as opposed to that of the actual transaction prices in view of constitutional principles. It also said that they delegate the authority of deciding when to use actual transaction prices to presidential decrees only for the situations where the tax amount thus calculated does not exceed the tax amount calculated with standard public land prices. The Constitutional Court said, “Thus interpreted, the provisos concretely specify the scope of delegation and do not violate the constitutional principles of statutory taxation or the rule against blanket delegation,” and declared, Therefore, if the provisos are interpreted broadly that it allow decrees to use the actual transaction price for the transfer value and the cost when actual transaction prices produce higher tax amounts than standard public land prices, they would violate Articles 38, 59 and 75.

51 Constitutional Court, 1994Hun-Ma40, Nov. 30, 1995, (1995 KCCR, 7–2, 616) (S. Kor.). 52 Article 38: All citizens shall have the duty to pay taxes under the conditions as prescribed by the Act; Article 59: Types and rates of taxes shall be determined by the Act; Article 75: The President may issue presidential decrees concerning matters delegated to him by the Act with the scope specifically defined and also matters necessary to enforce the Acts. Constitution, arts. 38 & 59 (S. Kor.).

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But, the Supreme Court had an opposite position to that of the Constitutional Court. Most of all, the Supreme Court denied the binding force of the limited constitutionality decision, saying: The limited constitutionality decision is merely an interpretation of the provision which specifies the meaning, contents and scope of application, because the language of the statute of provision remains intact in spite of the decision. The Constitution grants the power to interpret the statute, which is the essential part of judicial power to the Supreme Court and other ordinary courts exclusively. As the opinion in a decision of limited constitutionality is just one point of view of the Constitutional Court, it is no binding force on the ordinary courts.53

Then the Supreme Court decided that the proviso could be interpreted to delegate decrees to use the actual transaction price even when it would produce higher tax amounts than when calculated with standard public land prices. When the constitutional complaint was filed against this Supreme Court’s decision, the Constitutional Court annulled it and the imposition of the transfer profit tax on the complainant. As a precondition of the judgment, the Constitutional Court should remove an obstacle, Article 68(1) of the Constitutional Court Act, which excludes the ordinary courts’ judgments from the subjects of the constitutional complaint, observing: To the extent that the provision is interpreted to exclude from constitutional challenge those judgments that enforce the laws struck down in whole or part by the Constitutional Court and thereby infringe upon people’s basic rights, the provision in question should be unconstitutional. All government organs should be bound by the Constitution. Because Constitutional Adjudication is the judicial means to accomplish the task, all government power – including the judicial branch – must abide by the unconstitutionality decision of the Constitutional Court. The judgments that applied the laws previously invalidated by the Constitutional Court are opposite to the binding force of the decision and constitutional determination to give to the Constitutional Court the competence of judicial review. Thus, those judgments must be reviewed by the Constitutional Court, and Article 68(1) of the Constitutional Court Act must be interpreted as such. In that scope, it is unconstitutional.

Then, the Constitutional Court moved to the issue of the limited unconstitutionality decision. It said: Unconstitutionality decisions of the Constitutional Court could take such forms as unqualified unconstitutionality, limited constitutionality, limited unconstitutionality, and nonconformity to the Constitution, and the decision on all of these forms is binding. When evaluation of a statute would vary according to how it interprets the text, meaning, and legislative intent of the statute, the Constitutional Court should choose the interpretation which is the most compliant with the Constitution within the scope 53 Supreme Court, 1995Nu11405, Apr. 9, 1996 (S. Kor.).

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permitted by general rules of interpretation. After that, the Constitutional Court may find it constitutional within that scope. Or the Constitutional Court may articulate the possibilities of applying the statute beyond its constitutional scope and find it unconstitutional as applied outside that scope. The two forms are flip-sides of a coin and are the same for all practical purposes. They differ only in whether they actively or passively exclude the unconstitutional applications of an otherwise valid statute, and they are equal decisions of partial constitutionality.

At last, the Constitutional Court accepted the constitutional complaint against the Supreme Court’s judgment which enforces the statutory provision as invalidated by the Constitutional Court in a previous decision, because it violates the binding force of the Constitutional Court’s decisions and the complainant’s right to property.54 The ordinary courts’ main task is to solve each case by interpreting and applying statutes to the facts. The Supreme Court, as the highest court in the branch, has a strong tendency to consider concrete validity as being more important than legal principles and theory. This tendency was shown when the Supreme Court said that the provision in question could not be construed to delegate legislative power only in the tax payer’s favor and the Constitutional Court’s interpretation would unjustly relieve the complainant who made a considerable transfer profit over a very short time in the decision mentioned above. On the contrary, constitutional adjudication requires value-oriented approach by judges. Additionally, one of the main tasks of the Constitutional Court of Korea is to correct unlawful government actions made by the last authoritarian government, including a lot of unconstitutional statutes. Thus, the Constitutional Court usually has a tendency to place an emphasis on the constitutional principles and theoretical consistency. These opposing points of view collided with each other in this case. Many scholars and judges criticized the Constitutional Court’s position in this case, saying that such a decision conflicts with the supremacy of the Supreme Court and the independence of the judiciary, and constitutes an introduction of a four-trial system never anticipated by the Constitution. But the Constitutional Court replied that the decision was unavoidable in order to defend the binding force and integrity of the constitutional adjudication system.55 Anyway, this decision shocked the Supreme Court. Though it was an only small crack on the wall preventing constitutional review on its judgments, the decision meant that the Constitutional Court could go forward in making possible a constitutional complaint against decisions of ordinary courts by declaring unconstitutional the

54 There was a dissenting opinion written by three Justices. 55 Constitutional Court, supra note 48, at 536–37.

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clause of the Constitutional Court Act which excludes them from the subjects of the constitutional complaint. Since this decision, conflict between the two courts has become more intense. The Supreme Court has put much effort into preserving their highest and most prestigious status in the judicial branch, and continues to insist that the Constitutional Court be abolished and integrated into the Supreme Court.56 Meanwhile, the Constitutional Court insisted on the revision opinion of the Constitutional Court Act, saying that the constitutional complaint against judgments of the ordinary court must be allowed.

4.4

Supplementary Provision of a Repealed Act on the Regulation on Tax Reduction and Exemption Case57

After the above decision, the Constitutional Court made limited unconstitutional decisions several times. As the ordinary courts did not make direct objections, there was no conflict between them at face value. But the tension still existed and it could have emerged to the surface with momentum at any given time. In this case, the Constitutional Court held that if a court or a taxation authority interpreted Article 23 of the Supplement Provisions of the Act on the Regulation of Tax Reduction and Exemption as valid and took it as a basis for taxation, it would be a violation of both the principle of separation of power and the rule against taxation without law because the provision had already been repealed. Article 23 of the Supplement Provisions of the Act on the Regulation of Tax Reduction and Exemption58 was prescribed when the Act was revised by Act No. 4285 on December 31, 1990. The Act was entirely revised by Act No. 4666 on December 31, 1993, but Act No. 4666 did not provide anything about Article 23. The Constitutional Court said that when all the provisions of an Act are revised, it is the same as when a former Act is repealed and a new Act is enacted. Unless there is no provision for continuous applications of those entirely revised Acts, in this case, not only were the main texts of that former Act, but also its supplementary provisions, invalidated by the execution of the new Act. Thus, the Constitutional Court concluded that Article 23 was no longer valid. 56 Anticipation of Conflicts on Status of Supreme Court, Segyeilbo, Oct. 22, 2009, available at http://www.segye.com (in Korean). 57 Constitutional Court, 2009Hun-Ma123, 126 (consol.), May 31, 2012, (2012 KCCR, 24–1(B), 281) (S. Kor.). 58 Supplementary Provision Article 23 limited the validity period of assets revaluation in Article 56–2(1), which provided that assets revaluation will be valid for 2 years in cases of failure of stock listing. Article 23 delegated competence to prescribe a validity period in detail to presidential decree.

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On the contrary, the Supreme Court applied Article 23 to the cases as a valid provision in the decisions.59 It explained that there is a “specific circumstance” when, despite the execution of the entirely revised Act, the supplement provisions of the former Act could not be invalidated. The court must consider the purposes of the provisions, a problem of a legal vacuum, and other related matters for deciding the circumstances. In the above case, the Supreme Court recognized a “specific circumstance” and declared that the tax imposition based on Article 23 was valid. The Supreme Court said that the legislature appeared to have intentionally prescribed no more clauses considering that the matters relevant to special rules for assets revaluation would be sufficiently regulated even without separate transitory provisions for continuous application of Article 23. It also said that if Article 23 was considered as invalidated, a legal vacuum would arise and it would result in a situation where companies which either did not go public within their period, or who cancelled their asset revaluation, would be favored as compared to other companies with no reasonable grounds. The Constitutional Court accepted that if Article 23 was deemed to have lost its effect, a legal vacuum might be caused and those companies – such as the petitioners – might gain an unfair benefit, which might cause a violation of equity in taxation. However, the Constitutional Court said: In the area of tax law where the principle of no taxation without law requires that the elements of taxation shall be set forth by law and the languages of such law shall be clear, in principle, it is the legislature who has the authority and responsibility to prevent the obvious legal vacuum of inadequate transitional provision and correct unfairness against equity. On the contrary, the courts or tax authorities who interpret or apply laws within the limit of the languages of the law shall not have such authority and responsibility. Moreover, an logical interpretation or supplementary interpretation of a statutory provision based on reasonableness in reality can be allowed only if that provision is still “in effect” and thus a statutory provision “having already lost its validity” shall not be subject to that interpretation.

Therefore, the Constitutional Court laid down a limited constitutionality decision on Article 23 of the Supplement Provisions that had already lost its effect, as the ordinary court accepted it as still valid, and thus took such provisions as a basis for taxation. Once again, we can see the different tendency in judgments made by two of the highest courts. The Supreme Court could not admit companies’ unfair benefits, and made a decision in pursuit of concrete justice that even undermined legal principle. Meanwhile, even though it foresaw an unfair result, the Constitutional Court decided the law was unconstitutional on the base of constitutional prin59 Supreme Court, 2006Du19419, Nov. 27, 2008 (S. Kor.); Supreme Court, 2006Du17550, Dec. 11, 2008 (S. Kor.).

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ciples. The opinion of the Constitutional Court in this decision is totally opposite to that of the Supreme Court. If the petitioner raised constitutional complaint against the imposition of a tax and the Supreme Court’s above decision to the Constitutional Court, and if the Supreme Court did not change their position concerning their limited constitutionality decision of the Constitutional Court, i. e. it does not bind, it could be expected that the same event with the constitutional review of the Supreme Court decision case would occur. Then, the Constitutional Court would cancel the Supreme Court’s decision again. It would results in stiff confrontation between the two judicial organs.

5

Conclusion

Considering the history of constitutional adjudication, when the Constitutional Court was first established, no one could have expected that this judicial organ would play such a big role in developing Korean democracy. But the Constitutional Court has diligently performed its duty in controlling state power, realizing the principle of separation of power and protecting the fundamental rights of the people for the last 25 years. By subjecting the legislative, executive and judicial acts to judicial review, the people who exercise government power have to constantly consider the constitutionality of their actions. Since its establishment, the Constitutional Court has been estimated to be the most powerful and trustworthy government organ. Constitutional adjudication is a process to decide whether government action violates provisions or principles of the constitution. Judicial review’s purpose is to apply the constitution to provisions of statutes. In order to accomplish this task, the Constitutional Court must establish what the provision of the statute or the constitution means. After that, the Constitutional Court can move to decide whether or not the statute would violate the constitution.60 Thereby, the Constitutional Court can determine what the constitution requires or forbids in the particular area of law. This so-called, “constitutionalization of specific areas of law,”61 makes not only legislature, but also ordinary courts, pay attention to constitutional norms. It makes ordinary courts decide many constitutional issues and sometimes change their opinion to be consistent with that of the Constitutional Court. Interpretation of provisions of the statues is the main task of the Supreme Court. Usually, the Constitutional Court is ready to follow the interpretation 60 The process of adjudication in the ordinary court is similar. But as laws are applied to facts in this case, the courts must establish the facts and determine the meaning of the law. 61 Garlicki, supra note 12, at 48.

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already established by the decisions of the Supreme Court. Sometimes; however, the Constitutional Court should reject the ordinary court’s interpretation and find another one which could be considered as more constitutionally correct. The main body of conflicts between the courts has developed from the area of interpretation and decisions of limited unconstitutionality. Additionally, the Constitution itself divides the jurisdiction of constitutional adjudication of the Constitutional Court and the Supreme Court. For example, the Supreme Court has jurisdiction over the judicial review of administrative decrees and rules. The Constitutional Court also has jurisdiction over constitutional complaint against rules and regulations. The opinions of each court may not always be the same. The conflicts between the courts have developed from this area. The Supreme Court has a long history as the highest court of the nation and the paramount jurisdiction over almost every area of law. Placed at the top of the judicial branch, the Supreme Court has been respected by almost all judges and lawyers. On the contrary, the Constitutional Court was newly established in only 1988. As the Constitutional Court has expanded its influences over state and society little by little, the Supreme Court has had no choice but to realign its place in the new circumstances. Especially in the domain of constitutional law, the Supreme Court has no more experience and expertise than the Constitutional Court. The judicialization of the constitution, meaning that the constitution has become a legal instrument directly applicable in all courts,62 and the constitutionalization of specific areas of law, would be considered as the main factors which contribute to the existence of conflicts and tensions between the Constitutional Court and the Supreme Court.63 In Korea, we can recognize this from the fact that the main reason for disputes has been differing opinions about limited unconstitutionality decisions and the authority over statute interpretations between them. Korean experiences also tell us that overlapping functions between two different courts produces more conflicts and tensions. In this light, if it would be possible to make a clear role for each court, conflict could be reduced. For example, a good way to solve the conflicts could be to revise the clause which excludes the judgments of the ordinary courts from constitutional review in Article 68(1) of the Constitutional Court Act and to adopt unimpaired constitutional complaint. When tensions between two courts become aggravated and the level of conflicts goes to an aberrational level, there must be a measure to lessen the tensions. But, as long as the two highest courts can coexist, a certain level of tension cannot 62 Id. at 65. 63 Additionally, the natural inclination to expand the scope of the authority, professional selfesteem, institutional dignity, and differences in professional backgrounds can be mentioned as such factors. See, e. g., id. at 64.

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be avoided. Over the last 25 years, the Constitutional Court, the Supreme Court, and other lower courts have had a good cooperation with one another in order to accomplish the present level of development of democracy in Korea. They have been in conflict with each other in some cases. There is still a possibility that such conflicts could lead to some serious problems. However, if such conflicts change into healthy competition between the two courts to protect the basic rights of people and to strive for justice, they will further contribute to the development of democracy and constitutionalism.

References Brewer-Carias, A. R. (1989). Judicial review in comparative law. Cambridge, UK: Cambridge University Press. Cheli, E., & Donati, F. (1994). Methods and criteria of judgment on the question of rights to freedom in Italy. In D. M. Beatty (Ed.), Human rights and judicial review: A comparative perspective (pp. 227–265). Dordrecht, the Netherlands: Martinus Nijhoff. Chong, J. S. (2009). The establishment of the Constitutional Court in Korean Constitution of 1960. Korean Journal of Law and Society, 36, 385. (In Korean) Constitutional Court (2008). Twenty years of the Constitutional Court of Korea. Seoul, Korea: Author. Garlicki, L (2007). Constitutional court versus supreme courts. International Journal of Constitutional Law, 5, 44–68. Gun, Y. et al. (1999). Proposals for revision of the Constitutional Court Act. (In Korean) Kim, C. Y. et al. (1993). Study of legislation for improvement of constitutional adjudication procedures. (In Korean) Schwartz, H. (2000). The struggle for constitutional justice in post-communist Europe. Chicago, IL: University of Chicago Press. Villaón, P. C. (2006). Conflicts between Tribunal Constitucional and Tribunal Supremo: A national experience. In I. Pernice, J. Kokott, & C. Saunders (Eds.), The future of the European judicial system in a comparative perspective (pp. 111–116). Baden-Baden, Germany: Nomos Verlagsgesellschaft. Yu, G. O. (1981). Memories of constitutional founding. (In Korean)

Wen-Chen Chang

4

The Evolution of Administrative Adjudication in Taiwan: A Model of Judicial Cooperation*

1

Introduction

In modern constitutional democracy, administrative adjudication serves as a significant check and balance with the exercise of powers by administrative agencies. By enabling courts to scrutinize administrative decisions, administrative adjudication crystallizes the constitutional principle of separation of powers at the level of mundane administration.1 More importantly, it facilitates citizen participation in public decision-making through litigation process and ensures the right of citizens to seek remedy when their rights or interests are infringed by the government.2 Even in authoritarian context, Ginsburg and Moustafa find that administrative adjudication – albeit substantially constrained – may still render important functions such as exercising social control, sustaining governing legitimacy, overseeing the bureaucracy, ensuring market commitments and resolving challenging issues.3 These various functions – in both authoritarian and democratic contexts – have been witnessed in Taiwan as administrative adjudication has evolved.4 The development of administrative adjudication in Taiwan began quite early. The system of modern administrative appeals or litigation modeled on the * The author would like to thank research assistants Yi-Li Lee, Chia-Ching Chen and Po-Cheng Lin, for their superb research assistance. 1 Richard B. Stewart, Administrative Law in the Twenty-first Century, 78 N.Y.U. L. Rev. 437, 438– 39 (2003). 2 Hee-Jung Lee, Administrative Litigation in Korea: Structures and Roles in Judicial Review, in Litigation in Korea 175–99 (Cho Kuk ed., 2010). 3 Tamir Moustafa & Tom Ginsburg, Introduction: The Function of Courts in Authoritarian Politics, in Rule by Law: The Politics of Courts in Authoritarian Regimes 1, 1–10 (Tom Ginsburg & Tamir Moustafa eds., 2008). 4 Wen-Chen Chang, Governing Functions of the Constitutional Court and Administrative Courts in Taiwan, in The Inheritance and Endurance of Rule of Law: The First Public Law Symposium in Honor of Professor Weng Yueh-Sheng 75, 75–108 ( Jau-Yuan Hwang ed., 2013) (in Chinese).

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German Reich was introduced during the Japanese colonial era, 1985–1945.5 After World War Two, however, a new system of administrative adjudication was established as the Nationalist Party (Kuomintang, KMT) government retreated from mainland China to Taiwan due to the defeat by the Community Party. On the mainland, administrative adjudication was created in 1914, three years after the Republic of China (ROC) was founded. The Administrative Court was formally established in 1932 under the tutelage government controlled by the KMT. The organization and jurisdiction of the Administrative Court remained intact even after the implementation of the ROC Constitution in 1947. The Administrative Court continued its main functions after the relocation to Taiwan and was not undergone with any significant change until the comprehensive revision of the Administrative Litigation Act in 1998. Despite the lack of administrative law reforms prior to the late 1990s, Taiwan had nevertheless successfully transformed itself from an authoritarian regime into a full-fledged constitutional democracy. Both constitutional and administrative litigation have become indispensable in safeguarding the rights of individuals and exercising effective checks and balances with the exercise of government powers.6 Particularly in recent years, administrative courts have rendered quite a number of decisions challenging or even revoking administrative decisions that had substantial political and economic consequences. Scholars have argued that the transformation of administrative adjudication in Taiwan has been largely due to administrative law reforms in the late 1990s driven by forces of democratization.7 However, it remains intriguing to explore if the development of administrative adjudication prior to the late 1990s has laid some groundwork for the subsequent successful transformation. Given the lack of reforms prior to the late 1990s, in what way had the system of administrative adjudication developed any strategies to meet the challenge? Are there any other actors, for example the Constitutional Court, lending any support? This Chapter is thus aimed at recapitulating the development of administrative adjudication in Taiwan from both historical and institutional perspectives. It seeks to analyze how administrative adjudication in Taiwan has emerged and what progress made by which actor. Aside from the introduction and conclusion, the Chapter is divided into four major sections. The first three sections (Sections 2 to 4) illustrate various aspect of administrative adjudication: creation and evolution, judges and appointment, and jurisdictions and per5 Tay-Sheng Wang, Legal Reform in Taiwan under Japanese Colonial Rule, 1895–1945: The Reception of Western Law (2000). 6 Jiunn-rong Yeh, Democracy-driven Transformation to Regulatory State: The Story of Taiwan, 3 Nat’l Taiwan U. L. Rev. 31 (2008). 7 Jiunn-Rong Yeh & Wen-Chen Chang, The Emergence of East Asian Constitutionalism: Features in Comparison, 59 Am. J. Comp. L. 805 (2011).

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formance. Section 5 is the highlight of this Chapter as it closely examines if – and in what way – both the Administrative Court and the Constitutional Court have collaborated on the progress of administrative adjudication prior to the reforms of the late 1990s. This Chapter concludes by providing an affirmative answer to the aforementioned question and arguing that a model of judicial cooperation between the Administrative Court and the Constitutional Court has facilitated the expansion of administrative adjudication in Taiwan for the past decades.

2

Creation and evolution

The idea of administrative adjudication was born in the creation of the Council of State in 1914, three years after the ROC was founded. However, the Creation of the Administrative Court was by the Administrative Litigation Act that was promulgated in 1932 and became effective in 1933. Minor revisions were undertaken in 1936, 1942, 1969, and 1975. The comprehensive revision that replaced original 34 provisions with 308 provisions was undertaken in 1998. The new provisions became effective in July 2000. Following the Administrative Act of 1998, minor revisions were done in 2007, 2009, 2011, and 2012 respectively.

2.1

The establishment of administrative adjudication

The Council of State (平政院) was created in 1914. Modeled on the Conseil d’État in France, the Council of State was not strictly a judicial institution and made subordinated to the President. The functions and jurisdictions of the Council were rather broad. Individuals whose rights were infringed by the government were allowed to bring complaints before the Council. In addition, ombudsmen (肅政史) were also created in assisting the works of the Council. Their duties were to investigate the conduct of government officials and placed charges against impugned officials before the Council.8 In 1928, the Organic Act of the Central Government provided that the authority of administrative litigation should be exercised by the judiciary. The Administrative Litigation Act and the Organic Act of Administrative Court were enacted in 1932 and became effective in 1933. Minor revisions were done in 1936, 1942, 1969, and 1975. None involved significant changes.9

8 Huaiying Tu, The Fundamental Principle of Administrative Law 677 (1980) (in Chinese); Chi-tung Lin, Administrative Law 525 (5th ed. 1990) (in Chinese). 9 Lin, supra note 8, at 526.

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During this period of more than sixty years, there was only one administrative court separated from the courts of general jurisdictions that included three tiers of courts – District Courts, High Courts and Supreme Court. The Administrative Court was the first and final instance of administrative adjudication. The only type of administrative litigation is the litigation to revoke illegal administrative dispositions, unilateral administrative acts with direct and final legal effects upon individuals.10 Under the law, individuals whose rights were infringed by illegal administrative dispositions could bring suits to the Administrative Court after having exhausted the appeals and re-appeals to the concerned administrative agencies and their supervisory agencies.11 Once being revoked, administrative dispositions were usually remanded back to the concerned administrative agencies for consideration of making new dispositions or revising the existing ones. While it was also possible for the Administrative Court to make or revise administrative dispositions directly, the Administrative Court had rarely done so.12 The functions of administrative adjudication during this period were considerably constrained due to such designs of administrative adjudication. First, there was only one administrative court located in Taipei. Second, the concept of administrative disposition was narrowly and strictly construed. Third, only rights – but not interests – that were infringed could seek remedy. Last but not the least, the exhaustion of administrative appeals was required before suing at the Administrative Court. Notably however, as Sections 4 and 5 of this Chapter illustrate, these constraints were gradually lifted through collaborative efforts by both the Constitutional Court and the Administrative Court in a series of decisions.

10 Administrative Appeals Act, art. 2(1) (1979) (Taiwan). 11 Administrative Litigation Act, art. 1 (1975) (Taiwan). Article 1 of the 1932 Administrative Litigation Act provided that any person whose rights were infringed by an unlawful disposition of administrative agency at central or local level would be entitled to bring an administrative appeal in accordance with the Administrative Appeal Act. If the administrative agency did not make any decision regarding the appeal within thirty days, such an individual could thus file the suit before the administrative court. Subsequent amendments of Administrative Litigation Act had similar provisions on revocation of administrative dispositions. For example, Article 1 of the 1942 amendment and Article 1 of the 1969 amendment stipulated that anyone whose rights or interests were unlawfully or improperly infringed by an administrative disposition done by an agency at the central or local level would be entitled to file an administrative appeal or in case when the agency did not make any decision on his/her appeal within three months or in the case of re-appeal in two months, could file a remedy by means of administrative litigation to the administrative court. The difference between the two revisions was merely the time limit. The time-limit to bringing the litigation in the 1932 amendment was thirty days compared to the extension to three months in the 1942 and 1969 amendments. 12 Geng Wu, Administrative Litigation 259 (6th ed. 2012) (in Chinese).

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The comprehensive revision since the late 1990s

In 1998, a comprehensive revision was made to the Administrative Litigation Act, replacing original 34 provisions with 308 provisions. Under this new law, a twotier system of administrative courts was created. The original administrative court was rechristened as the Supreme Administrative Court serving as the second and final tier of the court. In addition, three High Administrative Courts were created to exercise the original jurisdiction of administrative litigation. Judgments of the High Administrative Courts may be appealed to the Supreme Administrative Court in violation of laws.13 In the revision of 1998, the types of administrative litigation were expanded. Aside from the litigation to revoke illegal administrative disposition, new types of administrative litigation include: (1) to appeal for mandatory administrative dispositions that administrative agencies should have rendered in accordance with law,14 (2) to appeal for confirmation on invalidity of administrative dispositions or on the existence or nonexistence of public law relationships,15 (3) to appeal for mandatory administrative actions other than administrative dispositions,16 and (4) to appeal for public interests against illegal administrative actions pursuant to laws that include citizen suits clauses.17 To further illustrate, according to Article 5 of the Administrative Litigation Act, appeals for mandatory administrative disposition entail that an individual whose rights or legal interests were unlawfully infringed by illegal administrative inactions at the central or local level within the limited period is entitled to bring an administrative suit demanding for the issuance of administrative disposition. Article 6 of the Administrative Litigation Act provides appeals for confirmation on invalidation, illegality and other legal relationships, in that an individual may bring the suit to review invalidity or illegality of an administrative disposition or whether certain legal relationship exists under public law. Only individuals with legal interests in such invalidation or legal relationship may bring such a suit. Notably, certain important differences exist between revocation of administrative disposition and appeal for confirming invalidation, illegality and other legal relationships. First, before an individual files a lawsuit for revocation of administrative disposition, he or she must bring an administrative appeal to the agency whereas there is no appeal requirement to the appeal for confirming invalidation, illegality and other legal relationships. Secondly, before an individual brings the suit for appeal for confirming invalidation, illegality and 13 14 15 16 17

Administrative Litigation Act, art. 242 (1998) (Taiwan). Id. art. 5. Id. art. 6. Id. art. 8. Id. art. 9.

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other legal relationships, Article 113 of the Administrative Procedure Act provides such an individual should make a request to the administrative agency to determine the invalidity of an administrative disposition. If the administrative agency did not respond such a request within thirty days or held different opinions on invalidity or illegality of administrative disposition, then the individual can bring the appeal for confirming invalidation, illegality and other legal relationships.18 Article 7 of the Administrative Litigation Act allows individuals to file a lawsuit for damage compensation or other forms of payment appended into all types of administrative litigation. In addition, Article 8 of the Administrative Litigation Act stipulates appeals for mandatory agency actions other than administrative disposition, permitting that individuals may bring the suit to require the central or local government to undertake actions that arise from the reason of public law, to make non-property acts other than administrative disposition, or to perform administrative contracts. In addition, the legal basis for public interests litigation was first provided in the Administrative Litigation Act in 1998. Article 9 of the Administrative Litigation Act allows citizens to bring public interests litigation against illegal agency actions at administrative courts. It provides public interests groups with a much greater access to administrative justice. However, due to floodgates concerns, Article 9 also stipulates that there must be a special law granting jurisdiction on a specific subject in order for public interests litigation to proceed. In other words, Article 9 itself cannot be the enabling provision for citizen suits. Only if there is a specific law that clearly grants such public interests litigation would administrative courts have jurisdiction over the adjudication of such cases. Thus far, such public interests litigation has been granted mostly in environmental statutes.19 The revision also permitted requests for government compensation to be appended into all types of administrative litigation. Mandatory administrative re-appeals were abolished. More importantly, standing to sue was expanded to include those individuals whose rights or legal interests were infringed.20 In other words, not only rights but also legal interests are now permitted grounds for administrative litigation. The procedures of administrative litigation were also substantially reformed, modeled in greater degree on an adversarial system. Two other recent revisions have also strengthened the functions of administrative courts. In 2007, a provision was added to resolve jurisdictional disputes 18 Geng Wu, Theory and Practice of Administrative Law 651–60 (2012) (in Chinese). 19 These statutes include Air Pollution Control Act, Water Pollution Control Act, Soil and Groundwater Pollution Remediation Act, Marine Pollution Control Act and Environmental Impact Assessment Act. 20 Administrative Litigation Act, art. 5(1) (1998) (Taiwan).

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between the administrative courts and the courts of general jurisdictions. As the administrative courts are separated from the courts of general jurisdictions, individuals especially without lawyers may bring suits at wrong courts, causing additional costs and unnecessary delays. The new provision enables the administrative courts to directly transfer those cases to proper jurisdictions without burdening litigants.21 Even more importantly, in 2011, the third tier of administrative courts was created. At present, a tribunal of administrative litigation in charge of summary proceedings and traffic disputes is included in every district court.22 Complainants of these summary proceedings and traffic disputes, if dissatisfactory with the judgments delivered by the administrative tribunals of district courts, may make appeals to the three High Administrative Courts as the final instance.23

3

Judges and appointment

Generally judges in Taiwan are recruited through unified judicial exams. Upon the completion of the two-year training courses at the Judicial Training Institute after the passage of exams, judges are often in their late twenties or early thirties and begin to climb their judicial career through seniority and meritocracy.24

3.1

Qualifications of judges

The qualification of administrative court judges in Taiwan has been changed alongside with political and constitutional progress. During the era of political tutelage, administrative court judges were demanded to embrace a deep understanding of political ideology associated with the KMT. According to the Organic Act of Administrative Court of 1932, administrative court judges must have a deep understanding of KMT’s political ideology and have served the government for more than two years, and older than the age of 30.25 In 1945, the Act stipulated that a qualified administrative court judge at least should be a graduate from colleges with a major in politics or law.26 In 1948, as the ROC 21 22 23 24

Administrative Litigation Act, arts. 12–1 to 12–4 (2007) (Taiwan). Administrative Litigation Act, arts. 229 & 273–3 (2011) (Taiwan). Id. art. 235. Wen-Chen Chang, Courts and Judicial Reform in Taiwan: Gradual Transformations Towards the Guardian od Constitutionalism and Rule of Law, in Asian Courts in Context 143, 157– 58 ( Jiunn-rong Yeh & Wen-Chen Chang eds., 2014). 25 Organic Act of Administrative Court, art. 6 (1932) (Taiwan). 26 Organic Act of Administrative Court, art. 6 (1945) (Taiwan).

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Constitution became effective, the requirement for having a deep understanding of political ideology was abolished.27 In 1949, the KMT government retreated from Chinese mainland to Taiwan, and the Administrative Court moved to Taiwan along with other central judicial authorities. The Organic Act of Administrative Court that was revised in 1948 remained unchanged for more than twenty years. In 1975, there was a significant revision to the Organic Act of Administrative Court. The limit on age was suspended. A civil servant who had served for more than four years would be qualified for an administrative court judge. Furthermore, the qualification of administrative court judges was expanded to include career judges who may wish to transfer to the administrative court. Those who had served as judges at the Supreme Court, or as judges or prosecutors for more than a certain period could also be qualified as administrative court judges.28 The Organic Act of Administrative Court was substantially revised in 1999 after the comprehensive revision of the Administrative Litigation Act in 1998. As indicated earlier, the Administrative Court was rechristened the Supreme Administrative Court, while three High Administrative Courts were established.29 The qualifications of judges at the Supreme Administrative Court were expanded to include professors of public law, researchers of the Academia Sinica, and experienced lawyers. In addition, civil servants may also be qualified if having dealt with administrative complaints or legal affairs at administrative agencies for more than six years.30 The qualifications of High Administrative Court judges are similar to those of the Supreme Administrative Court, but the required lengths in experiences are shortened.31 The transformation in the qualification of administrative court judges presents two main features. First, requirements that were irrelevant to legal expertise, such as age or political ideology, were all abolished. Second, since 1975, the sources for recruiting judges became diversified. Not only civil servants, but also judges and prosecutors from the courts of general jurisdiction may become administrative court judges. More importantly, since the revision of 1999, experienced scholars of public law and experienced lawyers may also be qualified for administrative court judges.

27 28 29 30 31

Organic Act of Administrative Court, art. 6 (1948) (Taiwan). Organic Act of Administrative Court, art. 6 (1975) (Taiwan). Organic Act of Administrative Court, art. 2 (1999) (Taiwan). Id. art. 18. Id. art. 17.

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Appointments of judges

The appointment of administrative court judges was not clearly stipulated in the Organic Act of Administrative Court until 1975. It is interesting to note that the revision in 1975 stipulated that administrative court judges should be “selected” among those qualified.32 However, the details on the selection process were not clearly stipulated. The 1999 amendment to the Organic Act of Administrative Court required the judges of the Supreme Administrative Court to be appointed through selection or audition. Judges or prosecutors in the courts of general jurisdiction should be selected by the Judicial Selection Committee under the Judicial Yuan, the highest judicial administrative body whose president and vice-present concurrently serve as the justices to the Constitutional Court. These selected judges are required to take courses on administrative laws such as administrative litigation law, trademark law, patent law, and tax law before serving as administrative court judges.33 Scholars, lawyers and civil servants should be examined by the Audition Committee established by the Judicial Yuan, and should also take courses on administrative laws before their services.34 The members of the Audition Committee should be appointed by the Judicial Yuan. More than half of the members should be representatives from the Executive Yuan and Examination Yuan, scholars and trusted individuals in the society recruited by the Judicial Yuan.35 The method in the appointment of judges at high administrative courts is similar to those of the Supreme Administrative Court.36 In 2012, the Judicial Yuan promulgated the Rule of Review by the Judicial Selection Committee. The Committee consists of the President of the Judicial Yuan, two representatives of the Examination Yuan, six representatives of the judges, one representative of prosecutors, three representatives of lawyers, and six representatives of scholars or the society.37

3.3

The number of judges

At present, there are about 80 judges serving for the three High Administrative Courts and the Supreme Administrative Court. As shown in figure 1, the number of judges at High Administrative Courts is gradually on the rise. At the same time, 32 33 34 35 36 37

Organic Act of Administrative Court, art. 6 (1975) (Taiwan). Organic Act of Administrative Court, art. 18(2) (1999) (Taiwan). Id. art. 18(3). Id. art. 18(4). Id. art. 17. Rule of Review by the Judicial Selection Committee, art. 3(1) (2012) (Taiwan).

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the number of judges at the Supreme Administrative Court decreases. From 2006 to 2008, the judges of the Supreme Administrative Court decreased to 14, but the number comes back to 21 in 2009. Figure 1 shows the number of judges of the Supreme Administrative Court and High Administrative Courts from 1993 to 2011. SAC

70

Number of Judges 31 31

HAC

71

Total

72

74

62 52 47

49

52

55

73

74

59

61

14

13

72 58

77

56

76

55

80

81

58

59

22

22

38 28

29

28

29

24

23

24

25

24

23

24

25

29

23

24

23

22

20

19

14

21

21

19931994199519961997199819992000200120022003200420052006200720082009201020112012

Figure 1: The number of judges of the Supreme Administrative Court and High Administrative Courts from 1993 to 2012 (SAC: Supreme Administrative Court; HAC: High Administrative Court) (Source: Author)

Among the current 15 justices of Constitutional Court, two justices served as the judges at the administrative courts before: Hsi-Chun Huang and Pai-Hsiu Yeh. Over the past decades, relatively fewer administrative court judges – compared to judges at the Supreme Court of general jurisdiction – had been appointed to Constitutional Court.38

4

Jurisdiction and performance

Prior to the comprehensive revision of the Administrative Litigation Act in 1998, the jurisdiction of administrative court was limited to revocation of illegal administrative dispositions. Such a narrow jurisdiction substantially constrained the function of administrative adjudication. It is worthy of noting that even prior to the revision of 1998 and other recent amendments, a series of judgments 38 They are former Justices Feng-Zhi Peng, Chi-Nan Chen, Hua-Sun Tseng, Chien-Hua Yang, and Teh-Sheng Chang.

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rendered by both the Constitutional Court and the administrative court have gradually expanded the jurisdictions of administrative courts and enhanced the performances. The following illustrate such judicial cooperation on two aspects: jurisdictional conflicts between the administrative courts and the courts of general jurisdiction, and standing to sue in administrative litigation.

4.1

Jurisdictional conflict

As previously mentioned, in Taiwan, administrative courts are separated from the courts of general jurisdiction. Unless otherwise stipulated, disputes arising from private law relationships shall be adjudicated by ordinary courts; disputes arising from public law relationships shall be determined by administrative courts.39 However, in circumstances in which cases may be possibly dealt with by both ordinary courts and administrative disputes, conflicts may arise. Such conflicts of jurisdiction usually occur in cases concerning contracts between individuals and administrative agencies and cases on government compensation.40 Prior to the revision to the Administrative Litigation Act in 2007, if either the administrative court or the court of general jurisdiction denied the jurisdiction over the case, the litigant party must proceed with the other court.41 Such conflicts of jurisdiction have led to the waste of time and resources. In 2002, the Constitutional Court decided in J.Y. Interpretation No. 540 that the courts – rather than rendering dismissals – should directly transfer the cases to the proper courts.42 In 2005, the concurring opinion of J.Y. Interpretation No. 595 by Grand Justices Zhong-li Hzu, In-Jaw Lai, Tzu-yi Lin and Yu-Hsiu Hsu criticized that J.Y. Interpretation No. 540 may not be sufficient as it protected only the litigants whose cases were decided by the Constitutional Court.43 To resolve such jurisdictional conflicts, the Code of Civil Procedure was amended in 2009,44 and the Administrative Litigation Act was revised in 2007.

39 J.Y. Interpretation No. 466 (1998). 40 According to Article 12 of State Compensation Law, the provisions of the Code of Civil Procedure, as well as the provisions of the State Compensation law, are to be applied in claims for compensation. In general, the cases of State Compensation shall be adjudicated by ordinary courts, but there are still exceptions in practice and theory discussion. 41 Code of Civil Procedure, art. 249(1) (1945) (Taiwan); Administrative Litigation Act, art. 107 (1998) (Taiwan). 42 J.Y. Interpretation No. 540 (1992). 43 J.Y. Interpretation No. 595 (2005) (concurring opinion of the Grand Justices Zhong-li Hzu, InJaw Lai, Tzu-yi Lin and Yu-Hsiu Hsu). 44 Code of Civil Procedure, art. 31–2(2) (2009) (Taiwan); Administrative Litigation Act, art. 12–2 (2) (2007) (Taiwan).

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The solution to the conflicts of jurisdiction is as follows: if the case is in session of administrative court, a party cannot transfer the suit to ordinary court;45 if the case is in session of an ordinary court, a party cannot transfer the suit to administrative court.46 When the final judgment is rendered, the case is not to be dealt with by the other court.47 If the parties take the suit to a court – either the administrative court or ordinary court – and the court denies the jurisdiction, the court must directly transfer the case to the other proper court.48 In the meantime, if the other court also considers having no jurisdiction, it shall suspend the procedure and apply for an interpretation by the Constitutional Court. However, if two parties have an agreement to be adjudicated by ordinary court, the ordinary court shall have jurisdiction.49 After the revision, a dispute arose over the proper court to decide on the inmate’s petition against the denial of parole. In J.Y. Interpretation No. 691, the Constitutional Court stipulated a temporal solution before the final settlement by the law. According to the Constitutional Court, as a decision to grant parole was of administrative procedure in nature, the appeals against the denials of parole should be better decided by the administrative courts in accordance with Article 2 of the Administrative Procedure Act.50 In J.Y. Interpretation No. 695, the Constitutional Court assigned the disputed jurisdiction again to the administrative courts on the disputes over the denial of a lease granted according to the Operational Guidelines for the Restoration of the Over-cultivated, State-owned Woodland.51 Table 4.1 lists a series of interpretations rendered by the Constitutional Court regarding the jurisdictional conflicts between the administrative courts and ordinary courts. It seems that the Constitutional Court have accorded more cases to the administrative courts whenever it has found appropriate.

45 46 47 48 49 50 51

Code of Civil Procedure, art. 31–1(2). Administrative Litigation Act, art. 12–1(2). Code of Civil Procedure, art. 31–2(1); Administrative Litigation Act, art. 12–2(1). Administrative Litigation Act, art. 12–2(2) (Taiwan). Code of Civil Procedure, art. 182–1. J.Y. Interpretation No. 691 (2011). J.Y. Interpretation No. 695 (2011).

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Table 4.1: Interpretations by the Constitutional Court regarding jurisdictional conflicts, Source: Author J.Y. Interpretations No. 89

Date

Issue

June 2, 1961

Which court has the jurisOrdinary Courts diction over a dispute that arises from the revocation or dissolution of public lands release for cultivation? Should the disputes arising Administrative Courts from the implementation of the Land-to-the-Tiller Act be settled through administrative procedures?

No. 115

Sept. 16, 1966

No. 305

Oct. 2, 1992

No. 448

Feb. 27, 1998

No. 466

No. 540

Jurisdiction

(1) Are state-owned enterprises public or private legal persons? (2) Is a state-owned company’s removal of its employee from office the result of the exercise of public authority and, hence, is it subject to the review of administrative courts? Which court shall the jurisdiction be vested when the dispute arises from the government agency’s sale and/ or lease of a public property for and on behalf of the Treasury?

Disputes over the termination of the contractual shall be resolved in accordance with civil proceedings relationship; the governmental behalves’ relationships with government agencies which assign or appoint them are still relationships of public law. Ordinary Courts

Sept. 25, 1998

Should a payment dispute arising under the Public Functionaries Insurance Act be resolved in accordance with the procedures for administrative litigation?

Mar. 15, 2002

Which court has the jurisdiction over a dispute that arises from the revocation or dissolution of opening up of public lands for cultivation?

Administrative Courts. However, in the event an order for payment under administrative relief procedures cannot be realized, permission shall be granted for relief proceedings to be instituted in the ordinary courts. Ordinary Courts

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Table 4 (Continued) J.Y. Interpretations No. 595

Date

Issue

Jurisdiction

May 6, 2005

Which court should have the Ordinary Courts jurisdiction over a dispute arising in connection with the Bureau of Labor Insurance’s claim in subrogation after the said Bureau made advances of arrear wages that should have been paid by an employer? Administrative Litigation Act was amended in 2007. No. 691

Oct. 21, 2011

No. 695

Dec. 30, 2011

4.2

Which court shall have the Administrative Courts jurisdiction to adjudicate the inmate’s petition against the denial of parole rendered by the administrative organ? Disputes over the denial of a Administrative Courts lease granted according to the Operational Guidelines for the Restoration of overcultivated, state-owned Woodland, are to be resolved by administrative litigation or not?

Standing to sue

Before 1998, the Administrative Litigation Act allowed only individuals whose rights were infringed had the standing to sue against administrative agencies. The 1998 revision expanded the standing to sue. The Act now permits individuals whose rights or legal interests were infringed to be eligible to file suits.52 According to the jurisprudence developed by administrative courts, the term of “rights or legal interests” does not include factual interests or interests that are merely reflective upon the law, and thus, “legal interests” and “interests” must be carefully distinguished.53 To prove that rights or legal interests of individuals exist, there ought to be statutes or authorized regulations that obligate the 52 It should be noted however that the wording of rights or interests has long been used in the Administrative Appeals Act ever since the promulgation in 1920. In other words, the standing to bring administrative appeals has been always broader than to bring administrative litigations. At present, individuals whose rights or legal interests. 53 Min Chen, General Administrative Law 258–59 (7th ed. 2011) (in Chinese).

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government to act or to respond, and the purposes of such statutes or authorized rules are to protect or fulfill the rights or interests of certain individuals.54 Hence, if the obligation imposed by law or legislative rule is aimed at accomplishing public interests rather than rights or legal interest of certain individuals, individuals whose interests may be reflective upon general public interests are still not permitted to file suits. This is so-called “the theory of protective norm” borrowed by administrative courts as well as Taiwan’s administrative law scholars from German administrative law jurisprudence.55 In 1998, the Constitutional Court illustrated the theory of protective norm in J. Y. Interpretation No. 469.56 According to the Constitutional Court, to see if rights or legal interests are protected by statutes or legislative rules, one must observe “the overall structure of the law, the applicable party, the intended regulatory effects and factors of social developments” and if so identified, such persons whose rights or legal interests are intended to be protected by the law shall have a recourse in law.57 The theory of protective norm recognized in J.Y. Interpretation No. 469 has paved the ground for the standing to sue by a third party against an administrative disposition. Such a third party to an administrative disposition may sue if his or her legal interests are affected.58 Take the Electronic Toll Collection (ETC) case as an example.59 In this case, the Aviso Tech Incorporation (ATI) filed the suit against the National Freeway Bureau for revoking an administrative contract between the bureau and the other company, the Far Eastern Electronic Toll Collection Company (FETC), claiming that ATI as a competitor should have been provided with such an administrative contract. Such a standing to sue as a competitor in revoking administrative actions and mandating alternatives was rare. Nevertheless, ATI’s standing to sue as a competitor was affirmed by both the High Administrative Court and the Supreme Administrative Court.60 Another issue in standing to sue is whether administrative agencies may raise an administrative complaint in litigation against another administrative agency. In the past, such litigation was not possible as administrative complaints were understood as raised by individuals against the government. In 1945, the Judicial Yuan made an interpretation that recognized the standing to sue of local governments when these local governments stood the same as individuals in receiving administrative dispositions from the higher-level or central gov54 55 56 57 58 59 60

Id. at 259–62. Id. at 258. J.Y. Interpretation No. 469 (1998). See id. Wu, supra note 18, at 334–35, 652–53. Taipei High Administrative Court, 94 Su No. 752 (2006) (Taiwan). Id.; Supreme Administrative Court, 95 Pan No. 1239 (2006) (Taiwan).

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ernment.61 In 1954, the Constitutional Court in J.Y. Interpretation No. 40 affirmed that local governments with an autonomous status had the standing to sue, but such a standing did not extend to subsidiary agencies under local governments.62 Nevertheless, there were still cases in which the Administrative Court extended standing to sue to such subsidiary agencies.63 The 1998 revision to the Administrative Litigation Act resolved this issue to some extents. The revision stipulates that administrative organs of central or local governments have the right to be one of the parties of a suit.64 Yet, whether these administrative organs or subsidiary agencies may be conferred with standing to sue depends upon the claimed made in actual cases. As scholars have noted, these agencies are to be conferred with the standing to sue if they successfully show that they stand the same as individuals in receiving administrative dispositions,65 or they may raise complaints on jurisdictional conflicts against another administrative agencies.66 In recent years, administrative courts have begun expanding further standing to sue in cases concerning environment or human rights. In a case concerning the revocation of environmental impact assessment, the Supreme Administrative Court recognized the standing to sue by individuals who lived outside the development area but nevertheless would be greatly affected.67 The Supreme Administrative Court held that if individuals – as a third party to the environmental impact assessment – claimed that the decision of the environmental impact assessment would have or indeed had produced any worse or serious impact to their life, job or property, they must be eligible to sue. As the Supreme Administrative Court reasoned, in judging whether certain laws protected certain individuals, the text of the law was not the only basis. Related regulations and institutional conditions of the affected areas should be also taken into consideration. The standing of individuals in such environmental cases should be examined according to the context of each case, concerning the ranges of possible environmental impacts.68 61 62 63 64 65 66 67 68

J.Y. Yuanjie Interpretation No. 2990 (1945). J.Y. Interpretation No. 40 (1954). Administrative Court, 76 Pan No. 643 (1987) (Taiwan). Administrative Litigation Act, art. 22 (1998) (Taiwan). Chen-Shan Li, Introduction to Administrative Law 534 (2008) (in Chinese). Wu, supra note 12, at 381–82. Supreme Administrative Court, 102 Pan No. 70 (2013) (Taiwan). Supreme Administrative Court, 102 Pan No. 70 (2013) (Taiwan). This dispute arose from the environmental impact assessment of phase 4 of the Central Taiwan Science Park. In the lower court decision, the Taipei High Administrative Court decided that the Environmental Impact Assessment Act protected only procedural rights of individuals, not substantial rights, and held only residents whose procedural rights were infringed had the standing to sue. See Taipei High Administrative Court, 99 Su No. 1882 (2011) (Taiwan). However, the Supreme Admi-

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Due to the narrowed understanding of rights or legal interests in the past,69 the administrative courts had long held that an individual would not be conferred with a standing to sue when his or her foreign spouse was refused an entry to Taiwan. According to the Supreme Administrative Court, an interest to live with one’s spouse was not a legal interest, and hence, a Taiwanese citizen whose spouse was refused to enter into Taiwan by the immigration authority had no standing to sue against such a refusal.70 However, a recent decision by the Taipei High Administrative Court altered such a long held position.71 Grounding on the right to family enshrined in the International Covenant on Civil and Political Rights that was ratified by the government in 2009 and made domestically applicable through an Implementation Act, the High Administrative Court conferred that the individual whose foreign spouse was refused for entry should have the standing to sue. It was noted that the reunion of the spouses was crucial to the realization of right to marriage and family, and when one’s foreign spouse was denied for an entry to Taiwan, his or her right to marriage and family is deprived, and the recourse to legal remedy must be provided.72 This decision and its reliance on international human rights that become domestically applicable have been praised. It is worthy of further observation if such a trend may continue as the administrative courts continued to liberate the standing to sue in administrative litigation.

4.3

Performance

As stated earlier, the 1998 revision to the Administrative Litigation Act that became effective in 2001 created two tiers of administrative courts: the Supreme Administrative Court and the three High Administrative Courts. The performance of these two tiers of administrative courts is shown in the following figures 2, 3 and 4. Figure 2 illustrates the number of cases received in the docket, disposed of, and remaining in the docket of the Supreme Administrative Court and High Administrative Courts from 1993 to 2011. The increased caseload of the Supreme Administrative Court in 2001 was due to its transformation from the only administrative court to the Supreme Administrative Court, as the caseload remains

69 70 71 72

nistrative Court found the reading of the Environmental Impact Assessment Act by the Taipei High Administrative Court too narrow. Administrative Court, 75 Pan No. 362 (1986) (Taiwan). Supreme Administrative Court, 98 Pan No. 798 (2009) (Taiwan). Taipei High Administrative Court, 101 Su No. 520 (2013) (Taiwan). Id.

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stable after 2002. Overall, the caseload of both the Supreme Administrative Court and the three High Administrative Courts has been in a steady increase. by SAC

by HAC

20 39.3

18

Number (by thousand) of cases disposed

16 14 12

10.5 9.4

10

9.9 10.0 9.8 10.1 8.9

8

7.2 6.9

6 4 2

6.4

6.1

6.7 6.8 4.4 4.6

5.5

5.1 5.3 5.3

5.8

4.4

5.0 5.2 3.8 4.0 4.0

5.1 5.3

5.6 4.4

3.5

2.5

0

Figure 2: The number of cases received disposed of the Supreme Administrative Court and the High Administrative Courts from 1993 to 2012 (Source: Author)

Figure 3 shows the number of pending cases per judge of the Supreme Administrative Court and the High Administrative Courts. The Supreme Administrative Court has had in large number of pending cases while the High Administrative Courts seem to have dealt with caseloads efficiently. This may also seem to indicate a high percentage of appeals. Figure 4 illustrate the rate of revocation by the Supreme Administrative Court prior to 2001, the rate of rescindment by the Supreme Administrative Court after 2001, and the rate of individuals winning suits at the High Administrative Courts after 2001. It is quite intriguing that the rate of individuals winning suits at the High Administrative Court has been slightly decline while the rate of rescindment

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SAC

HAC

700 626.1

Cases pending per year

600

500 442.9 419.6

400

280.7

287.3

300

211.5

227.8 220.0

200

246.7

185.8 181.4 146.6 168.4

193.5

143.4

0

33.5

124.3 80.6

100 23.8

134.7

121.7

95.7

35.0 44.9 54.6

68.1

39.227.7 46.4

36.1 36.722.8

41.3

Figure 3: Pending cases per judge of the SAC and HAC by years from 1993–2012 (Source: Author)

by the Supreme Administrative Court has been on a rise. This may seem to suggest a much more progressive attitude of the Supreme Administrative Court in affirming rights of individuals. However, such a speculation requires further studies on the content of cases and grounds for individuals’ winning and rescindment.

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SAC rate of revocation (before 2002) SAC rate of " reason of rescindment" HAC rate of "individuals winning suit" 25.0 40.1 (HAC 2000)

20.0

16.5 15.0

15.0

14.9

15.0

14.5 13.9

rate (%)

13.7 11.6 10.2

10.0

11.2

10.4 9.5

9.3

8.7 8.0

9.4

9.3 8.2

7.3 6.4 7.1

6.3

8.3

10.6

9.0

5.0

5.9

7.2

6.1

6.6

6.4 6.5

4.9 3.9 1.3 0.0

0.0

Figure 4: The rate of revocation by SAC, reason of rescindment by SAC, and individuals winning suit by HAC from 1993–2012 (Source: Author)

5

Expansion: the model of judicial cooperation

Despite – and notwithstanding – the lack of administrative law reforms in decades, the administrative courts in Taiwan have gradually provided effective functions in guaranteeing the rights of individuals and supervising government actions. It is indeed worthy of exploring how such a profound transformation has been made and through what particular mechanism. As illustrated in the pre-

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vious section, both the Constitutional Court and administrative courts have undertaken some efforts in developing administrative law jurisprudence regarding jurisdictional conflicts and standing to sue that have made administrative adjudication much more accessible to concerned individuals. The following section analyzes additional aspects on the expansion of administrative adjudication by both administrative courts and the Constitutional Court.

5.1

Expansion by administrative courts

Despite its jurisdiction limited to revocation of administrative disposition, the Administrative Court has over the years tried to expand the functions by adopting a liberal constructive approach to the definition and application of administrative disposition. For example, the Administrative Court recognized a disposition made by an internal agency – initially unchallengeable – as an administrative disposition rendered by the superior administrative agency in order to make it possible to be challenged at the administrative court. A decision in 1961 constructed the decision rendered by the bureau of education in the city government as the administrative disposition made by the city government itself, thus challengeable at the Administrative Court.73 In addition, the Administrative Court also recognized the confirmation of public property relationship by the administrative agency as administrative disposition. For example, the Administrative Court decided that the public easement entailed a legal relationship in which those privately-owned lands should be used for public purpose, and that if the land owners transformed the public easement into their private farmland without authorization, the administrative agency must issue administrative disposition – challengeable at the Administrative Court – for correction.74 Further examples of liberal construction included the permission to use public property such as river land,75 the decision of labor insurance competence agency to give or deny the application of labor insurance,76 and even the denial of membership to the members of the irrigation associations, all being fallen into the concept of administrative disposition by the administrative agency challengeable at the Administrative Court.77 Upon retreating to Taiwan after the World War Two, the KMT government implemented a series of land reform policies including the rent reduction to 37.5 73 74 75 76 77

Administrative Court, 50 Pan No. 18 (1961) (Taiwan). Administrative Court, 45 Pan No. 8 (1956) (Taiwan). Administrative Court, 71 Pan No. 87 (1982) (Taiwan). Supreme Court, Civil Division, 56 Tai-Shang No. 3372 (1967) (Taiwan). Administrative Court, 50 Pan No. 21 (1961) (Taiwan).

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percent in 1949, the sale of public land in 1951, and the land to the tiller in 1953. These reforms were not without controversies. The Administrative Court in dealing with such disputes had again relied on liberal construction of administrative disposition to include the revocation or dissolution of opening up of public lands or land taking,78 the registration of land,79 the lease of land between government and individuals.80 In addition, the Administrative Court also recognized the urban planning as administrative disposition. It in its landmark decision, the Administrative Court stated that: Unilateral administrative acts, whether targeting a specific individual or a group of relevant individuals, by the government pursuant to its competent authority and in response to factual matters, cannot be said to be non-administrative acts if the said acts produce tangible results in the context of public law. Individuals whose rights or interests have been impaired by such said administrative acts may appeal for relief . . .81

This decision was affirmed by J.Y. Interpretation No. 156 of the Constitutional Court, upholding that if the urban planning or change of it directly abridges the rights and privileges of individuals within a certain region or intensifies their burdens, it must be regarding as having the characteristics of an administrative disposition.82 Such a liberal construction of administrative disposition continues till this day. In a recent decision, the Supreme Administrative Court again read an administrative plan regarding the network between local and mobile phones issued by the National Communication Commission as administrative disposition.83 Similar to the expansive reading of administrative disposition, the construction and application of administrative contract has also been interpreted quite generously by administrative courts. The examples include: the contract between the administrative agency and the contract-based employers,84 the commission contract to establish public facility or labor housing,85 the agreement to subsidize the private social welfare organization,86 the contract to support the electricity,87 the agreement to be a volunteer based upon the Volunteer Service Act,88 the

78 79 80 81 82 83 84 85 86 87 88

Administrative Court, 43 Pan No. 21 (1954) (Taiwan). Administrative Court, 56 Pan No. 97 (1967) (Taiwan). Administrative Court, 51 Pan No. 152 (1962) (Taiwan). Administrative Court, 59 Pan No. 192 (1970) (Taiwan). J.Y. Interpretation No. 156 (1979). Supreme Administrative Court, 98 Tsai No. 1195 (2009) (Taiwan). Supreme Administrative Court, 100 Pan No. 541 (2011) (Taiwan). Supreme Administrative Court, 96 Tsai No. 1876 (2007) (Taiwan). Supreme Administrative Court, 96 Pan No. 1531 (2007) (Taiwan). Supreme Administrative Court, 98 Pan No. 372 (2009) (Taiwan). Supreme Administrative Court, 94 Pan No. 798 (2005) (Taiwan).

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agreement between the city government and the animal hospital on promoting the sterilization of dogs and cats.89 Under the current law, disputes concerning administrative contracts may be brought to administrative courts by making appeals for confirming invalidation, illegality and other legal relationships90 or appeals for mandatory agency actions other than administrative disposition.91

5.2

Expansion by the Constitutional Court

The Constitutional Court has generously expanded the jurisdictions of administrative courts in the past decades. The expansion was mostly done in three ways: first, by a liberal construction of administrative disposition; second, by eliminating “the special power theory” in which certain classes of citizens were not permitted to sue against the government; and third, by extending a full judicial protection to contractual disputes arisen under public law between individuals and the government. The following illustrates each of these creative constructions. The Constitutional Court in J.Y. Interpretation No. 423 for the first time elaborated the definition of administrative disposition. The Constitutional Court defined an administrative disposition as “an administrative act taken unilaterally by an administrative agency in the exercise of its public authority in respect of a specific matter in public law with external legal consequence.”92 Based upon such definition, the Constitutional Court held that a notification that had directly affected the rights and duties of individuals and produced external legal effects must be regarded as an administrative disposition notwithstanding the fact that such a notification usually would be followed by subsequent – more formal – administrative decisions.93 In J.Y. Interpretation No. 459, the Constitutional Court deemed “classifications of the physical conditions of conscripts in connection with their military services” as “unilateral administrative acts of the conscription authorities” and provided those subject to such classification in the conscripts the opportunity to raise suits against the government.94 In 2002, the Constitutional Court rendered another interpretation, J.Y. Interpretation No. 546 in the context of electoral litigation.95 In the past, administrative litigations challenging election matters had usually not been admitted 89 90 91 92 93 94 95

Supreme Administrative Court, 96 Tsai No. 1785 (2007) (Taiwan). Administrative Litigation Act, art. 6 (2011) (Taiwan). Id. art. 8. J.Y. Interpretation No. 423 (1997). Id. J.Y. Interpretation No. 459 (1998). J.Y. Interpretation No. 546 (2002).

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because the matters would become moot when the term of years expired before the final judgment. According to the court, since the rights or legal interests involved in such disputes are irreparable or unrecoverable, these cases should not be admitted by the court.96 However, J.Y. Interpretation No. 546 altered such a long held position. According to the Constitutional Court, so-called irreparability or un-recoverability of infringed rights or interests does not include such circumstances as the repetitive exercise of a recurrent right or legal interest by individuals due to participation in or enjoyment of a system designed by the state. In this case, as the authority disapproved the complainant’s application for candidacy for public offices, the complainant should be able to initiate an administrative litigation against such decision. Although the election was already held, the complainant continued to have legal interests in the outcome of a review or a trial that would produce substantive benefits for his or her candidacy in another election.97 Due to the legal doctrine of “special power theory” borrowed from Japan and Germany, in Taiwan’s administrative law jurisprudence, certain classes of individuals – such as civil servants, students, public school teacher, inmates in prison and military soldiers – were made subordinate or even submissive to the state, and as a result, these classes of individuals were not permitted to sue against the government even if their rights or legal interests were gravely infringed. Such jurisprudence had long been recognized and affirmed by the case law of the administrative court.98 In the mid-1980s, however, the Constitutional Court began to alter this doctrine. In J.Y. Interpretation No. 187, the Constitutional Court extended to civil servants the right to sue again the government. A similar decision was made also in J.Y. Interpretation No. 201.99 The judicial protection of public functionaries continued till this day. For example, the Constitutional Court in J.Y. Interpretation No. 243 gave civil servants the right to sue even when they were deposed.100 Greater protection was further provided in J. Y. Interpretation No. 298, when government officials were faced with disciplinary measures.101 In J.Y. Interpretation No. 491, the unequal construction between the state and the civil servants was nearly eliminated.102 With regard to the rights of students, the Constitutional Court in J.Y. Interpretation No. 382 voided a precedent (P.T. No. 6) of the Administrative Court in 96 J.Y. Yuanjie Interpretation No. 2810 (1945). 97 J.Y. Interpretation No. 546 (2002). 98 Administrative Court, 53 Pan No. 229 (1964) (Taiwan); Administrative Court, 59 Pan No. 400 (1970) (Taiwan). 99 J.Y. Interpretation No. 187 (1984); J.Y. Interpretation No. 201 (1986). 100 J.Y. Interpretation No. 243 (1989). 101 J.Y. Interpretation No. 298 (1992). 102 J.Y. Interpretation No. 491 (1999).

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1952. According to the Constitutional Court, “an expulsion or similar action taken by a school of any level against one of its students in accordance with its student codes or disciplinary regulations fundamentally change that student’s status and hinder his/her opportunity to receive an education” and in light of the constitutional guarantee on the right to education, “such a disciplinary action shall be classified as an administrative act subject to administrative appeal and administrative litigation.”103 Following this decision, the Constitutional Court in J.Y. Interpretation No. 684 further upheld that When a university makes administrative decisions or other public authority measures for realizing educational purposes . . . or for maintaining the campus order, if the decisions or measures infringe the student’s right to education or other constitutional rights, . . . even if the decisions or measures are not expulsions or similar decisions, . . . the student whose right has been infringed shall be allowed to bring administrative appeal and litigation and there is no need to place special restrictions.104

The Constitutional Court also adopted the liberal construction of administrative disposition to protect the rights of university faculty members if affected by tenure decisions. In J.Y. Interpretation No. 462, the Constitutional Court decided “The authority of the faculty evaluation committee of each department, college and university over the faculty promotion review is a public authority with specified scope conferred by the law” and therefore a decision by such authority should be classified as administrative acts subject to administrative appeal and administrative litigation. An evaluated faculty member who is not satisfied with the decision and has exhausted all administrative remedies . . . is entitled to bring administrative litigation.105

The Constitutional Court also in J.Y. Interpretation No. 430 decided that military soldiers enjoyed the right to bring litigation against the denial order of their superior officers on their application to remain in post. The Constitutional Court stated that “military officers are in a broad sense civil servants and have public law relationships with the State due to their official posts” and thus should be accorded with the right to seek remedies by lodging administrative complaints as “the orders of discharge affect their military statuses and may result in violation of the constitutional guarantee of the right to perform public service.”106 In comparison with civil servants, students, public school teacher, and military soldiers, prisoners’ right to bring litigation against administrative agency was developed only very recently. In 2008, the Constitutional Court stated in J.Y. Interpretation No. 653 that a person should have right to litigate in court for legal 103 104 105 106

J.Y. Interpretation No. 382 (1995). J.Y. Interpretation No. 684 (2011). J.Y. Interpretation No. 462 (1998). J.Y. Interpretation No. 430 (1997).

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remedies when his personal right was infringed, and there should be no exception made by reason of the status of a detainee.107 In 2011, the Constitutional Court rendered J.Y. Interpretation No. 691 to entitle inmates in prison to receive adequate judicial remedy, stating that the petition against the denial of parole by the administrative authority should be accorded with the remedy decided by the court.108 Thus far, the doctrine of special power theory has been substantially eliminated and the jurisdiction of administrative courts uninhibited. Last but not the least, the Constitutional Court also begun extending a full judicial protection to disputes regarding administrative contracts. The Constitutional Court in J.Y. Interpretation No. 533 held that the contracts between the Bureau of National Health Insurance and other National Health Insurance Healthcare Providers would have the nature of an administrative contract, and that the disputes arisen from such contracts should be dealt with by administrative courts govern by public law.109 Similarly, the Constitutional Court held in J.Y. Interpretation No. 695 that when the Forestry District office rejected leasing contracts proposed by civilian applicants on grounds of public interests, an injured party should be entitled to resort to administrative litigation for relief, and all related disputes should be adjudicated by administrative courts.110

6

Conclusion

Despite – and notwithstanding – the lack of administrative law reforms prior to the late 1990s, administrative adjudication in Taiwan has developed into effective judicial checks and balances with the exercise of government powers. As this Chapter finds, such a profound transformation has been rendered through the cooperation between administrative courts and the Constitutional Court. Over the years, it has been closely in the agenda of the Constitutional Court to liberally construe the concept and application of administrative disposition, being the only administrative acts admitted for judicial challenge at the Administrative Court. Meanwhile, albeit in a much more cautious fashion, the administrative court also initiated by itself a liberal approach in constructing administrative disposition along with standing to sue and other administrative legal concepts. Unlike other comparative cases such as in Indonesia where liberal construction 107 108 109 110

J.Y. Interpretation No. 653 (2008). J.Y. Interpretation No. 691 (2011). J.Y. Interpretation No. 533 (2001). J.Y. Interpretation No. 695 (2011).

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by administrative courts may be suppressed by the Constitutional Court,111 the liberal construction by administrative courts in Taiwan has been substantially encouraged and supported by the Constitutional Court. The cooperative model between the two courts has rendered the velvet transformation in absence of legislative reforms in the area of administrative adjudication in Taiwan. This Chapter, however, has not yet explained the underlying reasons for such cooperation between the administrative courts and the Constitutional Court, which require much further contextual studies on the two courts and the context of democratic transitions facing these two courts.112 Further researches may extend to exploration of whether and in what ways such a cooperative model may work in other comparative settings.113

References Bedner, A. (2010). ‘Shopping forums’: Indonesia’s administrative courts. In A. Harding & P. Nicholson (Eds.), New courts in Asia (pp. 209–230). Oxon, UK: Routledge. Chang, W.-C. (2013). Governing functions of the Constitutional Court and Administrative Courts in Taiwan. In J.-Y. Hwang (Ed.), The inheritance and endurance of rule of law: The First Public Law Symposium in honor of Professor Weng Yueh-Sheng (pp. 75–108). Taipei, Taiwan: New Sharing. (In Chinese) Chen, M. (2011). General administrative law. Taipei, Taiwan: New Sharing. (In Chinese) Lee, H.-J. (2010). Administrative litigation in Korea: Structures and roles in judicial review. In K. Cho (Ed.), Litigation in Korea (pp. 175–199). Northampton, MA: Edward Elgar. Li, C.-S. (2008). Introduction to administrative law. Taipei, Taiwan: Sanmin. (In Chinese) Lin, C.-T. (1990). Administrative law. Taipei, Taiwan: Sanmin. (In Chinese) Moustafa, T., & Ginsburg, T. (2008). Introduction: The function of courts in authoritarian politics. In T. Ginsburg & T. Moustafa (Eds.), Rule by law: The politics of courts in authoritarian regimes (pp. 1–10). New York, NY: Cambridge University Press. Stewart, R. B. (2003). Administrative law in the Twenty-First Century. New York University Law Review, 78, 437–460. Tu, H.-Y. (1980). The fundamental principle of administrative law. Taipei, Taiwan: Sanmin. (In Chinese) Wang, T.-S. (2000). Legal reform in Taiwan under Japanese colonial rule, 1895–1945: The reception of western law. Seattle, WA: University of Washington Press. Wu, G. (2012). Administrative litigation (6th ed.). Taipei, Taiwan: Sanmin. (In Chinese)

111 Adriaan Bedner, ‘Shopping forums’: Indonesia’ Administrative Courts, in New Courts in Asia 209 (Andrew Harding & Penelope Nicholson eds., 2010). 112 Jiunn-rong, Yeh & Wen-Chen, Chang, Introduction: Asian Courts in Context: Tradition, Transition and Globalization, in Asian Courts in Context, supra note 24, at 1. 113 For example, South Korea may provide a great comparative example in light of such a cooperation model between the courts. Lee, supra note 2.

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Wu, G. (2012). Theory and practice of administrative law. Taipei, Taiwan: Sanmin. (In Chinese) Yeh, J.-r. (2008). Democracy-driven transformation to regulatory state: The story of Taiwan. National Taiwan University Law Review, 3, 31–60. Yeh, J.-r., & Chang, W.-C. (2014). Introduction: Asian courts in context: Tradition, transition and globalization. In J.-r. Yeh & W.-C. Chang (Eds.), Asian courts in context (pp.1–74). Cambridge, UK: Cambridge University Press. Yeh, J.-r., & Chang, W.-C. (2011). The emergence of East Asian constitutionalism: Features in comparison. American Journal of Comparative Law, 59, 805–840.

Seong-Wook Heo

5

The Judicial Review Criteria in Korean Administrative Litigation: The Proportionality Principle in Korean Administrative Law and Democratic Accountability

1

Introduction

As many other countries influenced by the German jurisprudence, the proportionality principle is quite widely used as a judicial review criterion to decide the legality of administrative action in Korean administrative adjudication. The basic concept of the proportionality principle is that the administrative measure to achieve a certain administrative goal should be proportionate to the goal. In this sense, if the administrative policy measure taken by the agency is out of proportionality against the policy goal to be achieved by the measure, then that administrative action shall be decided to be illegal by the court. One thing that should be noted in the application of the proportionality principle is that the judges in the judicial branch will make the final decision on the proportionality regarding the administrative action. Herein come the challenging questions surrounding the principle. Firstly, do the judges have systematic balancing tools to apply in the real cases where the proportionality of measures against the goals matters? Secondly, considering the importance of the principle of democracy in modern society, is it okay for the judiciary to make the final decision on the proportionality of administrative policy measures? Isn’t it true that the political or administrative branches that are under the governance of democratic procedure should make that kind of policy decision?

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2

The proportionality principle in Korean administrative adjudication

2.1

Background

The proportionality principle originally comes from the German legal theory in the age of police states, however, in addition to that theoretical origin, many Korean scholars find the positive legal foundation of the principle from Article 37 of the Constitution, which prescribes as follows: (1) The freedom and rights of people shall not be slightly treated for the reason that they are not enumerated in the Constitution. (2) The freedom and rights of people can be restricted by the parliament’s legislation when the restriction is required for the cause of national security, maintenance of public orderings, and public welfare. Even in the case of restriction, the core of the freedom and rights cannot be restricted.1

Even though there were quite many cases in which the proportionality principle was mentioned in the decision before 1992, it was at the 92Heonga8 decision in December 24, 1992 when the Korean Constitutional Court first clarified that Article 37 is the basis of the proportionality principle. At the decision, the Court ruled as follows: [T]he balancing of interests principle in the state’s activity especially in the legislative activity means the proportionality principle which naturally stems from the principle of rule of law. And Article 37 of our Constitution declares “the freedom and rights of people can be restricted by the parliament’s legislation when the restriction is required for the cause of national security, maintenance of public orderings, and public welfare. Even in the case of restriction, the core of the freedom and rights cannot be restricted,” which means that the proportionality principle has the role of setting the boundary of legislative power.2

After that decision, the Constitutional court has widely used the proportionality principle as the criterion to decide the constitutionality of legislative powers to restrict the freedom or rights of people. In the same vein, many administrative legal scholars in Korea find the basis of the proportionality principle in administrative adjudication from Article 37 of the Constitution and/or the rule of law principle.

1 This work was supported by the Korea Research Foundation Grant funded by the Korean Government [KRF-2010–013-B00039]. Constitution, art. 37 (S. Kor.). 2 Constitutional Court, 92Heonga8, Dec. 24, 1992 (S. Kor.).

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The contents of the proportionality principle

As the legal foundation of the proportionality principle is based upon Article 37 of the Constitution, the contents of the principle is understood to be identical with the principle of prohibition against over-fetched legislation or administrative measures and it is composed of the following three components.3 2.2.1 Principle of suitability (Grundsatz der Geeignetheit) This means that the administrative measures should be chosen from among the measures that are suitable to achieving the administrative goal. 2.2.2 Principle of necessity (Grundsatz der Erforderlichkeit) This means that the administrative measures should not exceed the necessary boundary for the achievement of the administrative goal. This means that the administrative agency has to choose the least infringing measures from among policy options to achieve the public interest goal. 2.2.3 Principle of proportionality (Grundsatz der Angemessenheit) This is the narrow meaning of the principle of proportionality. It requires that the administrative agency should not take a certain administrative measure even if that measure is necessary for the achievement of the administrative goal when the cost of that policy measure is larger than the benefit from that policy measure.

2.3

The effect of the violation of the principle of proportionality

As mentioned above, because the principle of proportionality comes from the Constitution, when a certain administrative action violates that principle, that administrative action naturally becomes illegal. Depending upon the gravity and the obviousness of the defect in the administrative action, it is decided whether the defect makes the administrative action simply cancellable or it makes the administrative action void. In many administrative law judicial review cases, the Supreme Court of Korea ruled that the violation of the proportionality principle makes the administrative action cancellable rather than void. However, in recent cases, the Supreme Court 3 Kim Dong-Hee, 1 The Administrative Law 56–58 (13th ed. 2007) (in Korean).

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ruled that the defect of the violation of the proportionality principle is quite grave and obvious, which made the administrative action void.4

3

The example of judicial review of administrative action through the proportionality principle in Korea5

3.1

Supreme Court March 8, 1994 Decision [Case I]6

This was a case where the legality of the administrative decision by the Ministry of Public Health to ban the domestic selling of fabricated drinking water by the plaintiff company which had the license for the fabrication of drinking water only for the international export. The plaintiff company had that a license which was valid from January 23, 1976 to June 23, 1987. The Ministry of Public Health found out that the company was selling the fabricated drinking water at the domestic market around July of 1990, and gave the company a monetary penalty of business suspension for a fourmonth period. Against this administrative action, the plaintiff company raised an administrative lawsuit asking for the cancellation of that penalty. In this case, the Supreme Court ruled that the administrative goal to achieve a high quality of drinking water should be attained by other policy measures like heightening the quality of tap water or spreading exact information about the quality of the tap water. The Court also ruled that simply banning the domestic sales of the fabricated drinking water was too much restriction of the freedom of business for the plaintiff company and it was not a suitable administrative policy option to achieve the administrative goal of keeping the high quality of drinking water. In this sense, the administrative rulemaking that banned the domestic sales of fabricated drinking water by the plaintiff company was not valid, and, accordingly, the administrative decision of sanctioning the company for the violation of the rulemaking was also illegal and should be cancelled.

4 Supreme Court, 2005Da24646, Nov. 15, 2007 (S. Kor.). 5 In this section, about the selection of the cases and their contents, I mostly referred Kim Taeho, The Proportionality Principle in Administrative Law, the presentation material of the 148th conference of the Public Law Association of Korea 101–16 (Apr. 18, 2009) (in Korean). 6 Supreme Court, 92Nu1728, Mar. 8, 1994 (S. Kor.).

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Supreme Court November 23, 2006 Decision [Case II]7

This was a case over the validity of an administrative decision through rulemaking to limit the area of fishing in the near sea and the number of ships at the area. In this case, the Supreme Court ruled that the administrative decision was justifiable for the purpose of the protection of fishery resources and the maintenance of balanced development of the fishing industry. The Court also decided that the administrative measure was a suitable and necessary one for the achievement of the administrative goal, and there was no severe imbalance between the public interest protected by the restriction and the sacrifice of private interest imposed by the restriction. Therefore, the administrative measure in this case did not violate the proportionality principle.

3.3

Supreme Court August 24, 2001 Decision [Case III]8

This was a case where the legality of disciplinary measures taken against a prosecutor who was claimed to have behaved badly while doing his prosecutorial job was decided. In this case, the Supreme Court ruled as follows. Even when there is a reason for a disciplinary measure against a public officer, the decision whether to give a disciplinary penalty to the officer, and the decision of what kind of disciplinary measure to be given to the officer, is up to a higher ranking officer who has the authority as a discretionary decision-maker. However, when the final disciplinary measure is deemed to be against the administrative goal of why the authority of a disciplinary decision is given to the higher ranking officer, or it violates the principle of proportionality by choosing too harsh disciplinary measures when compared with the bad behavior of the officer, then that disciplinary measure is illegal as a violation of the discretionary power boundary. The decision of whether a disciplinary measure violates the principle of proportionality should be made by comprehensively considering the contents and gravity of the bad behavior, the context and reason for the bad behavior, the seriousness of the impact of the bad behavior on the organization of the public service and to the people in general, the ranking and duty of the officer in the organization, the record of the officer’s competence on normal days, and the gravity of the disadvantage to the officer by the disciplinary measure according to a healthy social consensus.

7 Supreme Court, 2006Du12463, Nov. 23, 2006 (S. Kor.). 8 Supreme Court, 2000Du7704, Aug. 24, 2001 (S. Kor.).

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Is there any consistent and logical criterion for deciding whether a certain administrative measure is proportional?

In the previous section, I have briefly explained the three cases in which I could find the principle of proportionality decision by the Supreme Court of Korea. What I am in agreement over is that the final conclusions in those three cases came out after the application of the proportionality principle. What I am not in agreement over is about whether the Court has the consistent and logical criterion in the application of the proportionality principle in real cases. I have briefly reviewed the academic contents of the proportionality principle in Chapter II, which are the principle of suitability, the principle of necessity, and the narrow meaning of the principle of proportionality. However, to be frank, I am not sure how much pragmatic function can be found from those Dogmatiks for providing a logical criterion for decision-making in proportionality cases. Let me quote again the essential part of Case III. The decision whether a disciplinary measure is violating the principle of proportionality should be made by comprehensively considering the contents and gravity of the bad behavior, the context and reason of the bad behavior, the seriousness of the impact of the bad behavior to the organization of the public service and to the people in general, the ranking and duty of the officer in the organization, the record of the officer’s competence on normal days, and the gravity of disadvantage to the officer by the disciplinary measure according to a healthy social consensus.

Actually, the logic of this part of the ruling in Case III is also applicable to every other proportionality case. And, unfortunately, at least to me, that part reads as “the court decides the legality of the administrative measure in full discretion by considering every factor relevant to the case.” Herein lies the question of the separation of powers in the world of the proportionality principle.

5

The proportionality principle and the Chevron deference principle9

The way that the proportionality principle is applied in the judicial review of administrative action is quite comparable to the Chevron deference in U.S. administrative law. 9 Actually, I am not sure whether the Chevron deference attitude by the courts in U.S. administrative law cases can be called as “principle.” As the term “principle” can have legally and philosophically special meanings in the area of jurisprudence compared to the term “rule” or

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To be exact, in the sense that the Chevron deference is about how much deference is to be given by the court to the statutory interpretation of the administrative agency, its context is not exactly the same as the proportionality principle. However, if we understand that the discretionary power by the agency in the proportionality principle basically comes from the statutes enacted by Congress, the judicial review of the administrative discretionary power can also be understood from the angle of statutory interpretation. What matters in the proportionality principle is also how much deference should be given by the court to the agency’s statutory interpretation. As we will see later, the major difference in the proportionality principle from the Chevron deference is that in the former, the judges make the decision on the merits of what was the most appropriate administrative measure in a specific case. As we all know very well, the Chevron deference principle is composed of the following two steps.10 First is the question of whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter. In this case, the court must give effect to the unambiguously expressed intent of Congress. If, however, the court determines that Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.11

The first step regards the typical issue of the interpretation of the intent of Congress on a statute. If the intent of Congress found in the first step is obvious or unambiguous, then, there is not much for the court to do. The court can just review whether the agency has faithfully executed the intent of Congress as expressed in the statutory language. And that is it. However, in the real world of statutory interpretation, the agency and the court are almost always faced with the ambiguity of statutory language. That may sometimes be done inadvertently and at other times intentionally by Congress, for many reasons, and can be scientifically analyzed by way of public choice theory. Under this ambiguous situation, the Chevron deference principle orders the court to review only whether the statutory interpretation taken by the agency is permissible or reasonable. When the statutory interpretation of the agency is

“standard.” However, in this paper, I will simply use the term “Chevron deference principle” in a somewhat neutral meaning to set it as parallel with the proportionality “principle.” 10 Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). 11 Stephen G. Breyer et al., Administrative Law and Regulatory Policy: Problems, Text, and Cases 242–46 (6th ed. 2006).

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permissible, even in a case where the court is not exactly agreeing with the final conclusion, the court should not substitute its own preference for the agency’s conclusion. The court should defer to the agency’s decision. In this aspect, the Chevron deference principle is ordering the court to address the issue of judicial review very differently from the proportionality principle. Here we find the issue of democratic accountability.

6

The proportionality principle and democratic accountability

According to the details of the proportionality principle, the court makes the final decision on the legality of administrative discretionary decisions. After the stage of the principle of suitability and the principle of necessity, and during the stage of the narrow meaning principle of proportionality, the court has the role of balancing between public and private interest, the benefits from the regulation and the costs for the regulation, and the private interests of two different groups influenced by the administrative action. As mentioned in Section 3, the proportionality principle originally comes from the German legal theory in the age of police states. In the police state era, people’s expectations of the role of the state were relatively simple. It was well functioning if it maintained basic social ordering and defended itself from foreign enemies. In that situation, the proportionality decision was also quite simple, and it could be expected that judges in the court do their job quite well. Naturally, the issue of democratic accountability could be covered under the veil of the protection of private rights from the state power. However, in the modern world, people’s expectations of the role of the state are much more complex and multi-dimensional. Most modern administrative actions are done under a situation of scientific uncertainty. I can enumerate on many examples, including climate change, food safety, bird flu, nuclear energy, etc., just to name a few. In this scientifically uncertain situation, it is not guaranteed that the court can make an appropriate decision on a complex issue. Of course, there is no guarantee that the administrative agency always does better in modern administrative decision-making than the court does. However, it is true that the agency is generally supported by many more resources and by more professional staff then the court is. Moreover, the administrative agency generally has much more democratic accountability in the sense that it is composed of public officers who are nominated and dismissed by a President who was elected through democratic means. The administrative agency is also under the general control of Congress. For the proportionality principle to be justifiable in a modern administrative state, it should be able to provide much more sophisticated criteria in deciding

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the legality of administrative action done under scientific uncertainty. Letting the court struggle to try to find the best way by considering all the relevant factors is actually not a good enough method. In this respect, we can find many reference points from the Chevron deference principle that could be applied to the proportionality principle. Of course, it is true that active discussion is still going on in U.S. administrative law surrounding the exact meaning of the Chevron deference principle and its scope of application. However, after quite fierce discussions among judges and scholars on the meaning and scope of the Chevron deference during the past thirty years since its first decision in 1984, it is now safe to say that the Chevron deference principle is the basic foundational tool in judicial review of administrative action. Actually, the Chevron decision took the position of the most cited decision in U.S. jurisprudence. There is one more thing that we should check. By commanding the court to do the best it can by considering all the relevant factors in the proportionality test, aren’t we implicitly letting the court behave much like the court in the Chevron deference world? If that is true in the positive world, we better try to fill the gap between the normative principle and the positive real world as soon as possible. In analyzing this point, the insights from the study of public choice theory can provide a useful tool to better understand the real world of interest group activity and the incentive structure of many players in the regulatory regime.

7

Conclusion

In Korean administrative adjudication, the principle of proportionality has been used as a very strong tool to judicially review the legality of administrative discretionary decisions. As a conceptual Dogmatik, it has well-established subprinciples – like the principle of suitability, the principle of necessity, and the narrow meaning of the proportionality principle. Until recently, when the issues dealing with the state were not relatively complex, the evaluation of the proportionality principle’s function was relatively tolerable. However, to address modern administrative state issues full of scientific uncertainty, we should reconsider the validity of the proportionality principle. Because the court is the least democratically accountable branch of the state, we cannot simply order the court to do the best that it can to consider all relevant factors according to a social consensus. In this sense, the Chevron deference principle can provide a reference point to rethink the proportionality principle and to find a way to develop a more sophisticated version of the proportionality principle.

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References Breyer, S. G., Stewart, R. B., Sunstein, C. R., & Vermeule, A. (2006). Administrative law and regulatory policy: Problems, text, and cases. New York, NY: Aspen. Kim, D.-H. (2007). The administrative law (Vol. 1). (In Korean) Kim, T. (2009, April). The proportionality principle in administrative law. Paper presented at the 148th conference of the Public Law Association of Korea. (In Korean)

Part II: Courts in Civil and Commercial Adjudications

Chung-jau Wu

6

The Law-making Function of the Court and the Necessity for a Second Amendment for Taiwanese Law of Contracts: An Observation from Leading Cases

1

Introduction: a unanimous orientation of the codification or amendment of civil law in East Asia

The integration of Civil Law in Europe, and contract law in particular, started in the 1970s, and has temporarily come to an end in 2010. In the year 2002, the codification of the United Nations Convention on Contracts for the International Sale of Goods (CISG), the UNIDROIT Principles on International Commercial Contracts (PICC), the Principles of European Contract Law (PECL), and the Draft Common Frame of Reference (DCFR) brought up the modernization of the German law of obligations, which indirectly inspired the amendment of the Civil Codes of some East Asian countries such as Japan, China and Korea. The amendment was greatly influenced by European Civil Law, and German Civil Law in particular. This was mainly because a considerable portion of the rules in German Civil Law was adopted by East Asian countries when codifying their own, and thus the aforementioned amendment was greatly influenced by the modernization of the German law of obligations as well. Japan, as the principal European-law-succeeding state in East Asia, abolished its French-law-succeeding Civil Code in 1890, and changed to a German-based legal system. Given the fact that the Japanese Civil Law adopted the scheme and principles of the German Civil Law, much of the interpretation of Japanese Civil Law was rooted in the German doctrines concerned. As a result, a complete succeeding of German doctrines occurred in Japan. The modernization of the German law of obligations and its amendment, which was made in accordance with the European contract law, had profound impact on the amendment of the Japanese law of contract (law of obligations). Korean Civil Law succeeded from the scheme and from the principles of the German Civil Law as well. Despite the lack of Korean legal studies in Taiwan, some of the archives demonstrated that the amendment of the Korean law of obligations was also greatly influenced by the German law of obligations, the

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CISG, PICC, and PECL, especially in terms of the attribution of the debtors, and the categories of the performance irregularities1 were distinct. China did not initiate its codification until 1999, and pointed out that its law of contract was inspired by French, German, Japanese, Italian, and Taiwanese law, as well as the Uniform Commercial Code (UCC), PICC and European laws of contract. In 2009, when the Chinese law of torts was promulgated, it was stressed that the modification of the German law of obligations, as well as the unification of European private law, was taken as its blueprint. As for Taiwan, the latest amendment of the law of obligations was in 2000 (issued on April 21, 1999; entered into force on May 5, 2000), prior to the amendment of the German law of obligations. Therefore, neither the German law amendment, nor the amendment of the Japanese, Korean or Chinese civil laws was taken as a reference for the amendment of the Taiwanese law of obligations. This essay aims at reviewing the amendment of the German law of obligations as well as the corresponding leading cases in Taiwan, in order to look at the boundaries of the present law of obligations, and the efforts that the court devoted to law making. By doing this, the present law is demonstrated as being insufficient, thus displaying the necessity of commencing a second amendment of the Taiwanese law of obligations. The content stated above could be shown more clearly as figure 5.

Figure 5: How the unification of European private law and the modernization of the German law of obligations influenced East Asian nations’ civil laws

1 This is not a technical term but a collective term consisting of all possible variations of nonfulfillment of an obligation, and was commonly referred to as “breach of contract” in common law system.

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Rethinking the necessity for a second amendment of the Taiwanese Law of Obligations

In 2002 when the German law of obligations was amended, among the amendments were three crucial parts: the statute of limitations,2 the non-fulfillment of an obligation,3 and the contract of sale and contract of work. Part of the amendment focused on the collaborative application between non-conforming performance, and the contract of sale and contract of work. Specifically, the amendment of German law of contract emphasizes the suitability of the current rules in terms of statutes of limitations and irregularities of performance. While comparing the amendments of the German law of obligations with the one we have in Taiwan, and observing how the rules are applied in individual cases, we must consider the necessity of amending the Taiwanese law of obligations once again. Compared to the German law of obligations, the current Taiwanese law of obligations – the situations we now have – are different from the German contract law. Specifically, these differences are: (1) that the non-conformity performance has been codified (Article 227 of Taiwanese Civil Code4), and (2) that the fault in contracting (culpa in contrahendo) has been codified as well (Article 245–1 of Taiwanese Civil Code). In addition, the situations we have now that are identical to the German law of obligations are: (1) that rules regarding statutes of limitations require an overall re-examination; (2) that the types of performance irregularities are still divided into three categories, and this concept is still widely adopted in Taiwan; and (3) that how the rules of non-conformity performance and warranty of sale are applied collaboratively. The above issues will be addressed as follows.

2 According to the official translation of the Taiwanese Civil Code issued by the Ministry of Justice, “limitations” is referred to as “extinctive prescription” in article 125. For the consistency of this essay, “limitations” will be the chosen term used when referring to extinctive prescription. 3 In a common law system, non-fulfillment of an obligation is referred to as a “breach of contract.” 4 “If a debtor incompletely performs his obligation by reason of a circumstance to which the debtor is imputed, the creditor may execute his right according to the provisions of the default or impossibility of the performance. In addition to the injury arising from the incomplete performance in the preceding paragraph, the creditor may claim compensation for other injuries arising therefrom, if any.”

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An overall re-examination on the rules of limitations

One of the amendments of the German law of obligations focused on shortening the period of the statute of limitations to three years; apart from that, the period of the statute of limitations commences from the moment when the creditor obtains the knowledge of the circumstances giving rise to the claim and the debtor, or would have obtained such knowledge if he had not shown gross negligence. This part of the amendment is identical to the rules of the PECL (14: 202) and the DCFR (art. Ⅲ-7:201). The General Principles of the Civil Law of People’s Republic of China (hereinafter “PRC Civil Law”) also adopts a standard which corresponds closely to what is generally accepted around the world. According to Article 135 of PRC Civil Law, “Except as otherwise stipulated by law, the limitation of actions regarding applications to a people’s court for protection of civil rights shall be two years.” A limitation of action shall begin when the entitled person knows or should know that his rights have been infringed upon. However, the people’s court shall not protect his rights if twenty years have passed since the infringement. Under special circumstances, the people’s court may extend the limitation of action.5 We can conclude from the above rules that there are three standards to determine the specific moment of commencing the period of limitations: (1) the moment when the right is infringed; (2) the moment when the creditor realizes that his right has been infringed; (3) when uncertain about the creditor’s awareness of his claim, whether he is aware of the circumstances shall be determined objectively.6 The issue of the statute of limitations was brought into the amendment of the Taiwanese law of obligations in 1999. However, only the statute of limitations on “fault in contracting” and “objective initial impossibility of performance” was added to the amendment, which was stipulated as two years.7 The general period of the statute of limitations remains at fifteen years, and the controversy over the commencement of the statute of limitations was left unsolved; however, most scholars and legal workers in practice accept the opinion that the commencement 5 General Principles of the Civil Law of the People’s Republic of China, art. 137 (1986). 6 Wang Liming, The Study on General Principles of Civil Law 728 (2003) (in Chinese). 7 See Taiwanese Civil Code, art. 246 (“If the prestation of a contract is impossible, is it void.”); Taiwanese Civil Code, art. 247 (“When a contract is void on account of impossibility of the performance, the party who at the time of constituting the contract knew or might know of the impossibility is responsible for the injury caused to the other party, who, without his negligence, believed in the validity of the contract. The provisions of the preceding paragraph shall be mutatis mutandis if the presentation is partially impossible and the contract is valid in respect to the possible part, or, if one of the several presentations subject to a choice is impossible. The claims for the injuries in the preceding two paragraphs shall be extinguished by prescription if not exercised in two years.”).

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shall be decided as the moment when the claim arises, which is referred to as “objective doctrine.” As for courts’ opinions regarding the commencement of the statute of limitations, a resolution given by the Supreme Court in its 16th Assembly in 2006 stated that in Article 128 of Taiwanese Civil Code, “the moment the claim may be exercised” refers to the moment when the claim can be exercised legally without obstacle. Nevertheless, a factual obstacle, such as diseases, which results in the claimant’s failure to exercise his claim cannot be considered as a legal obstacle, and therefore the period of the statute of limitations commences from that very moment. The fact that the creditor is not aware of his entitlement to the claim does not serve as a “legal obstacle,” it is merely a “factual obstacle.” For instance, the “interest” stipulated in Article 182 of Taiwanese Civil Code is by nature an unjust enrichment, and thus the period of the statute of limitations commences from the moment when the claim of unjust enrichment may be exercised.8 Although the Supreme Court came to a conclusion on when to commence the period of the statute of limitations, it is often unjust to rely on such a standard. Therefore, in several cases, such as Supreme Court decision 91 Tai-Shang No. 1312 (2002), the court adopted a different standard, in which “the moment the claim may be exercised” was referred to as “the moment when the claimant is aware of the circumstances of the entitlement to exercise the claim.”9 Such opinion is often referred to as a “subjective doctrine.” As the saying goes, “The laws aid the vigilant and not those who slumber.” This is exactly the rationale behind the statute of limitations. Somehow, if the claimant was unaware of his entitlement to exercise the claim, it would be unjust to impose the statute of limitations on the claimant. In addition to the above judgment rendered by the Supreme Court in 2002, case 93 Tai-Shang No. 1311 of the Supreme Court (2004) also concurred with the opinion that the purpose of the statute of limitations is to urge people with claims to exercise them so that their rights can be fulfilled.10 In a way, this keeps disputes from arising. Under this rationale, Taiwanese Civil Code Article 128 – “the moment the claim may be exercised” – refers to not only to the moment when the claim arises, but also to the moment when the claimant obtains the knowledge of the claim.

8 See also Chung-Jau Wu, The Alteration on the Commencement of Extinctive Prescription, in 1 Legal Study on Civil Law and Methodology in Jurisprudence 173, 173 (2007) (in Chinese); Chung-Jau Wu, After Insisting on Objective Doctrine on the Commencement of Prescription, in 4 Legal Study on Civil Law and Methodology in Jurisprudence 181, 181 (2010) (in Chinese). 9 See Supreme Court, Civil Division, 91 Tai-Shang No. 1312 (2002) (Taiwan). 10 See Supreme Court, Civil Division, 93 Tai-Shang No. 1311 (2004) (Taiwan).

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After a resolution was made by the Supreme Court 16th Assembly in 2006, another judgment was rendered by the Taiwanese High Court (Court of Appeals) in 2008.11 It dissented from the opinion adopted by the resolution. The judgment indicated that the commencement of the statute of limitations should take the claimant’s knowledge of the claim into account as well. Taiwanese Civil Code Article 128 – “the moment when the claim may be exercised” – indicates the circumstances in which the claim may be exercised, and it does not matter whether the debtor is capable of fulfilling the obligation or not. Scholars have long agreed with the idea that “the moment when the claim may be exercised” stands for “the circumstances giving rise to the claim,” which suggests that even if the claimant does not know of his entitlement to the claim, the statute of limitations still commences from the moment when the claim may be exercised. It is true that claimants may exercise their claims if they knew that they were entitled to do so, in this case, it would be legitimate to commence the period of the statute of limitations from the moment when the claim arises. Conversely, if the claimant is unaware of the claim, we shall not merely rely on the moment when the claim occurs to commence statute of limitations. Without a doubt, the statute of limitations is designed to protect the debtors from the uncertainty of the legal status which results from a claimant’s non-exercise of a claim. In addition, the debtors may have lost the evidence as the time goes by; the statute of limitations thus protects debtors from the burden of proof. Another rationale of the statute of limitations is to respect the existing substantive legal order and to maintain the steadiness of the law; besides, the law aids only the vigilant, not those who slumber. The statute of limitations thus provides the possibility of simplifying the legal status of the parties. To some extent, disputes could be avoided, which reduces the load of the court. While the statute of limitations is meant for the protection of the debtor, it requires that the creditor be aware of the claim, yet fails or delays the exercise of the claim; only when the aforementioned prerequisite is satisfied, can the purpose of the statute of limitations be legitimized. Furthermore, an observation from the modified German law demonstrated the acceptance of both objective and subjective doctrines by contemporary German law. The court thus concluded that rules regarding the statute of limitations of the German Civil Code shall be deemed as a general principle of law, thus, according to Article 1 of Taiwanese Civil Code, there is a legal basis to determine the commencement of the statute of limitations. By indirectly applying the German Civil Code, the court successfully played a role of law making. In terms of the relevant issues of the statute of limitations, scholars also urge that there is a need to thoroughly scrutinize the relevant rules of the statute of

11 See High Court, Civil Division, 97 Shang No. 11 (2008) (Taiwan).

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limitations.12 Currently, within Taiwanese Civil Code, the law of obligations particularly has flaws, and thus, shall be amended in order to be in conformity with the aforementioned internationally accepted orientation.

2.2

Reviewing the law of irregularities of performance

2.2.1 A general outline As articulated previously, the modernization of the German law of obligations adopted the rules that are identical to the CISG, PICC, PECL and DCFR. The following are the major parts that were amended: (1) The abolishment of the old German Civil Code Article 306 (in which contract of objective initial impossibility was deemed to be void): The old German law of obligations categorized impossibility of performance into four variations, which were objective initial impossibility, subjective initial impossibility, objective subsequent impossibility, and subjective subsequent impossibility. These categories vary in terms of legal consequences. Given the complexity of the system of impossibility and the difficulty of differentiating one category from another, which is often controversial when applying those rules to individual cases, the amended German Civil Code abolished the old Article 306, which stipulated that in the case of objective initial impossibility, the contract shall be deemed as void. Both the amended German Civil Code Article 311a (1) and DCFR art. II-7:102 have taken the position that objective initial impossibility does not invalidate a contract.13 (2) The simplification of the categories of performance irregularity: The amended German Civil Code no longer classified irregularities of performance as “impossible performance,” “late performance” and “non-conforming performance.” In addition, the debtor’s intention or negligence was no longer required as a subjective criterion; instead, it is the debtor’s duty to establish his attribution as an objective criterion. (3) Setting a period of performance and price reduction became the principal legal consequence of performance irregularities, and a termination is allowed only when there is a gross breach of duty, i. e., the breach of the seller constitutes a “serious violation of the contract,” or in the case of non-performance, a rea-

12 See Ze-Jian Wang, General Principles on Law of Obligations 75 (3d ed. 2012) (in Chinese); Li Huang, Study on New German Law of Obligations 64 (2009) (in Chinese). 13 See Peter A. Windel (Chung-Jau Wu & Ru-Ai Hsu trans.), “Meaningless” Promise of Performance, 186 Taiwan L.J. 39 (2011) (in Chinese).

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sonable period was rendered by the buyer, yet the seller fails to perform during the period.14 Currently, German Civil Code Article 311a states: (1) A contract is not prevented from being effective by the fact that under section 275 (1) to (3) the obligator does not need to perform and the obstacle of performance exists when the contract is entered into. (2) The obligee may, at his option, demand damages in lieu of performance, or reimbursement of his expenses in the extent specified in section 284. This does not apply if the obligator was not aware of the obstacle to performance when entering into the contract, and is also not responsible for his lack of awareness. Section 281 (1) sentences 2 and 3 and (5) apply with the necessary modifications.

Article 275 stated: (1) A claim for performance is excluded to the extent that the performance is impossible for the obligator or for any other person. (2) The obligator may refuse the performance to the extent that the performance requires expense or effort, which, taking into account the subject matter of the obligation and the requirement of the good faith, is grossly disproportionate to the interest in performance of the obligee. When it is determined what reasonable effort may be required of the obligator, it must also be taken into account whether he is responsible for the obstacle to performance. (3) In addition, the obligator may refuse performance if he is to render the performance in person, and when the obstacle to the performance is weighed against the interest of the obligee in performance, performance cannot be reasonably required of the obligator.

2.2.2 Performance impossible: subjective or objective? According to the Taiwanese Civil Code, a contract with an objective initial impossibility is void.15 However, a contract with a subjective initial impossibility is still considered effective. Regarding the effectiveness of an initial impossible contract, the legal consequence is identical to the old German Civil Code Article 306. Nevertheless, it is quite controversial to differentiate subjective impossibility from objective impossibility. A typical issue is that, when the object of a sale is sealed-up by the court, resulting in impossibility of performance, it is hard to tell whether the impossibility is subjective or objective. 14 See PICC, art. 7.1.1 (“Non-performance is a failure by a party to perform any of its obligations under the contract, including defective performance or late performance.”); PECL, art. 9:501 (1) (“The aggrieved party is entitled to damages for losses caused by the other party’s nonperformance which is not caused under Article 8:108.”). 15 This opinion is commonly accepted by the majority of scholars and is in practice in Taiwan. See also Ze-Jian Wang, Subjective Initial Impossibility of Performance, in 3 The Legal Study on Civil Law and Case Study 41, 41 (1981) (in Chinese).

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In Taiwan’s Supreme Court decision 82 Tai-Shang No. 1034 (1993), the applicant (buyer) contended that the contract of sale regarding the real estate, which was the house, was entered into on May 17, 1991, and the buyer paid NTD 1,000,000 for the house. Yet, the applicant discovered that the house already had been sealed up by the court on May 10, 1991, which made it impossible for the respondent (seller) to implement his obligations to hand over the house and to transfer the ownership of the house to the applicant. Since this performance was impossible, the applicant terminated the contract of sale based on the respondent’s breach of the contract. In addition to the termination, the applicant contended that double the amount of the earnest money should be returned. The respondent rebutted that at the time when the contract was entered into, the applicant was aware of the fact that the house had been sealed up by the court, and agreed on performing the debt by way of payment of the house, so that the sealing up could be removed.16 The case was previously ruled on by the Taiwanese High Court that the contract was invalid owing to objective initial impossibility. The judgment articulated: The applicant was not aware of the fact that the house was already sealed up by the court on May 10, 1991 when the contract was entered into on May 17, 1991. According to Taiwanese Civil Code Article 246, if the performance of a contract is impossible, it is void. “Impossible” as mentioned in Article 246 of Taiwanese Civil Code is limited to “objectively impossible,” which is an opinion by the majority of scholars and is in practice. According to a resolution made by the Supreme Court in its 18th Assembly in 1981, the impossibility was caused by the court sealing up the house, and this act was considered a performance impossibility unless the sealing up was removed. In the case presented, the house was sealed up by the court, which had not yet been removed before the contract was entered into. Thus, the contract was void since the sealing up of the house led to the objective initial impossibility of performance. In conclusion, we do not concur with the applicant’s submission on the validity of the contract and his entitlement to claim for termination and the double amount of earnest money to be returned.17

Nonetheless, the Supreme Court dissented from the Taiwan High Court’s opinion, stating that in the case of impossibility caused by a sealed-up house, the impossibility was deemed to be subjective and thus did not prevent the contract from being effective. The judgment articulated: According to Taiwanese Civil Code Article 349, the seller shall warrant that the thing sold is free from any right enforceable by any third parties against the buyer. If the seller does not perform his duties specified in Articles 348 to 351, the buyer may exercise his 16 See Ze-Jian Wang, Impossibility of Performance in Contract of Sale Arising from Sealed-up Object, 39 L.J. 1, 1 (1994) (in Chinese). 17 High Court, Civil Division, 81 Shang-Geng (Yi) No. 329 (1993) (Taiwan).

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right in accordance with the provisions concerning the non-performance of obligations. In the present case, the house was compulsorily executed upon the application of a third party, and was sealed up by the court before the contract was entered into. The contract was valid because the impossibility was subjective.18

The above argument proves that the system of impossibility appears to be too complicated to distinguish one category from another. Additionally, it is very difficult to tell what categories they fall into when applying the law of impossibility to individual cases. The above argument arose from a long-existing Roman law principle “impossibilium nulla obligation est.” The principle has long been criticized, and scholars disputed that in the case of initial impossibility, it does not logically lead to a void contract.19 Thus, it is necessary to re-evaluate the legal consequences of a contract with objective initial impossibility.

2.2.3 Performance impossible or performance non-conforming? Besides the difficulty of differentiating subjective impossibility from objective impossibility, the differentiation between performance being impossible and performance being non-conforming has emerged as an issue in Taiwan. In case 99 Tai-Shang No. 111 (2010) ruled on by the Supreme Court, A bought a booth from B in order to run a food business, and paid NTD 8,860,000 for it. After the ownership of the booth was transferred, A spent NTD 1,989,786 on interior decorating and purchasing the materials, yet was reported as illegal. In order to find out the reason for the report, A applied for the blueprint of the building permit; it was not until then that A found out that the original usage of the building was for the purpose of constructing an office building, which means that a food business would not be allowed. The Taiwan High Court determined this case to be a performance impossible situation, and stated in the judgment: The space in question was not allowed to be used as a booth for running a food business. Such a defect thus cannot be repaired. According to Taiwanese Civil Code Article 256, the buyer may exercise his right to terminate the contract and, according to Article 259, may claim for the return of the price paid and the interest calculated from the time of receipt.20 18 Supreme Court, Civil Division, 82 Tai-Shang No. 1034 (1993) (Taiwan). In another case of the Supreme Court, the Court concurred with the opinion that in the case of a contract on the sealed-up house, the contract of sale was valid, yet impossible to perform for the seller. Thus, the buyer may claim termination of the contract and restoration of the initial status of the parties. See Supreme Court, Civil Division, 95 Tai-Shang No. 2010 (2006) (Taiwan). 19 Ze-Jian Wang, Impossibility of Performance, in 1 The Legal Study on Civil Law and Case Study 413, 420 (1975) (in Chinese). 20 High Court, Civil Division, 96 Chung-Shang No. 290 (2009) (Taiwan).

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Yet, the Supreme Court ruled that it was a non-conforming performance, and articulated: Impossible performance stipulated in Taiwanese Civil Code Article 226 indicates an irreparable defect which is considered an impossibility from a general perspective of the society. The space in question was already transferred to the buyer in 1993. Thus, impossibility does not exist in the present case. As for the defect of the house, which lacked ordinary efficacy or fitness for the purpose of the contract of sales, is rather the matter of warranty or non-conforming performance, and does not concern impossibility. Thus, we do not concur with the High Court’s opinion that the defect is irreparable, and thus the buyer may terminate the contract accordingly.21

In another case, once again, the Supreme Court disagreed with Taiwan High Court on distinguishing between impossible performance and non-conforming performance. In the case of 96 Tai-Shang No. 1648 ruled by the Supreme Court in 2007, A purchased furniture from B in 2000. B performed his obligation to hand over the furniture, and A performed his obligation as well as completing the payment. However, A discovered that the furniture handed over was defective, and thus was inconsistent with the deal that they had agreed upon. B had attempted to repair the furniture, but in vain. How should A make a claim for his rights? On the ground of impossible performance or non-conforming performance? The Taiwan High Court is of the opinion that it was a non-conforming performance. It stated: Impossibility means a defect that was irreparable, which is a performance of impossibility from a general perspective of the society. As for the difficulty to perform, such as the buyer’s incapability to the payment of the price, or things that ought to be handed over that are defective but reparable, is not the situation of impossible performance. If performance is possible, yet not conforming, this kind of scenario is defined as nonconforming performance instead of impossible performance. Under the circumstances of an obligation of handing over designated objects, from a general perspective of the society, impossibility does not arise in such a case.22

The Supreme Court has adopted a different point of view and ruled that it was an impossible performance, stating: The seller of a thing shall warrant that the thing sold is, at the time when the danger passes to the buyer according to the provisions of Article 373, free from any defect in quality which may destroy or impair its value, or its fitness for ordinary efficacy, or its fitness for the efficacy of the contract of sale. When the object of a sale was designated only as to its kind, if the seller has done whatever is necessary for the delivery of the object, such a thing is designated as the object of the performance. If the defect exists at 21 Supreme Court, Civil Division, 99 Tai-Shang No. 111 (2010) (Taiwan). 22 High Court, Civil Division, 95 Shang-Keng (Yi) No. 106 (2007) (Taiwan).

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the time when the object is designated for performance, apart from the duty of warranty, the seller bears the duty arising from non-conforming performance as well. The buyer may claim that the performance was impossible or that the performance was delayed, depending on the circumstances, and if other injuries arise from non-conforming performance, the buyer may also claim compensation. The Taiwan High Court considered the case presented as an example of a non-conforming performance, and held that because the furniture as the object of the sale is not a designated object, a case of impossible performance does not exist in such a scenario. Therefore, the High Court denied the seller’s claim for compensation. Nonetheless, we dissented from the Taiwan High Court’s opinion.23

The amendment of the Japanese and the Korean Civil Codes also thoroughly discussed the necessity to keep splitting non-performance into three categories. As for the amendment of the Taiwanese law of obligations, the provisions and experiences of the modernization of the German law of obligations and the unification of the European law of contract shall be seriously taken into consideration in order to make sure that our legal system meets up with the standard which is adopted internationally. 2.2.4 How the provisions of non-conforming performance and warranty are applied collaboratively With respect to the legal consequences of non-conforming performance and warranty, for the former, the creditor may claim termination of the contract or claim compensation, or, if the defect is repairable, the creditor may claim repairs; as for the latter, the buyer may claim termination of the contract, price reduction or compensation. The question is: how do we apply the law to individual cases when the criteria of non-conforming performance and warranty of sales are both satisfied? 24 Some scholars consider that in the case of a non-conforming performance, the provisions of warranty of sale prevail since special rules shall apply prior to the general principles. However, the majority of scholars and legal practice is of a different opinion that the buyer is free to either exercise his right under the general principles, or exercise his right under special rules.25 A resolution made by the Supreme Court in its 7th Assembly in 1988 made it clear that,

23 Supreme Court, Civil Division, 96 Tai-Shang No. 1648 (2007) (Taiwan). 24 See Sheng-Lin Jan, Non-Conforming Performance: The Development of the Opinions of the Supreme Court, in 2 Case Study on Civil Law 127, 127 (2003) (in Chinese) [hereinafter Non-Conforming Performance]; Sheng-Lin Jan, Practical Developments of Non-conforming Performance and Warranty for Goods and Works, 39(3) Nat’l Taiwan U. L.J. 69 (2010) (in Chinese) [hereinafter Practical Developments]. 25 See Chun-Tang Liu, General Principles on Law of Obligation: Law of Contract 371 (2011) (in Chinese); Ze-Jian Wang, Non-Conforming Performance, Warranty of Sale and

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if the object of the sale is defective, adding that the defect exists when the contract was entered into, in addition to the warranty of sale that the seller is responsible for, the buyer may also exercise his right set forth in general principles, i. e., the provisions of non-conforming performance. In other words, the buyer may invoke the Taiwanese Civil Code Article 360 to claim damages instead of conforming performance; he may also invoke the right by analogy of Article 226 to claim damages, or by analogy of the provisions regarding performance delayed, claim repair or compensation.

The resolution suggests that when the special rules and general principles collaborate on an individual case, both of the provisions may be applied, and the buyer may claim repair from the seller. However, the resolution restricts the application of general principles to the situation only when the defect exists after the contract was entered into. Consequently, if the defect existed before the contract was entered into, the provisions of non-conforming performance could not be invoked by the buyer. The opinion of the resolution was severely criticized by many scholars, arguing that there is no need to distinguish the defect as “existing before the contract was entered into” and “existing after the contract was entered into.”26 Additionally, regarding the extinctive prescription of damages, in general, the period of a statute of limitations is fifteen years for both damages of defective performance (Mangelshaden) and consequential damages (Mangelfolgeschaden). Nevertheless, in the field of special rules, especially with respect to work contracts, when the defect of work is attributable to the contractor, in which the criteria of general principles and special rules are both fulfilled, according to Taiwanese Civil Code Article 514, the period of the statute of limitations is restricted to only one year, which is relatively short compared with fifteen years regulated in general principle. In order to eliminate the unfairness from the application of special rules, a resolution of the Supreme Court made in its 8th Assembly in 2007 stated: (1) consequential damages are excluded from the scope stipulated in Article 495; (2) when the contractor is at fault for the defect of the work, the statute of limitations of the employer to claim a damage of defective performance is restricted to one year, namely, the provision of the contract of work shall apply prior to the general principles.

However, the above method of distinguishing damages for the purpose of applying different periods of the statute of limitations was strongly questioned because of the difficulty of telling whether a damage is consequential or of

Counter-Performance Rebuttal, in 6 The Legal Study on Civil Law and Case Study 115, 115 (1989) (in Chinese); Non-Conforming Performance, supra note 24, at 168. 26 For a more detailed description, see Practical Developments, supra note 24, at 71–86.

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defective performance. This was exactly the issue that the old German Civil Code used to deal with.27

3

Conclusion: analysis and development of the Taiwanese Law of Obligations

3.1

The achievement of judge-law-making function by the court

From the discussion above, we can discover that the court has a complete comprehension of the content and rationale of the law of obligations, and has made efforts to accomplish its task on judge-law making in order to clarify the ambiguity of the legal terms. For example, regarding the commencement of the statute of limitations, by way of adopting the subjective doctrine as well, the court has successfully defeated the unjustness stemming from adopting the objective doctrine as the standard to determine when the statute of limitations commences. As for the variations between the performance impossible and irregularities of performance, the judgments above further confirmed the difficulty of distinguishing those categories from one another. In order to seek justice in applying the relevant provisions to individual cases, the court followed the German doctrine to differentiate damages of defective performance and consequential damages, applied different provisions, and individual cases were given different legal consequences, depending on the nature of the damages and the statute of limitations.

3.2

The constraints of judge-law-making and the necessity for an amendment

Despite the dedication of the court to breaking through the limits, law-making exhibited little function on mending the insufficiency and unjustness of the law, which proves that Taiwan’s rules on the statute of limitations and irregularities of performance require a second amendment so that Taiwanese law would be consistent with the unification of European private law and the modernization of the German Civil Code. Recently, a prestigious Taiwanese scholar Ze-jian Wang stressed the importance of a reform of the current law of obligations.28 In his book General Principles on Law of Obligations, he stated: 27 See id. at 97–98. 28 See Wang, supra note 12, at 10–12.

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The modification of the law of obligations in 1999 did help our law better adjust to the needs of contemporary society, yet, the 1999 modification was based on the current scheme of the law, which is of a supplement nature. The basic principles and system on the law of obligations still needs to be reviewed in its entirety. As Europe underwent its own unification of private law, Germany and Japan had already modernized their laws of obligations, and China also had its Civil Law codified. We need to once again amend Taiwan’s law of obligations, for the following reasons: (1) there is a need to examine the interaction between the Civil Code and the special law on a re-codifying basis; (2) the law of obligations in Taiwan needs to be amended to qualify for an international standard, in order to accelerate globalization and economic activities between Taiwan and other states; (3) the Taiwanese Civil Code has long been affected by the German and Japanese legal systems and doctrines, if Taiwan is not able to follow these countries’ paths, Taiwan will be gradually marginalized; (4) by making use of the experience of the amendment of other countries, Taiwan is capable of innovating, and thus, to some extent, Taiwan will be making a contribution to the progress of the legal development of East Asia; (5) a second amendment of the law of obligations will attract more and more scholars and legal workers to participate in the study of the Civil Law, and this will eventually revitalize the study of Civil Law which has had no progress for a long time. The effect of the first amendment shall be evaluated so as to initiate a second amendment, and the study of comparative law is will hopefully be taken into consideration. Other than that, the government shall make a budget for the convention of experts, in which they shall do research on certain subjects, and make drafts for the amendment. In this way, the process of legislation can be accomplished.

Professor Wang stated the reasons and the process for a second amendment with specific details, and the majority of scholars agree with the above opinions as well.

3.3

A chance for the unification of East-Asian contract law

Despite the fragmentation of East-Asian countries in terms of forming a transnational organization or a consistent currency system, when we look at how Europe developed, we may be inspired to ponder the possibility for Asia to unite its law of contracts or law of obligations. We may refer to the route that Europe approached in its unification as one of the ways to reach the unification of East Asian laws of contract. In fact, the dialogue and interaction between academic groups, as well as the solutions being found for cross-border disputes, are all ongoing activities that are contributing to the unification of East Asian contract law.29 Recently, four of the East Asian nations (Korea, Japan, China and Taiwan) have been in constant academic conversation.30 In 2011, Seoul University of 29 See Tzu-Chiang Chen, The Harmonization of Contract Law 138–43 (2011) (in Chinese). 30 Take National Taiwan University as an example: more than 20 international academic con-

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Korea hosted the first conference on the topic of the unification of East Asian Civil Law, and the discussion specifically focused on laws governing personal rights as well as personality and torts. In 2012, it was China who hosted the second conference, which was aimed at discussing the protection of consumers’ rights under civil law. The third conference was hosted by Japan’s Tokyo University in December of 2013, and the fourth by National Taiwan University in 2014. As stated above, since 2011 the process of building up a united legal system of civil law or of a law of contracts was initiated under the consensus of the scholars.

References Chen, T.-C. (2011). The harmonization of contract law. Taipei, Taiwan: Angle. (In Chinese) Huang, L. (2009). Study on new German law of obligations. Taipei, Taiwan: Angle. (In Chinese) Jan, S.-L. (2003). Non-conforming performance: The development of the opinions of the supreme court. In S.-L. Jan (Ed.), Case study on civil law (Vol. 2, pp. 127–182). (In Chinese) Jan, S.-L. (2010). Practical developments of non-conforming performance and warranty for goods and works. National Taiwan University Law Journal, 39(3), 69–108. (In Chinese) Liu, C.-T. (2011). General principles on law of obligation: law of contract. Taipei, Taiwan: Author. (In Chinese) Wang, L. M. (2003). The study on General Principles of Civil Law. Beijing, China: China Renmin University Press. (In Chinese) Wang, Z.-J. (1975). Impossibility of performance. In Z.-J. Wang (Ed.), The legal study on civil law and case study (Vol. 1, pp. 413–432). Taipei, Taiwan: Author. (In Chinese) Wang, Z.-J. (1981) Subjective initial impossibility of performance. In Z.-J. Wang (Ed.), The legal study on civil law and case study (Vol. 3, pp. 41–58). Taipei, Taiwan: Author. (In Chinese) Wang, Z.-J. (1989). Non-conforming performance, warranty of sale and counter-performance rebuttal. In Z.-J. Wang (Ed.), The legal study on civil law and case study (Vol. 6, pp.115–141). (In Chinese) Wang, Z.-J. (1994). Impossibility of performance in contract of sale arising from sealed-up object. Law Journal, 39, 1–8. (In Chinese) Wang, Z.-J. (2012). General principles on law of obligations (3rd ed.). Taipei, Taiwan: Author. (In Chinese) Windel, P. A., Wu, C.-j., & Hsu, R.-A. (2011). “Meaningless” promise of performance. Taiwan Law Journal, 186, 39–48. (In Chinese) Wu, C.-j. (2007). The alteration on the commencement of extinctive prescription. In C.-j. Wu (Ed.), Legal study on civil law and methodology in jurisprudence (Vol. 1, pp. 173– 231). Taipei, Taiwan: Author. (In Chinese) ferences (including ones that were held together with the four East Asian states mentioned in this essay) were held each month, on average.

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Wu, C.-j. (2010). After insisting on objective doctrine on the commencement of prescription. In C.-j. Wu (Ed.), Legal study on civil law and methodology in jurisprudence (Vol. 4, pp. 181–188). Taipei, Taiwan: Author. (In Chinese)

Jinsu Yune

7

Judicial Activism and the Constitutional Reasoning of the Korean Supreme Court in the Field of Civil Law

1

Introduction

Recently, the decisions of the Korean Supreme Court in the field of civil law exhibit clear traits of judicial activism. In the context of this paper, judicial activism means that the judiciary makes its own judgment, rather than simply obeying the commands of the legislature. In other words, the Korean Supreme Court liberally interprets and applies the law when the law is ambiguous, or even when there is an absence of a statutory law. This judicial activism is closely related with another phenomenon, that is, the frequent use of constitutional reasoning. The Supreme Court has often resorted to the Constitution to justify its decisions. For example, in declaring long-held customary laws as void, the Supreme Court has based its decisions on the ground that these customary laws were not in accordance with the Constitution. See Section 3 below. Moreover, the Supreme Court extended the use of constitutional reasoning to disputes between private persons by acknowledging the horizontal effect of human rights. In this article, I intend to show this trend of the Supreme Court by analyzing major en banc decisions of the Supreme Court.1 The decisions are classified into three categories: actual lawmaking by the court; a constitutional review of customary law; and the horizontal effect of human rights in the private sphere.

2

Actual lawmaking by the court

In the following cases, it can be said that the Supreme Court created laws in the absence of a statutory law. 1 Usually, panels of the Supreme Court are comprised of three or more justices who decide cases. En banc court is called for in important cases.

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The protection of transsexuals’ human rights

The problem of transsexuals’ legal status has been brought before Korean courts since the early 1990s. Most cases have been regarding transsexuals’ application for the rectification of their sex designated in the family register. However, there are no statutory provisions regarding the legal status of transsexuals. Consequently, there has been some confusion surrounding this issue. In an en banc decision of the Korean Supreme Court on June 22, 2006,2 the majority opinion declared that one who had undergone a transsexual operation could change their sex designated in the family register by way of correction prescribed in the Family Register Act.3 The argument of the majority opinion can be summarized as follows. Transsexuals have the right to enjoy human dignity and worth, and to pursue happiness, all of which are guaranteed by Article 10 of the Korean Constitution.4 If a transsexual has received medical operations resulting in a conversion of their genitals and physical appearance so that their biological sex is changed to the other sex, but is nevertheless treated legally as a member of the former sex, then she (or he) would be deemed as abnormal by society, and may suffer prejudices and difficulties in obtaining employment. Not allowing the change of the sex designation in the family register in the face of these circumstances runs contrary to the realization of the esprit of the Constitution. The concept of the correction prescribed in Article 120 of the Family Register Act is interpreted generally as correcting an error or omission existing at the time the statement was made. However, in light of the fact that the purpose of Article 120 of the Family Register Act is to easily correct an unlawful or untrue statement without having to obtain a formal court judgment, it is a reasonable interpretation that the designation of a transsexual’s sex in the family register can be changed by the procedures set out in Article 120 in order to match the real status.

2 Supreme Court, 2004Seu42, June 22, 2006, (2006 GONG 1341) (S. Kor.). 3 Article 120 of the Family Register Act (Correction of an Inadmissible Statement in the Family Register): If it is considered that there is a statement in the family register that is not permissible by the Act or there is an error or omission in the statement, the interested person may, after obtaining permission from the family court which has jurisdiction over the place where the family register exists, apply for the correction of the family register. In 2008, Article 120 of the Family Register Act was changed to Article 104 of the Act on the Registration, etc. of Family Relationship. The content was not substantially changed, however. Family Register Act, art. 120, amended by Registration, etc. of Family Relationship, Act. No. 8435, May 17, 2007, art. 104 (S. Kor.). 4 All citizens shall be assured of human dignity and worth and have the right to pursue happiness. It shall be the duty of the State to confirm and guarantee the fundamental and inviolable human rights of individuals. Constitution, art. 10 (S. Kor.).

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The majority opinion is a good example of judicial activism. The supplementary opinion to the majority opinion provided by one justice justified the majority opinion by applying the method of constitution-compatible interpretation (verfassungskonforme Auslegung in German). In contrast, the dissenting opinion emphasized the literal meaning of “error” and “correction.” According to the dissenting opinion, the meanings of error and correction used in Article 120 of the Family Register Act were clear and the aim of the legislature was to correct the error or omission that was in existence at the time the statement was made. The dissenting opinion understood the majority opinion as an analogy. It opined that this kind of analogy exceeded the limit established by the legislation. The dissenting opinion went on to assert that the legislature, not the court, should decide how to rule on issues pertaining to transsexuals. In other words, judicial self-restraint was appropriate in this case. In my view, the result of the majority opinion cannot be justified as a constitution-compatible interpretation. The reasoning of the majority opinion is contrary to the generally accepted meaning of this word, namely, correcting the error or omission in existence at the time the statement was made. What was not incorrect at the time the statement was made may not be corrected, but can be changed. Whether this analogy can be justified is a hard question to answer. But I am inclined to support the analogy to enable the change of one’s sex. In ordinary cases, such an analogy that would bring such a major change in the law should not be allowed. Such a matter should instead be resolved by a law made by the legislature. But in the present case, persisting that the court should not allow transsexuals to change their sex only to preserve the principle of separation of powers amounts to the refusal of a remedy for transsexuals. So, in such an extraordinary situation, the principle of separation of powers should yield to the principle of awarding an effective remedy for transsexuals. In other words, compassion for transsexuals who suffer greatly from sex dysphoria should be taken more seriously than other considerations.5 There is another important en banc decision about transsexuals’ legal change of their sex. The decision of the Supreme Court on September 2, 2011,6 denied the correction of sex designated in the family register. According to the majority opinion, the correction should not be allowed when the transsexual applicant is married. Once she or he is divorced, however, the past marriage is not a barrier to 5 See Jinsu Yune, The Role of the Courts in the Protection of Transsexuals’ Human Rights: A Comparison of Korea with Germany and the UK, in Lebendiges Familienrecht: Festschrift für Rainer Frank 409 (Tobias Helms & Jens Martin Zeppernick eds., 2008). 6 Supreme Court, 2009Seu117, Sept. 2, 2011 (S. Kor.).

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permit correction. On the other hand, if she or he has children who are minors, as in the present case, the application of correction should be rejected. It makes sense that the correction should not be allowed when the transsexual applicant is married, as same-sex marriage or same-sex partnership is not recognized in Korea. However, it is doubtful that the application of the correction should be denied when the transsexual applicant has children who are minors. The reason the majority opinion provided this was that it would be detrimental to the child, as it would result in the child’s mental confusion and shock. It is not so certain, however, that such mental confusion and shock would occur, as the parent’s physical change, which would first cause the child’s mental confusion, had been a fait accompli, regardless of the legal change of the transsexual parent’s sex. Furthermore, the human rights of a transsexual parent to enjoy human dignity and worth, and to pursue happiness should be given more weight than the child’s probable mental confusion and shock.

2.2

Termination of life-sustaining treatment

The en banc decision of the Supreme Court on May 21, 20097 dealt with the termination of life-sustaining treatment. The majority opinion explained the condition for the lawful termination of life-sustaining treatment in a case where the patient had entered into a stage of irrecoverable death and into a coma, and had left no advance directive, as follows. If it could be inferred that the patient, given the opportunity to exercise the right of self-determination, would choose the termination of the treatment, then the termination of the treatment should be allowed. There were two dissenting opinions. According to the first dissenting opinion, the termination of life-sustaining treatment could not be justified on the grounds of the inferred or implied intention of the patient. Rather, in cases where forcing life-sustaining treatment upon the patient – which would be a medically futile body invasion and would violate the patient’s dignity and value as a human being – the termination of treatment should be allowed. It appears that the majority opinion adopted the substituted judgment criterion, whereas the first dissenting opinion favored the best interest standard. In the end, the difference between these two opinions would not be so significant. In contrast, the second dissenting opinion stated that the right of self-determination should not be exercised in the form of the removal of life-sustaining devices, even if the patient had explicitly requested them. It would be equated with suicide. Only in situations where it could be predicted that the patient would 7 Supreme Court, 2009Da17417, May 21, 2009, (2009 GONG 849) (S. Kor.).

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die within a very short time – such as several hours or days, meaning that the patient had already entered the stage of irreversible death – treatment through life-sustaining devices would be medically futile and it would not be helpful in maintaining and preserving life. In this situation, the removal of life-sustaining devices and terminating treatment should be allowed. This case clearly shows the willingness of the Supreme Court to provide a legal rule even in the absence of a statutory regulation.

3

Constitutional review of customary law

Recently, the Supreme Court declared three times that customary social norms, which had been acknowledged as legally binding norms by the court for a long time, should not be deemed as valid customary laws, when these norms are not in compliance with the Constitution.

3.1

The customary prescription for the inheritance restitution right

The Japanese court in colonial Korea held in the 1930s that, according to the customary prescription law, the inheritance restitution right (hereditatis petitio) of an heir against a pseudo heir should expire in 20 years after the commencement of the inheritance. The Korean court had maintained this precedent after the Liberation. In 2003, however, the Supreme Court overruled this precedent en banc.8 The majority opinion reasoned as follows: If this custom were applied, then the true heir would lose their inheritance right when the infringement occurred 20 years after the commencement of the inheritance. This would be contrary to the nature of the property right, as one’s property right should not fall under the prescription, and result in the true heir being indefensible to the property infringement by the pseudo heir. It would be absurd and unjust, as it would not be in accordance with the spirit of the whole legal order, of which the highest norm is the Constitution. So, regarding such a custom, its validity as a customary law should not be acknowledged. Though the exact meaning of this ruling is a bit controversial, the general opinion is that the Supreme Court had exercised a kind of judicial review upon the customary law. This decision came in the aftermath of the Korean Constitutional Court’s decision in 2001.9 This decision declared the provisions of the Civil Code, 8 Supreme Court, 2001Da48781, July 24, 2003, (2003 GONG 1785) (S. Kor.). 9 Constitutional Court, July 19, 2001, (KCCR, 13–2, 1) (S. Kor.).

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which prescribed that the inheritance restitution right of an heir should expire in ten years after the commencement of the inheritance, as unconstitutional. As to the merit of the Supreme Court’s decision, it is controversial whether or not such a custom had really existed. It appears that there had been no such custom and that the Japanese court had “invented” the custom.10

3.2

The female membership of the Jongjung

In Korea, Jongjung (宗中) is a patrilineal lineage, that is, an organized group of descendants of a common male ancestor. Jongjung performs a similar function as the Chinese Chi Szu Kong Ye (祭祀公業). According to the customary law, only adult male descendants of a common ancestor could be a members of a Jongjung. Female descendants were excluded from Jongjung. However, the en banc decision of the Supreme Court on July 21, 200511 declared that the customary law which excluded females from Jongjung was no longer valid. According to the majority opinion, the opinion juris12 to such a customary law was shaken or weakened. Furthermore, the customary law was not in accordance with the spirit of the whole legal order, of which the highest norm is the Constitution, as our whole legal order guarantees family life based upon the dignity of the individual and gender equality. Such a customary law, however, deprived the female descendants of the opportunity to participate in the activity of the Jongjung on the ground of gender difference. So, the question of who could become members of Jongjung should be governed by the general principle of law (條理13). According to the general principle, descendants who share a family name with common ancestors shall be deemed to be members of the clan when they became adults, regardless of their gender. The concurring opinion agreed with the majority opinion that such a customary law was void. However, it criticized the majority opinion that female adult descendants should become members of Jongjung regardless of their will. Instead, only the female descendants who had expressed their desire to become members of Jongjung could become members. This conclusion was based on the ground of negative freedom of association and general public policy (ordre public). For one thing, the freedom of association implies that nobody should be forced to be a member of an association regardless of her will. On the other hand, 10 See Jinsu Yune, The Unconstitutionality of the Old Custom on the Prescription of the Inheritance Restitution Right and the Retroactivity of the Precedents, 11(2) Comp. Private L. 275 (2004) (in Korean). 11 Supreme Court, 2002Da1178, July 21, 2005, (2005 GONG 1326) (S. Kor.). 12 It means the belief that a certain custom is legally binding. 13 法理 in Taiwanese law.

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to reject the wish of a female descendant to become a member of Jongjung on the ground of her gender was contrary to the general public policy and void, as prescribed by the Korean Civil Code Article 103. It can be said that the concurring opinion employed horizontal effects of human rights. It limited its scope of application, however, as it stressed that male adult descendants should be members of Jongjung regardless of their will. Another point worth mentioning is that this decision adopted the selective prospectivity doctrine. Selective prospectivity of judicial overruling means that the new rule declared by the overruling decision is applied to the case announcing the new rule, and maybe some other limited cases, but not applied retroactively to other cases predating the new, overruling decision. The overruled precedent still governs old cases. This decision emphasized that the new rule should have only a prospective effect, as its retroactive application would disturb the numerous legal relationships which had been formed in reliance of the long-held old precedent. This result would be contrary to the rule of law, which encompasses the protection of trust based on legal certainty and good faith. Hence the new rule should be applied only to legal relations which would be formed after this decision. Only to the present case should the new rule be applied retroactively. That is because the non-application of the new rule to the plaintiffs of this case would be contrary to the nature of judicial function, which is to award the legal remedy for the right of the party in concrete cases. That the Korean Supreme Court adopted the selective prospectivity doctrine is another token of judicial activism. The prospective application of the new rule makes it easier to overrule, as the overruling does not give shock to the settled relation of the parties.14 The Supreme Court has reiterated this selective prospectivity decision once again. See Section 3.3 below. In my opinion, the legitimacy of the selective prospective overruling is doubtful. The court should decide every case according to its best understanding of the relevant law. The nature of judicial function is to award the legal remedy for the right of the party in every case, as the decision explained. Thus, this doctrine is inconsistent with equality before the law. The selective prospectivity doctrine had once been adopted by the U.S. Federal Supreme Court, but was later abandoned.15

14 According to Justice Scalia of the U.S. Federal Supreme Court, prospective decision making is the handmaid of judicial activism, and the born enemy of stare decisis. Harper v. Virginia Dep’t of Taxation, 509 U.S. 86, 105 (1993) (Scalia, J., concurring). 15 See Griffith v. Kentucky, 479 U.S. 314 (1987); Harper, 509 U.S. at 86 (majority opinion).

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The host or hostess of the ancestor worship ritual

The en banc decision of the Supreme Court on November 20, 200816 declared that the customary rule of deciding the host or hostess of the ancestor worship ritual ( Jesa, 祭祀) was no longer valid. In this case, the dispute was regarding who could decide the burial place of the deceased father. The defendant was a younger son born out of wedlock, whereas the plaintiff was the eldest son born in wedlock. According to Article 1008–3 of the Korean Civil Code, the property for the ancestor worship ritual belongs to the host or hostess of the ancestor worship ritual. The established precedent of the Supreme Court had held that the concept of the property for the ancestor worship ritual could be extended to include the corpse of the deceased; therefore, the result would depend upon who was the host or hostess. Traditionally, the Jongson (宗孫) was the host of the ancestor worship ritual. Jongson means the eldest legitimate son ( Jeokjangja, 嫡長子) born in wedlock of the main family (宗家). The precedent of the Supreme Court had confirmed this custom several times. If there were no Jongson, however, then the eldest legitimate son of the Jongson ( Jeokson, 嫡孫), the younger legitimate brother of the Jongson ( Jungja, 衆子), and the son of the ancestor born out of wedlock (Seoja, 庶子) would become the host, in turn. However, the above en banc decision overruled this precedent. It declared unanimously that the customary rule of deciding the host or hostess was no longer valid, as it had not taken into account the inheritors’ wishes and discriminated against the descendants born out of wedlock. In so doing, the Supreme Court quoted the decision on July 24, 2003, explained in Section 3.1 above. The decision was sharply divided on the issue of how the host or hostess should be decided. According to the majority opinion, the host or hostess must be decided by the agreement of the heirs. If no such agreement can be reached, the eldest son (in the case of his being deceased, his eldest son) and, in case no son was present, the eldest daughter should be the host or hostess. Thus the majority had eliminated the preferential status assigned to children born in wedlock, but the priority placed on a descendant according to one’s gender or age was still retained. This was criticized by other dissenting opinions, of which there were three. One dissenting opinion stated that in case no agreement can be reached, the host or hostess must be decided by majority rule. Another dissenting opinion asserted that the court should designate the host or hostess, taking into account all of the relevant factors. According to the third dissenting opinion, the power to dispose of the corpse of the deceased does not reside in the host or hostess of the 16 Supreme Court, 2007Da27670, Nov. 20, 2008, (2008 GONG 1727) (S. Kor.).

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ancestor worship ritual. Rather, the expressed wish of the deceased about how her own corpse should be handled should be the deciding factor, if it is expressed conclusively. In my opinion, the best way to resolve the problem is for the court to designate the host or hostess of the ancestor worship ritual, who would then also have the power to dispose of the corpse of the deceased. No such procedure is prescribed in statutory law. However, the court must have the inherent authority to decide such a matter in resolving a concrete dispute about the burial place of the deceased (incidental review, Inzidentprüfung). In designating the host or hostess, the court must take into account all of the relevant factors. Only in this way can the most reasonable result be attained. One more thing to mention is that the majority opinion had applied the selective prospectivity doctrine to this case once again. See Section 3.2 above.

4

Horizontal effect of human rights in the private sphere

Recently, the Supreme Court has addressed the problem of the horizontal effect of human rights in the private sphere several times.

4.1

The liability of an internet service provider for defamation

In the en banc decision of the Supreme Court on April 16, 2009,17 the liability of an internet service provider (ISP) for defamation resultant from materials written by internet users was acknowledged. In this case, the plaintiff ’s girlfriend had committed suicide, and the girlfriend’s mother had posted an article on her daughter’s mini-homepage stating that her daughter’s death had been caused by the plaintiff. Many internet users who had read the article uploaded articles and comments criticizing the plaintiff on the web portal sites operated by the defendants. Also, other news media had covered this incident, and the defendants had gathered these news reports and broadcast them on their portal sites. The plaintiff filed a suit against the defendants, alleging that transferring such news reports to the defendants’ portal site and not removing materials which were defamatory to the plaintiff constituted a separate tort of defamation to the plaintiff. The Supreme Court held that the defendants were liable for defamation. There were two issues to be decided. 17 Supreme Court, 2008Da53812, Apr. 16, 2009, (2009 GONG 626) (S. Kor.).

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Regarding the transferring of the defamatory news reports to the defendants’ portal sites, the Court was unanimous in finding that gathering news reports and transferring these reports to the defendants’ portal sites constituted a tort of defamation. However, there was disagreement about whether the defendants should be liable for not removing defamatory materials written by internet users. The majority opinion held that although the presence of defamatory materials on a portal site is not sufficient by itself to make an ISP liable for defamation, an ISP has a duty to manage the portal site to prevent damage caused by these materials. However, the liability of management should be limited to avoid a chilling effect upon the freedom of expression of internet users. More precisely, if the unlawfulness of the defamatory materials was evident, the ISP must have or could have recognized the uploaded materials, and since it is technically and economically possible for the ISP to control such materials, the ISP has a duty to remove such materials and block similar materials. In this case, the defendants had breached their duty, so they were liable for defamation. In contrast, the concurring opinion would limit the liability of the ISP even more than the majority opinion by adding one more condition. According to the concurring opinion, the ISP has the duty to remove defamatory materials only when the victim of defamation had designated the defamatory materials concretely and individually, and requested the removal. The concurring opinion reasoned that this additional condition is necessary for balancing the freedom of expression and the privacy interest of individuals’ reputation. The principles of definiteness and proportionality require this condition, too. The basic question in the decision was balancing the freedom of expression and the privacy interest of an individual’s reputation. Therefore, it can be understood as a case dealing with the human rights of private persons. First, it is worth noting that the decision distinguished between transferring the defamatory news reports and not removing the defamatory materials. For the former, liability was acknowledged without any further conditions. In contrast, not only the majority but also the concurring opinion required that more conditions must be present for the latter. It appears that the decision reflects a distinction between the publisher and the distributor.18 Regarding the liability for not removing the defamatory materials, the concurring opinion gave more weight to the freedom of expression than the majority opinion by requiring the victim demand the removal of the defamatory materials. However, the foundation of this additional requirement is not so clear from the perspective of general tort law theory.

18 See Stratton Oakmont v. Prodigy Services, 1995 WL 323710 (N.Y. Sup. Ct., May 24, 1995).

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Mandatory religious education in private schools

A Supreme Court decision on April 22, 201019 dealt with the issue of whether mandatory religious education in a private school could be lawful. The background of this decision was as follows. In Korea, most students attending high schools are distributed to high schools by way of lottery, without any consideration of the students’ wishes (The so-called High School Leveling System). As a result, a controversy arose about whether distributing students who were not religious to private schools established by religious organizations and providing religious education could infringe on the freedom of religion of the students. However, the Korean Constitutional Court decision on April 30, 2009 denied that such a system was a violation of the students’ right of freedom of religion.20 In this case, a high school student was expelled from a school established by a Christian education foundation, because the student had refused to attend the Christian rituals and education courses provided by the school. The student raised a suit for damages against the education foundation. The majority opinion of the Supreme Court acknowledged the plaintiff ’s claims. The decision elaborated the theory of the horizontality of human rights in the private sphere. According to the majority opinion, human rights guaranteed by the Constitution were not directly applicable to the private law relation in principle. Rather, human rights could influence the private law relations indirectly by forming the general principles of private law such as Article 2 (Good Faith and the Abuse of Rights), Article 103 (Ordre Public), Article 750 (General Clause of Tort Law), and Article 751 (Compensation for Mental Distress), and by becoming the guiding standards for these articles. In this case, there was a conflict between the freedom of religious education of the school and the freedom of negative religion and negative confession of faith. The conflict should be resolved by achieving a balancing of interests, as well as finding an interpretation that enables the practical harmony of these two human rights. This theoretical position was shared by all justices; however, there was no consensus on the result. The majority opinion found that the school had imposed a kind of disadvantage on the students who did not attend the Christian rituals held by the school, and provided Christian education courses to all students without offering alternative courses. In the Christian education courses, reading and discussing the Bible and writing the Ten Commandments and the Apostles’ Creed were required. Considering these circumstances, the majority opinion found that the 19 Supreme Court, 2008Da38288, Apr. 22, 2010, (2010 GONG 897) (S. Kor.). 20 Constitutional Court, 2005Hun-Ma514, Apr. 30, 2009, (KCCR, 21–2, 185) (S. Kor.).

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religious education that had been enforced by the defendant surpassed the limit that can be tolerated by our society. There were three dissenting opinions. In the context of this paper, only one dissenting opinion will be discussed. This dissenting opinion reasoned that the primary responsibility for resolving the religious conflict between the schools and the students lay with the state, as the conflict resulted from the High School Leveling System operated by the state. So it could not be said to be unlawful that the school did not provide alternative courses for the students who were not religious. The students should tolerate the education to a certain extent. Only when a student expressed her will unequivocally that she would reject the religious education or acted in an equivalent manner, enforcing the religious education on the student without providing alternative means such as giving the student the opportunity to transfer to another school would be a tort. It is very significant that the Supreme Court declared for the first time that the indirect application theory would be the proper standard on the question of horizontality. This theory is the prevailing opinion in the literature, too. It is doubtful, however, whether there was a true conflict of human rights. Students have a human right not to be taught mandatory religious education against their will, as mandatory religious education would violate their freedom of religion. In contrast, the freedom of religious education by the school cannot encompass the right to enforce the religious education. The freedom of religious education is the right not to have the state interfere in the offering of religious education. It cannot be a privilege to enforce religious education on unwilling students. If it could be assumed that there were a conflict between the freedom of religion of the school and that of the student, it should be resolved in favor of the student. Yet, the freedom of religious education can be meaningful, if it is provided only to consenting students. However, to enforce religious education on a student against her will is a violation of the freedom of religion of the student per se.

4.3

The disclosure of private information about attorneys

The en banc decision of the Supreme Court on September 2, 201121 dealt with the disclosure of sensitive information about attorneys. The defendant of this case was an operator of an internet site which had provided information about practicing attorneys. The defendant had collected various information about lawyers, and by combining the information, provided to users, among others, the 21 Supreme Court, 2008Da42430, Sept. 2, 2011, (2011 GONG 1997) (S. Kor.).

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trial win/lose rate and the expertise index of each practicing attorney, and the connection index between lawyers (including judges and public prosecutors). The connection index was calculated on the basis of information such as the birthplaces of the attorneys, and whether two certain lawyers had attended the same high school or university, had attended the Judiciary Training Institute simultaneously, had worked at the same court or prosecutor’s office at the same time, and so on. The defendant had assigned a certain number of points to such relations and added up the points to denote how close a pair of lawyers were. The plaintiffs were practicing lawyers. They sought for the defendant to cease the provision of such information and to pay damages. The cause of action was that the defendant had violated the privacy right and the right to control the selfinformation of the plaintiffs. The appellate court acknowledged the liability of the defendant regarding the disclosure of the trial win/lose rate and expertise index, but denied the defendant’s liability regarding the disclosure of the connection index. In contrast, the Supreme Court reached the opposite result. The Supreme Court acknowledged the violation of the plaintiffs’ right regarding the disclosure of the connection index, but denied the violation regarding the disclosure of the trial win/lose rate and expertise index. The Supreme Court found that there was a conflict between the human right of the plaintiffs to control self-information and the freedom of expression of the defendant to disclose the information of other people. The Court declared once again the indirect application of human rights in the private sphere, quoting the decision on April 22, 2010 (above Section 4.2). It can be unlawful to disclose the private information of another person without obtaining her consent. In the evaluation of which prevails between the interest of non-disclosure by protecting the privacy right of private information and the interest of disclosure by expression, circumstances such as whether the relevant person was a public figure, the public interest nature of the private information, the reasonableness of purpose, process, and using a form in the collection of the personal information, the necessity of using the private information, the nature and subject matter of the infringed interests and so on must be comprehensively taken into account. The Court unanimously declared that the disclosure of the trial win/lose rate and expertise index was not unlawful. According to the Court, the information about the win/lose rate and expertise index was formed in the sphere of the performance of the attorney’s duty, rather than in the private and intimate sphere of the attorney; hence it was public information. And the calculation method of the win/lose rate adopted by the defendant could not be deemed unreasonable. Moreover, such information could prove to be useful to legal consumers. There was not much concern that the plaintiffs’ social and professional reputation would be depreciated by the disclosure of the information.

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Therefore, the interest gained due to the disclosure of the information of the win/lose rate and expertise index should be evaluated as superior to the interest gained as a result of the non-disclosure. Hence, the disclosure should not be deemed as unlawful. However, the Court was divided over the lawfulness of disclosing the connection index. According to the majority opinion, the connection index was not merely a use of the plaintiffs’ disclosed private information, but a reprocessed numerical value. It was distinct information from the disclosed private information and one that had new value. This connection index service was premised on the belief that the intimacy between lawyers could influence trials and investigations, so it could promote distrust about the fairness of trials and investigations. In this aspect, the necessity for the protection of the public value achieved by the free disclosure of the connection index was not so high. Considering all relevant circumstances, the legal interest that could be achieved by providing the connection index disclosure service could not be deemed superior to the privacy interests of the plaintiffs protected by the nondisclosure of the connection index. Hence, providing the connection index was wrongful. In contrast, the dissenting opinion emphasized that the relevant personal information of individuals was already disclosed to the public and related to the public activities of the plaintiffs as lawyers, not about the private and intimate sphere of the plaintiffs. It was therefore argued that the connection index should be available to legal customers for the sake of choosing lawyers. In this regard, the plaintiffs should tolerate the disclosure of this information. The produced information based on this information was not worth protecting more than the freedom of expression of the defendant, either. Hence, the violation of the plaintiffs’ privacy interest was not severe. According to the dissenting opinion, the danger the majority opinion worried about, was that the connection index service could further the wrong belief that the intimacy between lawyers could influence trials and investigations and promote distrust for the fairness of trials and investigations. According to the dissenting opinion, this was an abstract worry. Thus, limiting the freedom of expression or business on the grounds of such a danger was an excessive restriction of a human right, and should not be easily tolerated. Two justices holding the dissenting opinion pointed out that the potential of the connection index to have an adverse effect to promote nepotism and work against the promotion of trust for the fairness of the judicial system was a totally different problem from the privacy interest of the plaintiffs. If it were necessary to restrict the freedom of expression and business for the sake of such a social problem, such work should fall under the responsibility of the legislature or the executive branch. Therefore, the court should refrain from actively regulating the

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freedom in a dispute between private persons in which the plaintiffs had asserted the infringement of their privacy right as the cause of action. In my view, the dissenting opinion is more persuasive than the majority opinion. Firstly, the basic information was not secret, so anyone who wanted to know the information could easily obtain it. Moreover, the defendant had disclosed the calculation method of the connection index to the general public. Thus, everyone could evaluate how reasonable the calculation method was, so it cannot be said that the calculation method had distorted the facts. Secondly, the fear of the majority opinion that the connection index would promote distrust for the fairness of trials and investigations should not be taken so seriously. If such a distrust in Korean society were to exist, it would already be present without the connection index service of the defendant. It is not certain whether the distrust might have grown stronger because of the service. Moreover, the existence of such a danger cannot be sufficient grounds for the restriction of the defendant’s freedom of expression. The connection index service also had a positive aspect. It provided information that legal consumers might have wanted to access. If the legal consumers were not to be criticized altogether for having such desires, then so should be the case for the defendant for providing the connection index service.

5

Conclusion

The reader can find from the preceding discussion that the Korean Supreme Court is inclined toward judicial activism and frequently resorts to constitutional reasoning. The question that remains is: Why has the Korean Supreme Court taken this direction? There can be various reasons. I will point out one possible reason, that is, the tension between the Supreme Court and the Constitutional Court. Judicial review against the law made by the legislature belongs exclusively to the Constitutional Court. An act of the government other than lawmaking can be reviewed by the Constitutional Court by way of a constitutional complaint, when it violates the human right of an individual. In contrast, a constitutional complaint against the decision of the court is not allowed. However, the Constitutional Court is trying to review the decision of the court in an indirect way. For example, the Constitutional Court has rendered so-called limited unconstitutionality decisions, when the Constitutional Court had deemed not the law itself, but the interpretation of the law by another court, including the Supreme Court, as unconstitutional. In these cases, the law remained valid and only the interpretation of

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the court should not be allowed anymore. However, the Supreme Court denied the binding force of limited unconstitutionality decisions.22 In this way, the judicial activism of the Supreme Court can be understood as a response to this situation. The Supreme Court must have felt a necessity to enhance its prestige by showing that it would be ready to pay attention to the violation of individuals’ human rights and to prescribe effective remedies. This is only one possible explanation and does not exclude other explanations. How should we evaluate the judicial activism of the Supreme Court? A simple yes-or-no answer to this question is not appropriate. Judicial activism can be good in some cases, but problematic in other cases. In my opinion, it can be deemed as positive overall. Formerly, the Supreme Court had been rather passive or insensitive to constitutional issues. The judicial activism of the Supreme Court can be seen, however, as the effort it is making to overcome this deficiency.

References Yune, J. (2008). The role of the courts in the protection of transsexuals’ human rights: A comparison of Korea with Germany and the UK. In T. Helms & J. M. Zeppernick (Eds.), Lebendiges Familienrecht: Festschrift für Rainer Frank (pp. 409–424). Berlin, Germany: Verlag für Standesamtwesen. Yune, J. (2004). The unconstitutionality of the old custom on the prescription of the inheritance restitution right and the retroactivity of the precedents. Comparative Private Law, 11(2), 245–259.

22 For example, compare the decision of the Constitutional Court, 2003Hun-Ba10, Oct. 30, 2008, (2003 KCCR, 20–2, 727) (S. Kor.) and the decision of the Supreme Court, 2004Du10289, Feb. 12, 2009, (2009 GONG 343) (S. Kor.).

Ching-Ping Shao

8

Beyond Uncertainty: Lower Courts’ Defiance in Insider Trading Cases*

1

Introduction

The role of the court cannot be overemphasized in any country that attempts to establish a viable economy and a strong securities market.1 Classic legal and financial theory posits that the quality of a country’s laws has a great impact on the shareholding structure of its enterprises.2 Because a good legal environment protects potential investors, it raises their willingness to put their money into the stock market and expands the scope of the capital market. Attentions should also be paid to the differences between the law in books and law in action. If written laws are inappropriately implemented and enforced, they might make little difference.3 Shareholders can be protected by the laws and need not excessively worry about the potential wrongdoing of corporate insiders and major shareholders. They can only feel this way when active financial regulators and independent courts enforce the law. Among all the legal mechanisms for protecting securities investors, insider trading law is what attracts the most media and public attention. In the United States, insider trading prohibition is rooted in Rule 10b–5 and Section 10(b) of the Securities Exchange Act of 1934. Under the classical theory of insider trading, a securities transaction made by persons who owe fiduciary duties to the trading parties and know of nonpublic, material information can result in a Rule 10b–5 violation.4 Besides, in accordance with the misappropriation theory, persons who * An earlier version of this chapter was published in National Taiwan University Law Review, 10 (1) (2015), by the permission of the National Taiwan University Law Review. 1 See Bernard S. Black, The Legal and Institutional Preconditions for Strong Securities Markets, 48 UCLA L. Rev. 781, 790–91 (2001). 2 See Rafael La Porta et al., Legal Determinants of External Finance, 52 J. Fin. 1131 (1997). 3 See John C. Coffee, Law and the Market: The Impact of Enforcement, 156 U. Pa. L. Rev. 229 (2007) (arguing that enforcement intensity, instead of its common law origin, defines the character of the U.S. capital market). 4 See Chiarella v. United States, 445 U.S. 222 (1980).

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trade securities commit an insider trading violation if they misappropriate information in a breach of duties to the source of that information.5 From the viewpoint of securities regulators and common investors, this law levels the playing field and promotes fairness in the securities market. However, the covert actions of insider trading offenders who are often highly educated or familiar with the securities market practice present a challenge to law enforcement. The difficult-to-define elements of insider trading exacerbate enforcement problems. Taiwan promulgated its insider trading law in 1988. Prosecutions against insider traders were rare until the late 1990s. As enforcement actions increase, highprofile cases often shock the public and unsettle the business community about how to implement trading without incurring any legal risks. On the other hand, only a small number of prosecuted defendants are finally convicted. Judgments by the second-instance high courts are often reversed and remanded by the Supreme Court. That the conviction rate and the non-reversal rate are low means that prosecutors and judges from different levels of the judicial hierarchy are often unable to agree on the alleged violations and the interpretation of the law. Hence, legal uncertainty is unreasonably high. To ease anxiety about the interpretation of the insider trading law, the Financial Supervisory Commission (FSC), Taiwan’s financial regulator, held two forums in 2007, where senior prosecutors and technocrats lectured regarding insider trading. Numerous famous tycoons and entrepreneurs attended, examining this confusing topic;6 the unusual presence of such notable persons indicates how problematic it is to enforce insider trading regulations. In this article, conventional wisdom is challenged regarding the causes of difficulties enforcing insider trading laws in Taiwan, arguing that evaluating the defiance of the lower courts can elucidate these enforcement problems. Part 2 introduces the development of Taiwan’s insider trading law. Part 3 describes the findings of recent empirical studies, presenting a review of relevant Supreme Court cases in Taiwan. Previous discussions on the low conviction rate and the low nonreversal rate often ended with proposals to refine the legal text and to establish a specialized court. These proposals have been fulfilled to a certain extent. From 2000 to 2010, Taiwan’s Securities and Exchange Act (hereinafter SEA) has been amended several times. Taipei District Court, the court of first instance located in the political and business capital of Taiwan, has set up specialized financial panels since 2008. The effects of these reforms remain to be seen; however, I suggest the enforcement plight reflects the defiance of the lower courts and might be exacerbated by re5 See United States v. O’Hagan, 521 U.S. 642 (1997). 6 The China Post News Staff, Higher Conviction Rate for Insider Trading Sought, The China Post, Dec. 5, 2007, http://www.chinapost.com.tw/news/2007/12/05/133560/Higher-conviction. htm.

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forms. Part 4 offers two series of cases that were reversed by the Supreme Court as examples of the lower courts’ defiance against the legal authority in insider trading cases. Part 5 scrutinizes the lower courts’ defiance in greater depth, and argues that the potential expertise gap between the Supreme Court and the lower courts contributes to the defiance, and, indirectly, the high reversal rate. In Part 6, I propose that the members of the Supreme Court should cite scholarly works in their verdicts to channel the disagreements into healthy discussions. Frequent and enhanced communication should also be promoted among the various levels of courts and the prosecutors before a full reexamination of the establishment of a specialized court can be conducted.

2

Insider trading law and enforcement in Taiwan

Taiwan’s major statute governing securities transactions came into force in 1968. To draft a new law from the beginning, legislators and regulators mainly borrowed from U.S. securities laws7 where the concept of insider trading was still emerging and poorly recognized.8 The original form of Taiwan’s SEA, therefore, included no specific provision to target insider trading.9 Article 157–1, which makes the provision to prohibit insider trading, was not written into the SEA until the act was amended in 1988. Those in violation of Article 157–1 would have to cover the damages incurred by other investors, as well as be prosecuted. The then paragraph 1 of Article 157–1 reads as follows: Upon knowing of any information that will have a material impact on the price of the securities of the issuing company, and prior to the public disclosure of such information, the following persons shall not purchase or sell shares of the company that are listed on an exchange or an over-the-counter market: 7 Taiwan borrowed from the securities laws of the United States and Japan when Taiwan drafted its own SEA before 1968. For a brief legislative history of the SEA, see Paul S.P. Hsu & Lawrence S. Liu, The Transformation of the Securities Market in Taiwan, the Republic of China, 27 Colum. J. Transnat’l L. 169, 174–75 (1988). Japanese law was modeled after the securities regulations of the United States during the Allied Occupation. See Tomoko Akashi, Regulation of Insider Trading in Japan, 89 Colum. L. Rev. 1296, 1297–98 (1989). 8 The first SEC action against insider trading was in 1961. See In re Cady, Roberts & Co., 40 S.E.C. 907 (1961). See also Mirela V. Hristova, The Case for Insider-Trading Criminalization and Sentencing Reform, 13 Tenn. J. Bus. L. 267, 268–69 (2012) (“Insider trading first came to broad public attention in the mid-1980s with a series of high-profile scandals involving investment bankers and lawyers who were charged with illegally trading in securities or tipping others about the company takeovers planned by their clients.”). 9 To be sure, paragraph 1 of Article 20 of the SEA, Taiwan’s counterpart of U.S. Rule 10b–5, served as a catch-all antifraud provision, and might be interpreted in outlawing the insider trading as Rule 10b–5 did. Whether this broad interpretation on the scope of this Section could be accepted is not without serious doubt.

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(1) A director, supervisor, and/or managerial officer of the company. (2) Shareholders holding more than 10 % of company shares. (3) Any person who has learned the information by reason of occupational or controlling relationship. (4) Any person who has learned the information from any of the persons named in the preceding three subparagraphs.

Illegal insider trading was not considered a felony because the maximum penalty for offenders was a sentence of 2-year imprisonment in accordance with Article 175 of the SEA. Nonetheless, the SEA amendment of 2000 penalized insider trading offenders by using Article 171 instead of Article 175, and the maximal term of imprisonment was drastically increased to 7 years. The penalty stipulated in Article 171 became even harsher in the SEA amendment of 2004. Insider traders can currently be sentenced with up to 10 years, and can be fined up to NTD 200 million. For serious offenders whose illegal insider trading resulted in gains of over NTD 100 million, the minimum imprisonment is 7 years, and the minimum fine is NTD 25 million. In addition, the maximum fine increases from NTD 200 million to NTD 500 million. Legislative efforts to amend the SEA apparently reflect the beliefs of lawmakers that insider trading is prevalent in Taiwan and should be imposed with severe penalties.10 The strong demands of the public to level the investment playing field also affect the construction of laws and the extent to which they are enforced. For example, according to Article 157–1, paragraph 1, subparagraph 3, persons who obtain material information “by reason of occupational or controlling relationship” will be charged with insider trading if they use such information to trade securities. On one hand, temporary or constructive insiders,11 such as lawyers, accountants, or underwriters hired by the issuing companies, who trade on inside information obtained while working for the companies, will be indicted based on the scope of this paragraph. On the other hand, judged from the legal text in context, whether such a paragraph can be applied to the U.S.-style misappropriation theory cases, where the traders violate their duties to the source of information instead of to the issuing companies, is not without doubts. Nonetheless, mainstream contemporary scholars suggest that the aforementioned occupational or controlling relationship should be broadly defined. This “occupational relationship” clause may cast a broader net than the mis10 Robert A. Prentice, The Inevitability of a Strong SEC, 91 Cornell L. Rev. 775, 837 (2006) (“There is a burgeoning international consensus that the inherent unfairness of insider trading undermines the integrity of securities markets and discourages regular investors from playing what they perceive as a loaded game.”). 11 See Dirks v. Securities and Exchange Commission, 463 U.S. 646, 655 n. 14 (1983). See also Robert A. Prentice, Permanently Reviving the Temporary Insider, 36 J. Corp. L. 343, 348–49 (2011).

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appropriation theory against insider trading in the United States because it is often easier to confirm the existence of occupational relationships than to meet the “fraud on the source” requirement in the U.S. regime. Not only lawmakers but also law enforcers did step up efforts to ferret out illegal insider trading. Since the early 2000s, prosecutors have filed several highprofile cases against prominent businessmen. Even the son-in–law of the former president of Taiwan was indicted.12 In the wake of disruptive enforcement actions, the business community had advocated for clear and specific rules to obey. As a result, several amendments have been made. The SEA amendment of 2006 revised paragraph 4 of Article 157–1,13 and defines the phrase “information that will have a material impact on the prices of the securities” in paragraph 1 as: information relating to the finances and businesses of the company, or the supply and demand of such securities on the market, or tender offer of such securities, the specific content of which will have a material impact on the price of the securities, or will have a material impact on the investment decision of a reasonably prudent investor.

This newly revised paragraph further empowers the relevant authorities or the FSC, to stipulate a regulation “governing the scope of the information, the means of its disclosure, and related matters.” Sample lists regarding the related matters were provided in resulting regulation designed to provide guidance to law enforcement officials. In addition, in the SEA amendment of 2010, paragraph 1 of Article 157–1 was revised in several ways. Among them, insider trading is illegal only if the trader buys or sells securities upon “actually” knowing of any material information, and “the information is precise.” Having been revised three times since its passage in 1988, the current paragraph 1 of Article 157–1 reads as follows: Upon actually knowing of any information that will have a material impact on the price of the securities of the issuing company, after the information is precise, and prior to the public disclosure of such information or within 18 hours after its public disclosure, the following persons shall not purchase or sell, in the person’s own name or in the name of another, shares of the company that are listed on an exchange or an over-the-counter market, or any other equity-type security of the company: (1) A director, supervisor, and/or managerial officer of the company, and/or a natural person designated to exercise powers as representative pursuant to Article 27, paragraph 1 of the Company Act. (2) Shareholders holding more than 10 % of the shares of the company. (3) Any person who has learned the information by reason of occupational or controlling relationship. 12 See The China Post Staff, Chao Insider Trading Profits Much Greater Than Thought, The China Post, Sept. 9, 2006, http://www.chinapost.com.tw/print/89972.htm. 13 The then paragraph 4 of Article 157–1 was renumbered as paragraph 5 after the SEA was amended in 2010.

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(4) A person who, although no longer among those listed in the preceding three subparagraphs, has only lost such a status within the last 6 months. (5) Any person who has learned the information from any of the persons named in the preceding four subparagraphs.

Illegal insider trading results in not only criminal penalties but also civil liabilities. Paragraphs 3 and 4 of Article 157–1 read as follows: Persons in violation of the provisions of paragraph 1 or the preceding paragraph shall be held liable, to trading counterparts who, on the day of the violation, undertook the opposite-side trade with bona fide intent, for damages in the amount of the difference between the buy or sell price and the average closing price for ten business days after the date of public disclosure; the court may also, upon the request of the counterpart trading in good faith, treble the damages payable by the said violators should the violation be of a severe nature. The court may reduce the damages where the violation is minor. The persons referred to in subparagraph 5 of paragraph 1 shall be held jointly and severally liable with the persons referred to in subparagraphs 1 through 4 of paragraph 1 who provided the information for the damages referred to in the preceding paragraph. However, where the persons referred to in subparagraphs 1 through 4 of paragraph 1 who provided the information had reasonable cause to believe the information had already been publicly disclosed, they shall not be liable for damages.

It is worth noting that Taiwan has set up a government-sanctioned nonprofit organization (NPO) named Securities and Futures Investors Protection Center (hereinafter IPC) to help victimized investors enforce their private rights of action. In 2002, regulators and legislators strived to pass the Securities Investor and Futures Trader Protection Act and created the IPC, which are both dedicated to investor protection. This Act empowers the FSC to require all related exchanges, self-regulatory organizations, and securities finance enterprises to finance the establishment of the IPC. This Act requires consistent, ongoing contributions from securities firms, futures firms, and the exchanges.14 The IPC’s charter identifies the board of directors consisting of eleven members as its decision-making body.15 At least two-thirds of the directors are scholars, experts, or impartial persons appointed by the FSC, and the remaining directors are selected by the FSC from persons recommended by the contributors.16 According to the Securities Investor and Futures Trader Protection Act, the IPC may bring a securities class action as long as more than twenty investors who are harmed by the same securities incident are willing to delegate their rights to, and be represented by, the IPC.17 The IPC finances the entire cost of the litigation, 14 15 16 17

Securities Investor and Futures Trader Protection Act, art. 7 (2002). Charter of the Investor Protection Center, art. 9 (2003). Securities Investor and Futures Trader Protection Act, art. 11 (2002). Securities Investor and Futures Trader Protection Act, art. 28, para. 1 (2002).

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and all proceeds arising from the litigation are distributed to the plaintiff-investors after deducting any legitimate expenses paid by the IPC.18 Those necessary expenses may not include the attorneys’ fees or other compensation for the services offered by the IPC, because the IPC is not allowed to charge the plaintiffinvestors it represents.19 The IPC enjoys huge cost advantages in bringing class actions. The Securities Investor and Futures Trader Protection Act originally exempted the IPC from paying court fees for the portion of the litigation amount in excess of NTD 100 million. Amended in 2009, the current cap amount was reduced to NTD 30 million.20 The Taiwanese court, with the express authorization of the Securities Investor and Futures Trader Protection Act, can exempt the IPC from having to pay the standard deposit for injunctions or attachments applications.21 The usual amount set for the deposit is one-third of the claim. However, but for that rule, the deposit required for the court’s temporary actions would have prohibited securities class actions with large claim amounts. This NPO model of enforcement is highly regarded22 and has made securities class actions be initiated more often than before.

3

Insider trading cases in Taiwanese courts

An empirical study completed in June 2013 stated that at least 91 insider trading cases have been initiated by prosecutors and adjudicated by first-instance district courts in Taiwan.23 Of these, 64 cases were finalized, and 27 cases are still being tried in the second-instance high court or deliberated in the third-instance Supreme Court. Compared with the frequent rumors of insider trading disseminated among the business community, the number of prosecutorial actions appears modest at best. However, viewed from a comparative perspective on

18 Securities Investor and Futures Trader Protection Act, art. 33 (2002). 19 Id. 20 Securities Investor and Futures Trader Protection Act, art. 35, paras. 1 & 2 (2009). Court fees for a case with a litigation amount of NTD 30 million are approximately NTD 276,000 for the court of first instance; if the case is appealed, the court fees for both the court of second instance and the court of third instance are about NTD 414,000. 21 Securities Investor and Futures Trader Protection Act, art. 35, para. 3 (2009). 22 See Curtis J. Milhaupt, Nonprofit Organizations as Investor Protection: Economic Theory and Evidence from East Asia, 29 Yale J. Int’l L. 169 (2004). 23 Chia-Jung Ho, A Comparative Study on Exemption Clause Under Taiwan Insider Trading Law 33 (2013) (unpublished master thesis, National Taiwan University) (in Chinese).

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insider trading enforcement, regulators and prosecutors in Taiwan seem to outperform their counterparts in other jurisdictions.24 What is often baffling is not the sheer number of cases, but how the cases tend to fare in courts. The defendants are acquitted in approximately half of finalized cases (30 of the 64 cases) mentioned.25 In sharp contrast, the so-called rate of prosecutorial correctness in all criminal cases released yearly from 2001 to 2011 by the Ministry of Justice is no less than 90 %, which means that more than 90 of 100 defendants prosecuted during the past decade are convicted in the end. The prosecutorial and judicial branches, and even judges in courts of varying levels, express conflicting views regarding what can be construed as illegal insider trading. A preliminary survey of Supreme Court verdicts in insider trading cases listed in the database maintained by the Judicial Yuan26 indicated that in the 55 verdicts passed by the end of May 2013, 33 of the high courts’ decisions were reversed and the cases were remanded, and 19 decisions were upheld. The nonreversal rate is approximately 35 %. In comparison, according to the statistics compiled by the Judicial Yuan,27 the non-reversal rate for all high court verdicts each year has risen steadily from 61 % to 85 % between 2007 and 2011. The question of explaining the low conviction rate and the low non-reversal rate in insider trading cases remains. Conventional wisdom might suggest that the numbers show how difficult and controversial enforcing the insider trading law can be. Examining the statistics of insider trading cases with the benchmark of overall criminal cases, which are mostly composed of trivial ones, is like a comparison of apples and oranges. The elements of insider trading are somehow vague and pose serious challenges for law enforcers to build their cases. Moreover, Article 157–1, the violation of which entails criminal sanctions, is subject to a strict textual interpretation under the nulla poena sine lege (no punishment without law) principle. Evidence to buttress prosecutorial decisions might not meet the elevated threshold of “beyond a reasonable doubt” from the judges’ viewpoint. Conversely, the open-ended legal text inevitably leaves room for judges to exercise their legal and factual discretion in insider trading cases. Supreme Court judges might hold a different view from that of lower court judges in any particular case. Thus, these uncertainties and difficulties in enforcing the insider trading law are part of the reasons why some scholars are not supportive

24 For example, there are few criminal prosecutions as well as civil actions against insider trading in the United Kingdom. See Coffee, supra note 3, at 265. 25 See Ho, supra note 23, at 52. 26 This database is available online at http://jirs.judicial.gov.tw/Index.htm. 27 The statistics are available online at http://www.judicial.gov.tw/juds/index1.htm.

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of regulating and criminalizing insider trading.28 Hence, the low conviction and non-reversal rates are no surprise. The decisional unpredictability of prosecutors and judges indicates substantial room for improvement in the insider trading enforcement policies of Taiwan. Judicial specialization is the critical suggestion in the solution offered by the Judicial Yuan. During the first National Judicial Reform Convention in 1999, a consensus was reached that specialized courts should be established to adjudicate certain types of cases. At that time, the major requirement for a person to become a judge or a prosecutor was to pass the judicial examination. Most people who passed the examination were law majors from universities; some had neither practiced law nor accrued other work experience.29 Thus, it was strongly argued that the inefficiency and unprofessionalism found in certain courts resulted from lack of training or lack non-law knowledge among presiding judges. After the consensus was established, the Judicial Yuan enacted efforts to specialize the courts. Various interest groups began lobbying to change the law and to form specialized courts to adjudicate their cases. Financial crimes are classic white-collar crimes that are inherently complex. Given the trend of specialized courts, it is logical that such criminal cases should be assigned to specifically-trained and well-qualified judges. In 2005, legislators amended seven financial codes, including the SEA, adding a clause to allow for court specialization. For example, Article 181–1 of the SEA now authorizes a court to establish specialized panels or designate specific judges to try criminal cases involving violations of the SEA. To implement this legislative mandate, the Judicial Yuan took a subsequent step in 2008, ordering the Taipei District Court to establish three specialized financial panels, each comprising three judges to hear financial criminal cases. The means of selecting judges to fill these panels generated controversy. Because financial criminal cases were often time-consuming and high-pressure, balancing the workloads among specialized and generalist judges was a primary concern. As a result, the preferences of the judges were fully respected during the assignment process, and the specialties of the candidates who were asked to serve on the specialized panels were not the top consideration for judicial administrators. Since these specialized financial panels in the Taipei District Court and other kinds of specialized courts were established, the Judicial Yuan has improved the administrative rules that govern these judicial specializations. Current rules re28 See, e. g., Henry G. Manne, The Collected Works of Henry G. Manne: In Three Volumes 169–80 (2009). 29 See Chang-fa Lo, Taiwan: External Influences Mixed with Traditional Elements to Form Its Unique Legal System, in Law and Legal Institutions of Asia: Traditions, Adaptations and Innovations 91, 111–14 (Ann Black & Gary Bell eds., 2011).

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quire that judges who acquire specialization certificates issued by the Judicial Yuan be given the priority to serve in specialized courts or panels.30 Those who have not completed academic degrees, published scholarly works, or writen judicial opinions on relevant subjects as required by the Judicial Yuan, cannot be certified.31 In addition, specialized judges must complete 12 hours of on-the-job training per year.32 Furthermore, judges who are assigned to the specialized courts or to panels must hold their positions for a three-year term, which can be renewed if a judge is willing to maintain her position.33 The requirements of earning a specialty certification and the term of service were intended to ensure that specialized judges serve as real specialists.

4

Beyond uncertainty: two examples of the lower courts’ defiance

Legal certainty is important for the trustworthiness of the judicial system. Under the nulla poena sine lege principle, criminal statutes make known to people criminalized behaviors and allow people to plan their activities without incurring any legal risks. For the same purpose, judges must interpret the law basically according to the legal text and its legislative purpose. To further enhance the predictability of the law and the courts’ verdicts, the principle of stare decisis requires that judges obey authorities or precedents and prevent, to a large extent, the potential abuses of their discretion.34 Whereas the legal system in Taiwan, with its civil law tradition, does not include the stare decisis,35 Taiwan’s Supreme Court decisions enjoy a strong de facto binding effect on the lower courts to decide subsequent cases.36 Notwithstanding, in view of the following two ex-

30 See Rules on Distribution of Annual Judicial Affairs for Judges at Each Level Court Dealing with Civil, Criminal, Administrative Cases and Cases of Specialization [hereinafter Rules on Distribution of Annual Judicial Affairs], art. 11. 31 Review Guidelines on Judicial Yuan’s Issuance of Specialized Judge Certificate, arts. 3 & 4. 32 Rules on Distribution of Annual Judicial Affairs, art. 12. 33 Id. 34 See Evan H. Caminker, Why Must Inferior Courts Obey Superior Court Precedents?, 46 Stan. L. Rev. 817, 849–56 (1994). 35 Id. at 826 (A central premise in civil law systems is that “judicial decisions are not a source of law. It would violate the rules against judicial lawmaking if decisions of courts were to be binding on subsequent courts.” Hence, “no court is bound by the decision of any other court in a civil law jurisdiction. In theory, at least, even though the highest court has already spoken on the question and indicated a clear view of its proper resolution, the lowest court in the jurisdiction can decide differently.”). 36 Lo, supra note 29, at 99. See also Katharina Pistor & Chenggang Xu, Incomplete Law, 35 N.Y.U. J. Int’l L. & Pol. 931, 947 (2003) (conceding that “judges in civil law jurisdictions are more

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amples, it appears that the rules for securing the minimum legal certainty are insufficiently adhered to. The lower court judges seem to be more defiant when they hear insider trading cases.

4.1

Comparison of the insider trading law before and after 2010

According to Article 2 of Taiwan’s Criminal Code, when the law is amended after the violator’s committing of an offense, the law in force at the time of its commission applies; provided that the amended law favors the offender, the most favorable law applies. In view of this article and the SEA amendment of 2010, the question of whether the old law or the new law should apply to a particular insider trading case must become the focus of discussion. Judging from the textual change, the 2010 amendment should be understood as favoring the defendants because they can raise new defenses under the current law that they did not “actually” know any material information, or that what they did know was not “precise” information. The original version of the amendment drafted by the securities regulator and submitted to the Legislative Yuan did not make such revisions. The current version of Article 157–1 is what the party caucuses agreed to in a closed-door negotiation during the committee’s deliberations. The Legislative Yuan Communique – official reports – provides scant explanation regarding the revisions. However, none would doubt that the revisions were enacted to benefit potential defendants. Soon after the passage of the 2010 amendment, some prosecutors and judges suggested that the amendment only reasserted the burden of proof that is borne by the prosecutors against defendants charged with insider trading. In other words, the additions of “actually” and “precise” are simply wording changes that increase the exactness of the legal text. The elements of insider trading have not been modified. Thus, the positions of defendants who are already on trial are neither positively nor negatively influenced by the new law; these cases will be adjudicated based on the old law. An identical conclusion regarding the application of the old law can be reached using an alternative path. Certain lower court judges indicated that whereas the revisions benefit defendants, the old law applies in the cases they oversee. This is because defendants allegedly committed insider trading before the enactment of the 2004 amendment, which imposed considerably harsher punishments compared with previous penalties. If the new law is applied in such cases, these judges suggested that the entirety of the new law, namely, the eleconstrained in exercising [lawmaking] rights than judges in common law jurisdictions, in part because of legal doctrine, and in part due to other institutional constraints on judges.”).

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ments of insider trading revised in 2010 and the punishments enacted in 2004, should be applied together and cannot be separately considered. Therefore, comparisons of the old and the new laws should specify that the old law substantially favors defendants and the extent to which this new law should be applied. By June 2013, four Supreme Court verdicts addressed the issue of a comparison of these laws.37 Both the theories of certain lower court judges and the view that the old law should apply were rejected by the Supreme Court. The Supreme Court holds that the 2010 amendment changed the elements of insider trading in favor of the defendants. The defendants will not be subject to any punishment if they are not found guilty under the current Article 157–1. Regarding the comparison of the old and the new laws, the punishment clauses, Article 171 and Article 175, come into play during the sentencing, and not at the conviction stage. To be sure, how substantial an impact can be made in the outcomes of insider trading cases by replacing the standard of “know” with one of “actually know” in Article 157–1 remains to be seen. Whether the information that the defendants know of is precise remains subject to interpretation and uncertainty. To better guide the law enforcers, the legislators could have allowed the recording of how the draft wording emerged and how it will influence insider trading cases. However, the textual change is clear and specific, as are legislators’ intentions to curb frivolous prosecutions. Downplaying the textual change and undercutting legislative intentions is surprising, simply because it is not what judges usually do. Moreover, lower court judges, as well as prosecutors who share the same view towards the 2010 amendment, did not offer persuasive reasoning to support their view. If the elements of insider trading remain unchanged, the purpose for legislators’ amendment of the text remains unanswered. If the legislative purpose is to strengthen the prosecutors’ burden of proof, this purpose cannot be achieved without new elements being introduced into the law. In this light, the Supreme Court’s reversal on these judgments should be anticipated, and the lower court’s defiance deserves further exploration.

37 Supreme Court, Criminal Division, 100 Tai-Shang No. 2565 (2011) (Taiwan); Supreme Court, Criminal Division, 100 Tai-Shang No. 7306 (2011) (Taiwan); Supreme Court, Criminal Division, 101 Tai-Shang No. 470 (2012) (Taiwan); Supreme Court, Criminal Division, 101 TaiShang No. 4243 (2012) (Taiwan).

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Controversy of “possession” versus “use”

Another controversy that reflects the lower court’s defiance concerns the choice between the possession standard and the use standard for insider trading. In accordance with the possession standard, the mere possession of material information at the time of trading is sufficient for establishing an insider trading liability. In contrast, to meet the use standard, a causal connection between both the possessed inside information and the trading achieved by the defendants must be proven. Because Taiwan modeled its SEA after the U.S. regime, developments and debates regarding U.S. securities regulations often draw attention and spark discussions in Taiwan. Taiwanese lawyers frequently cite U.S. cases in their briefs, and such cases often affect the opinions of Taiwanese judges. Thus, it is critical to note that a circuit split exists between the possession and use standards in the United States. Two circuits vital to discussions of securities laws, the Second and Ninth Circuits, have expressed differing opinions. The Second Circuit ruled in favor of the possession standard in 1993 in United States v. Teicher by dicta38 and subsequently reaffirmed its position in 2008 in United States v. Royer.39 In the recent case of United States v. Rajaratnam, this possession standard remained unchanged.40 By contrast, in 1998, the Ninth Circuit ruled that mere possession, without further use of inside information was insufficient to establish insider trading liability in United States v. Smith.41 In addition, the Eleventh Circuit decided unanimously in favor of the use standard in 1998 in Securities and Exchange Commission v. Adler.42 But it seemed to strike a balance by switching the burden of proof to the defendants.43 38 See United States v. Teicher, 987 F. 2d 112, 121 (2d Cir. 1993) (“It strains reason to argue that an arbitrageur, who traded while possessing information he knew to be fraudulently obtained, knew to be material, knew to be nonpublic, – and who did not act in good faith in so doing – did not also trade on the basis of that information.”). 39 See United States v. Royer, 549 F. 3d 886, 899 (2d Cir. 2008) (The use standard supported by Teicher “was arguably dictum,” but the Court “consequently adhere to the knowing possession standard articulated in Teicher.”). 40 See United States v. Rajaratnam, 719 F. 3d 139, 158–59 (2d Cir. 2013). 41 See United States v. Smith, 155 F. 3d 1051, 1069 (9th Cir. 1998) (“We nonetheless adhere to our view that Rule 10b–5 entails a ‘use’ requirement. . . . Any number of types of circumstantial evidence might be relevant to the causation issue. . . . We are confident that the government would have little trouble demonstrating ‘use’ in . . . situations in which unique trading patterns or unusually large trading quantities suggest that an investor had used inside information.”). 42 See Securities and Exchange Commission v. Adler, 137 F. 3d 1325, 1337 (11th Cir. 1998) (“We believe that the use test best comports with precedent and Congressional intent, and that mere knowing possession – i. e., proof that an insider traded while in possession of material nonpublic information – is not a per se violation.”). 43 See id. at 1337 (“[W]hen an insider trades while in possession of material nonpublic in-

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In Taiwan, a case survey conducted in 2009 indicated that the mens rea issue is the most raised defense by insider trading defendants.44 In that study, the socalled mens rea defenses were inclusive of the claims of defendants that they would have conducted the trading either way, despite not having had such inside information. Consequently, they should not be convicted under the use standard. In 2002, the Supreme Court passed its first verdict on this issue and expressly adopted the possession standard.45 Relying mainly on textual interpretation, this verdict states that the subjective purpose of the trader is not one of the elements stipulated in Article 157–1. As long as the trader “knows material information” and “trades the stocks before the disclosure of such information,” the trader commits the violation of insider trading. This verdict has been widely cited, and the possession standard has become the mainstream since then. Nonetheless, some lower court judges still insist on employing the use standard. They have not hesitated in confronting the Supreme Court. The Smith case and the Adler case from the United States were explicitly referenced in some of these verdicts. They did not mention the Teicher case in their verdicts, nor did the criminal court judges pay attention to the subtle difference on burden of proof discussed in the Smith case.46 The current findings indicated that 4 of the 36 insider trading verdicts offered by the Supreme Court required that the possession standard be adopted and reversed the cases to a second-instance high court.47 It is believed that this use standard is more popular in lower courts than what can be seen from these four cases. Regarding other lower court judgments that have adopted the use standard and still found the defendants guilty, the Supreme Court, which agreed with the guilty finding, would not reverse them on the sole basis of the lower courts’ dissent regarding the possession standard. Such judgments might not be appealed to or not overturned by the Supreme Court and, hence, are not examined in this study.

44 45 46

47

formation, a strong inference arises that such information was used by the insider in trading. The insider can attempt to rebut the inference by adducing evidence that there was no causal connection between the information and the trade – i. e., that information was not used.”). Chia-Hui Chuang, The Empirical Study of the Insider Trading 135–37 (2009) (unpublished master thesis, National Chiao Tung University) (in Chinese). Supreme Court, Criminal Division, 91 Tai-Shang No. 3037 (2002) (Taiwan). See Smith, 155 F. 3d at 1069 (In contrast with the Adler court, the Smith court “deal with a criminal prosecution, not a civil enforcement proceeding, as was the situation in Adler. We are therefore not at liberty, as was the Adler court, to establish an evidentiary presumption that gives rise to an inference of use.”). Supreme Court, Criminal Division, 91 Tai-Shang No. 3037 (2002) (Taiwan); Supreme Court, Criminal Division, 99 Tai-Shang No. 4781 (2010) (Taiwan); Supreme Court, Criminal Division, 99 Tai-Shang No. 6864 (2010) (Taiwan); Supreme Court, Criminal Division, 99 Tai-Shang No. 8070 (2010) (Taiwan).

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That the lower court judges expressed their opinions and were not intimidated by a possible reversal might be lauded as the manifestation of judicial independence. Unrest among lower court judges might induce Supreme Court judges to reevaluate their previous decisions.48 However, any consistent, ostensible disagreement between the lower courts and the Supreme Court is an anomaly in any legal system. When judges are deciding a particular case and believe that compliance with prior decisions by a higher court may compel an incorrect decision, they often adopt a judicial strategy of distinguishing the case from the decisions of the higher court.49 Authoritative decisions are applied based on the factual similarities between current cases and prior cases. Lower court judges, hence, have the discretion to decide what the facts of the case are and to produce a different outcome from cases heard previously by their counterparts in the higher courts.50 To find defendants innocent of insider trading, judges typically base their decisions on the lack or immateriality of information obtained by defendants. Resorting to the use standard might be unnecessary to ensure justice. Moreover, regarding defendants who were convicted regardless, it is not practically necessary for lower court judges to insist on using the lenient use standard instead of the strict possession standard. Thus, the adoption of the use standard among lower courts shows that such courts strive to pursue the justice they believe in and to defy the authority of the Supreme Court.

48 In at least two recent Supreme Court verdicts, some subtle changes can be found regarding the Supreme Court’s attitude toward the use standard. One verdict is Supreme Court, Criminal Division, 101 Tai-Shang No. 4351 (2012) (Taiwan). In this case, the second-instance high court followed the possession standard and found the defendant guilty of insider trading. The defendant appealed and argued that the use standard should be adopted. The Supreme Court not only upheld that “use” is not required for insider trading violations, it also opined that the defendant’s argument that his transaction is not caused by the knowledge of nonpublic information is not persuasive under the lenient use standard. The other verdict is Supreme Court, Criminal Division, 102 Tai-Shang No. 1420 (2013) (Taiwan). In this case, the secondinstance high court believed the use standard is the better law and found the defendant not guilty of insider trading. Prosecutors appealed this case to the Supreme Court. The Supreme Court did not outright reverse the case on the sole basis of the lower court’s wrongful interpretation of the insider trading law. Instead, the Supreme Court opined that the transactions made by defendants “seemed to be in connection with the defendants’ prior knowledge of material information of the merge.” 49 See Frederick Schauer, Precedent, 39 Stan. L. Rev. 571, 577–79 (1987). See also Caminker, supra note 34, at 819. 50 Pauline T. Kim, Lower Court Discretion, 82 N.Y.U. L. Rev. 383, 423 (2007) (“The discretion inherent in the task of applying legal doctrine to concrete facts primarily gives lower courts power over the outcome in the particular case before them.”).

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Exploring the lower courts’ defiance

Judicial independence is a characteristic of contemporary democratic governments. Judges make decisions based solely on facts and the law and are not subject to undue influences. Nevertheless, the influences that higher courts exert on lower courts are typically not deemed undue. This is why principal-agent theories are often used to model the judicial hierarchy in U.S. studies.51 According to these theories, the Supreme Court, as the principal, communicates its preferences in its verdicts to the lower courts as the agents; in addition, lower courts should adhere to the preferences of the Supreme Court in their case-bycase decisions. However, in the U.S. federal judicial system, the principal seems to have only limited power to discipline disloyal agents. The Supreme Court does not control the promotion, demotion, or compensation of lower court judges. It has the power of reversal and can make lower court judges whose judgments are reversed suffer possible reputational damage. However, because of its limited institutional capacity, only a very small number of decisions are subject to the review of the Supreme Court.52 Defiant lower court judges can easily avoid the potential sanctions of a reversal. This contrasts with Taiwan. In Taiwan, the Organic Act of the Judicial Yuan requires that promotion of judges be determined by the resolution of Personnel Committee in the Judicial Yuan.53 But tradition has it that any proposal on promotion of lower court judges to the Supreme Court judgeship can be approved only if it is backed by senior Supreme Court judges.54 In practice, Supreme Court judges have the power to select their future colleagues. With a low threshold for appeals, the parties in many cases have the right to appeal to the Supreme Court. Under such circumstances, we can imagine that the lower court judges in Taiwan have been better disciplined than their counterparts in the United States and should be less inclined to offer different opinions from those made by the Supreme Court. In short, the relationship between the Supreme Court and the lower courts in Taiwan can be better described as a principal-agent relationship than it can be in the U.S. This raises questions regarding verdicts made by the Supreme Court judges that are not popular among lower court judges. It is suggested that lower courts’ obedience to precedents be partly premised on the condition that higher courts 51 See, e. g., Donald R. Songer et al., The Hierarchy of Justice: Testing a Principal-Agent Model of Supreme Court-Circuit Court Interactions, 38 Am. J. Pol. Sci. 673 (1994). 52 Adrian Vermeule, Judging Under Uncertainty: An Institutional Theory of Legal Interpretation 130–31 (2006). 53 Organic Act of Judicial Yuan, art. 20. 54 In 2008, the President of Judicial Yuan, Lai In-Jaw, proposed to send two judges to the Supreme Court. This proposal was turned down by the Personnel Committee, partly because senior Supreme Court judges were not consulted.

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are more skillful interpreters of the law and can offer superior solutions to legal questions.55 In this light, many judges might ask whether the Supreme Court is, functionally or structurally, more suitable than the lower courts at appreciating the incomprehensible insider trading law. Although lower court judges are neither as senior nor as experienced as Supreme Court judges, they generally have greater exposure to recent scholarly productions and comparative legal developments about insider trading law, a field that has not been sufficiently nurtured in Taiwan until the past decade. Hierarchical legitimacy has become an increasing challenge since specialized panels were established in the Taipei District Court. These panels have gained respect from their colleagues within and outside the Taipei District Court for various reasons in recent years. Service on such panels is increasingly considered prestigious, whereas when the panels were established, few judges volunteered to take these positions. Criminal court judges were concerned about managing a heavy workload and hesitated to participate in the panels. However, the challenge of trying financial criminal cases can also be viewed as attractive to highly qualified judges. Hearing arguments from sophisticated counsels, adjudicating vexing issues, and proposing novel opinions is satisfying to numerous judges. Outsmarting white-collar criminals, imposing penalties, and bringing justice to the victims should engender a sense of achievement among judges; thus, judges should compete to secure positions on specialized panels and the quality of specialized judges should not be a concern.56 Regarding specialization, the judges who currently sit on specialized panels have undergone the training offered by the Judicial Yuan. These judges have qualified by pursuing advanced studies or producing extensive publications in their field. Handling high-profile cases not 55 See Caminker, supra note 34, at 845–49; Lewis A. Kornhauser, Adjudication by a Resourceconstrained Team: Hierarchy and Precedent in a Judicial System, 68 S. Cal. L. Rev. 1605, 1624 (1995) (Strict vertical precedent is required “because the appellate court invests more resources in legal deliberation, the quality of this trial-level signal is less accurate than that provided by appellate review.”). 56 Cf. Richard A. Posner, Will the Federal Courts of Appeals Survive Until 1984? An Essay on Delegation and Specialization of the Judicial Function, 56 S. Cal. L. Rev. 761, 779–80 (1983) (“Another Implication of what I have called specialization of function concerns job satisfaction, and in turn the caliber of people willing to accept appointment to the federal courts of appeals. One does not have to be a Marxist, steeped in notions of anomie and alienation, to realize that monotonous jobs are unfulfilling for many people, especially educated and intelligent people, and that the growth of specialization has given to many white-collar jobs a degree of monotony formerly found only on assembly lines. . . . I do not think it would be easy to maintain a high quality federal appeals bench on such a diet.”). But see Rochelle Cooper Dreyfuss, Specialized Adjudication, 1990 B.Y.U. L. Rev. 377, 427 (1990) (“[I]t is important not to exaggerate the potential problem with attracting qualified judges to serve on specialized courts. However persuasive these problems may seem in theory, the quality of the judges willing to serve has, in the past, been high.”).

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only offers them the best opportunities to learn and accumulate experience, but also makes their opinions well publicized. These judges often become famous figures throughout the nation. When considering the legitimacy of judges in lower courts, the quality, specialties, and nationwide recognition of these judges seem to upend traditional judicial hierarchy. It does not seem coincidental that the same opinions of the judgments of the lower courts in the two examples discussed in Part 4 were first mentioned or strongly concurred within the publications written by one particular specialized judge of the Taipei District Court.57 It is highly likely that this prolific judge and his colleagues on the specialized panels have become opinion leaders among the community of lower court judges.58 Special expertise and the experts’ self-esteem would make it difficult for them to change their firm positions on controversial questions. For better or worse, following the Supreme Court’s opinions is not always the best strategy for judges who wish to contribute more substantially to the law.59 In summary, without the full respect for the Supreme Court judges’ knowledge and expertise, lower court judges become more willing to challenge the authority of the higher court, and the legal certainty is, hence, damaged. Furthermore, the different levels of expertise obtained by the lower court judges, some of whom are specialists, and by the Supreme Court judges, all of whom are generalists, might produce different understandings of the same set of facts. The Supreme Court in Taiwan reviews only questions of law. However, the division between the questions of law and of fact is ill-defined. Deconstructing insider trading elements such as materiality and knowledge often includes interpretations that involve questions of law. When lower court judges identify and apply relevant legal information, Supreme Court judges might express differing views. Conversely, judges with special expertise might suffer from an overconfidence bias and overlook the details of a situation.60 It would be difficult for them to take the cue from the Supreme Court’s opinion even if its reversal is correct. The expertise gap might also explain, to an extent, why lower court judges think that the 2010 amendment, which was drafted and concluded in a closeddoor meeting by lawmakers, does not change the elements of insider trading after all. The quality of lawmaking in Taiwan has been subject to criticism. It is 57 See Lin Meng Huang, Financial Crime and Criminal Trial 258–60 (2011) (in Chinese). Lin Meng Huang, Preciseness and Knowledge of the Material Information in Insider Trading, 184 Taiwan L. Rev. 141, 155 (2010) (in Chinese). 58 See Dreyfuss, supra note 56, at 380 (suggesting that courts with generalist judges “might tend to defer to the expertise of the special bench.”). 59 See Anthony D’Amato, Legal Uncertainty, 71 Cal. L. Rev. 1, 19–20 (1983). 60 Chad M. Oldfather, Judging, Expertise, and the Rule of Law, 89 Wash. U. L. Rev. 847, 883–84 (2012).

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fair to say that the unexpected textual change, without a full discussion and the experts’ input, is a product of rush and haste. Lower court judges can easily discount the meaning of the amendment by saying that current legal practice, with which lawmakers are unfamiliar, has already met the threshold that the new legal text appears to raise. In addition to the expertise gap, the interest group theory and the possibility of legislative capture might be another reason lower court judges tend to ignore or downplay the amendment favorable to potential entrepreneur defendants. Judges in Taiwan are not appointed by politicians, but mostly selected through highly competitive examination. Their life tenures are guaranteed by the Constitution. However, the insulation from interest group pressure does not demonstrate that judges are better policy makers.61

6

Restoring the authority of the Supreme Court

Judicial expertise is critical, but it is not the only means of sustaining judicial legitimacy. Regardless of the expertise of a judge regarding his or her specialization, the judge is typically no more educated than the sophisticated parties involved in the case. Administrative decisions made by governmental entities are subject to judicial review not because judges exhibit superior understanding of regulations compared to administrative officials, but rather, because an impartial third party must limit governmental power.62 Explicit or implicit conflicts among the opinions of various judges must be addressed by a unified court. Judgeship is limited in the highest level court in any country, and judges should not be promoted within the judicial hierarchy based solely on their specialties. Hence, establishing panels within the Supreme Court based on field specialties is impractical.63 It is both expected and structurally unavoidable that generalist judges sit on the Supreme Court to review the opinions of lower court judges, some of whom may be deemed specialists. Some proponents of specialized courts also support the idea that specialization be confined to trial-level courts and higher courts should comprise generalists. It is suggested that generalist judges serve as “a check on the possible detriments of specialization.”64 61 See Einer R. Elhauge, Does Interest Group Theory Justify More Intrusive Judicial Review?, 101 Yale L.J. 31, 84–87 (1991). 62 However, because of the specialization of administrative officials, judges may defer to the officials’ fact-finding when they hear cases. See Martin Shapiro, Courts: A Comparative and Political Analysis 41–42 (1981). 63 By the end of 2012, the Taiwanese Supreme Court had 71 judges. Information is available online at http://www.judicial.gov.tw/juds/index1.htm. 64 Jeffrey W. Stempel, Two Cheers for Specialization, 61 Brook. L. Rev. 67, 114–15 (1995).

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The Taiwanese Supreme Court could suppress the defiance of lower courts against its opinions and reassert its authority in the strongest form. In other words, the opinions of the Supreme Court, which have been or will likely be defied by the lower courts, could be established “precedents.” As previously mentioned, Supreme Court opinions in Taiwan are only de facto binding when lower court judges deliberate their cases. The Supreme Court is empowered by Article 57 of the Court Organization Act to make its opinions de jure binding by rendering the formal status of precedent to any opinion if the Court determines such opinion is of great reference value for future cases. In Taiwan, the right to appeal to the Supreme Court is limited to certain grounds, one of which is that the verdict of the lower court is determined to violate relevant “laws and regulations.”65 The Supreme Court has long held that precedents fall under the scope of “laws and regulations.” Therefore, all such verdicts would certainly be brought to and reversed by the Supreme Court, and lower court judges would carefully consider disobeying a formally adopted precedent as opposed to a typical Supreme Court opinion. However, the Supreme Court’s opinions that lower court judges dare to defy are controversial. The Supreme Court may find it difficult to justify if it makes those opinions precedents. The reputation of the Supreme Court may be harmed if the choice of precedents backfires. Thus, rather than additional power clashes, the judiciary system requires additional communication. Judges rarely discuss specific cases. They communicate to the public and their colleagues mostly by using their reasoned verdicts. Defiance against Supreme Court verdicts can suggest that the opinions of the Supreme Court are unsatisfactory from the viewpoints of lower court judges. As indicated, this dissatisfaction may result from serious doubts regarding the specialties of judges, rather than the reasoning these judges offer in their opinions. To improve communication, Supreme Court judges should consider citing academic publications and scholarly works in their opinions; this is rarely done in Taiwan, and the reasons judges refrain from citing remain unclear. This may result from informal rules passed through generations of the judicial community; it is also likely that judges seek to show that they are free from outside influences to avoid the appearance of conflicts of interest. A judge who cites relevant works may leave a negative impression of that judge’s lack of creativity. However, these reasons are not sustainable. Justices of the Constitutional Court of Taiwan, which is a judicial body distinct from the Supreme Court and responsible for interpreting the Constitution, typically offer citations along with their opinions.

65 Article 377 of the Code of Criminal Procedure reads: “Appeals to the court of third instance may only be filed where the judgment is in contravention of the laws and regulations.”

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The controversy between possession and use in insider trading law serves as an effective example. Regardless of whether they are cited, notable works of academics and experts should be familiar to Supreme Court and lower court judges. Several leading scholars have suggested that the possession standard should be adopted when legal texts, legislative history, and the problems facing legal enforcement are all accounted for. The failure of judges to acknowledge this scholarship has downplayed the role of academics, burdening them with the task of offering comprehensive reasoning in their own names. If the works of leading and other scholars are cited, specialized authority could be assigned to the opinions of the Supreme Court judges. Thus, people who support disparate standards cannot use the lack of specialty of the Supreme Court judges as an argument to disobey Supreme Court opinions. Additional attention must be paid to substantive reasoning. Lower court judges who disagree with the possession standard cannot ignore cited works and must respond by referencing these sources. Scholars whose publications are cited should feel both honored and obligated to strengthen or defend their positions, and their academic colleagues should be eager to participate in this debate, igniting high-quality discussion among scholars and practitioners. In the wake of such debate and deliberation, judges are likely to reevaluate their original opinions and reach consensuses regarding complex issues. The Supreme Court could hold academic conferences, serving as a platform for exchanging ideas. Although conferences are ubiquitous among academic institutes, judges, and particularly Supreme Court judges, rarely attend these events unless they are invited as guest speakers. If the Supreme Court established such a platform for exchange, scholars and judges of various levels would be encouraged to attend. An academic atmosphere and the presence of scholars may facilitate dialogues among judges. The Supreme Court of Taiwan has previously hosted conferences, inviting well-known professors to present research regarding the Court opinions. To enhance the productivity of such sessions, lower court judges should be encouraged to participate. Interaction and dialogue between judges and scholars have long been demanded by members of the legal community in Taiwan. It is often emphasized that judges and law professors can learn from each other. However, such exchanges not only bridge the gap between legal practice and legal scholarship, but also facilitate conversations between lower court judges and Supreme Court judges. Because passing the judicial exam is the primary requirement of judgeship in Taiwan, numerous district court judges are relatively young and remain strongly influenced by the legal educations they have received. These judges certainly have no obligation to follow their teachers’ opinions, but they may also have less doubt on the specialty of their teachers than that of their senior colleagues in the Supreme Court. Thus, the tripartite dialogue with law professors in

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between may play a substantial role in easing the friction embedded in the judicial hierarchy.

7

Concluding remarks

Although the conviction rate is extremely low, insider trading enforcement actions have caused panic in the Taiwanese business community. Specialized divisions in lower courts are created to ensure that the decisions of the lower court are correct. However, during the investigation and prosecution period, insider trading cases have long been often prescreened by regulatory agencies and handled by specialized prosecutors. If their efforts in the past few years have not considerably helped increase the conviction rate, it might be time to reexamine the proposals focusing on judicial specialization. What is even worse is that the specialization of judges might be the cause, not the cure, of the low non-reversal rate in insider trading cases. More communications and substantive discussions are needed between the judges of the Supreme Court and their colleagues in lower courts. To this end, the Supreme Court can use some help from academics and scholarly works.

References Akashi, T. (1989). Regulation of insider trading in Japan. Columbia Law Review, 89, 1296– 1319. Black, B. S. (2001). The legal and institutional preconditions for strong securities markets. UCLA Law Review, 48, 781–849. Caminker, E. H. (1994). Why must inferior courts obey superior court precedents?. Stanford Law Review, 46, 817–873. Chuang, C.-H. (2009). The empirical study of the insider trading (Unpublished master thesis). National Chiao Tung University, Hsin Chu, Taiwan. (In Chinese) Coffee, J. C. (2007). Law and the market: The impact of enforcement. University of Pennsylvania Law Review, 156, 229–311. D’Amato, A. (1983). Legal uncertainty. California Law Review, 71, 1–55. Dreyfuss, R. C. (1990). Specialized adjudication. Brigham Young University Law Review, 1990, 377–441. Elhauge, E. R. (1991). Does interest group theory justify more intrusive judicial review?. Yale Law Journal, 101, 31–110. Ho, C.-J. (2013). A comparative study on exemption clause under Taiwan insider trading law (Unpublished master thesis). National Taiwan University, Taipei, Taiwan. (In Chinese) Hristova, M. V. (2012). The case for insider-trading criminalization and sentencing reform. Tennessee Journal of Business Law, 13, 267–308.

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Hsu, P. S.P., & Liu, L. S. (1988). The transformation of the securities market in Taiwan, the Republic of China. Columbia Journal of Transnational Law, 27, 169–194. Kim, P. T. (2007). Lower court discretion. New York University Law Review, 82, 383–442. Kornhauser, L. A. (1995). Adjudication by a resource-constrained team: Hierarchy and precedent in a judicial system. Southern California Law Review, 68, 1605–1629. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. W. (1997). Legal determinants of external finance. The Journal of Finance, 52, 1131–1150. Lin, M. H. (2010). Preciseness and knowledge of the material information in insider trading. Taiwan Law Review, 184, 141–156. (In Chinese) Lin, M. H. (2011). Financial crime and criminal trial. Taipei, Taiwan: Angle. (In Chinese) Lo, C.-f. (2011). Taiwan: External influences mixed with traditional elements to form its unique legal system. In A. Black & G. Bell (Eds.), Law and legal institutions of Asia: Traditions, adaptations and innovations (pp. 91–119). New York, NY: Cambridge University Press. Manne, H. G. (2009). The collected works of Henry G. Manne: In three volumes. Indianapolis, IN: Liberty Fund. Milhaupt, C. J. (2004). Nonprofit organizations as investor protection: Economic theory and evidence from East Asia. Yale Journal of International Law, 29, 169–207. Oldfather, C. M. (2012). Judging, expertise, and the rule of law. Washington University Law Review, 89, 847–900. Pistor, K., & Xu, C. (2003). Incomplete law. New York University Journal of International Law & Politics, 35, 931–1013. Posner, R. A. (1983). Will the federal courts of appeals survive until 1984? An essay on delegation and specialization of the judicial function. Southern California Law Review, 56, 761–791. Prentice, R. A. (2006). The inevitability of a strong SEC. Cornell Law Review, 91, 775–839. Prentice, R. A. (2011). Permanently reviving the temporary insider. Journal of Corporation Law, 36, 343–389. Schauer, F. (1987). Precedent. Stanford Law Review, 39, 571–605. Shapiro, M. (1981). Courts: A comparative and political analysis. Chicago, IL: University of Chicago Press. Songer, D. R., Segal, J. A., & Cameron, C. M. (1994). The hierarchy of justice: Testing a principal-agent model of supreme court-circuit court interactions. American Journal of Political Science, 38, 673–696. Stempel, J. W. (1995). Two cheers for specialization. Brooklyn Law Review, 61, 67–128. Vermeule, A. (2006). Judging under uncertainty: An institutional theory of legal interpretation. Cambridge, MA: Harvard University Press.

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9

Enforcement against Wrongdoing Directors: The Role of the Courts in Korea

1

Introduction

The regulation of corporate directors has been a central issue in both corporate law and the capital market. In most countries, various rules and standards have been legislated to avoid the agency problem concerning directors. However, the statutes are necessary but insufficient: the law in reality often works differently from its literal implication.1 Accordingly, the role of the courts is important, particularly in enforcement. This paper explores the current settings of enforcement of the law regarding directors in Korea and suggests some ways for its better adjudication. Enforcement covers a broad spectrum. It may be implemented through public agencies or private individuals. Generally, public enforcement refers to all legal and regulatory actions brought by organs of the state.2 The most notable public sanction is a criminal charge initiated and investigated by prosecutors. On the other hand, private individuals also enforce laws through civil lawsuits and mechanisms of reputational sanctions.3 Private enforcement includes traditional lawsuits, such as shareholder derivative actions and class actions. Both criminal indictments brought by prosecutors and civil lawsuits brought by individuals should be reviewed by the courts. Undoubtedly, the role of the courts is the most essential part of disciplining wrongdoing directors. Wrongdoing directors are those who have failed to fulfill the duties as agent of a corporation or shareholders as a whole. Concerning the state of mind of such 1 Bernard S. Black, The Legal and Institutional Preconditions for Strong Securities Markets, 48 UCLA L. Rev. 781, 813 (2001). For example, Russian company law contains reasonably strong procedural protections against self-dealing, but Russian companies routinely ignore the rules because they are not enforced. 2 Renier Kraakman et al., The Anatomy of Corporate Law: A Comparative and Functional Approach 46 (2d ed. 2009). 3 Reputational sanctions imposed by private parties might take the form of lower share prices, a decline in social standing, or a personal sense of shame. Id.

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directors, the element of intent (or mens rea) is of critical importance in criminal enforcement, although it is less emphasized in the field of civil enforcement. The discussion below covers the misconducts of directors with or without intent. The balance of this paper is organized as follows. In Section 2, the civil or criminal statutory arrangements are reviewed. This part includes an explanation of major causes of action as stipulated in the Korean Commercial Code and the elements of criminal charges brought against the occupational breach of trust (in Korean Up-Moo-Sang-Bae-Im). Sections 3 and 4 analyze some major jurisprudence of the Korean courts on the misconduct of directors. In case law there are rulings by the civil or criminal courts on directors’ business judgments, limitations on damage, and the criminal sanction of LBO transactions. Section 5 further examines the legal enforcement of directors’ actions in corporate groups, which is currently a complex and controversial issue in Korea. Section 6 discusses a harmonized civil and criminal enforcement system and a balance between the ex post and ex ante role of the courts.

2

Statutory arrangement: civil and criminal sanction

2.1

Civil sanction: director’s liability under the Korean Commercial Code and the Capital Market Act

2.1.1 Causes of action The liabilities of corporate directors are stipulated in the Korean Commercial Code (the “KCC”) and the Capital Market and Financial Investment Services Act (the “Capital Market Act”). While the Capital Market Act is applied to listed companies, the KCC is applicable to listed or unlisted companies. According to Article 399 of the KCC, the directors shall be liable for damages to “the company” if they failed to fulfill their duties. Because a director is regarded as an agent or a trustee for the company itself,4 not for the shareholders or investors, he shall compensate the damages to the company as is in the case of breach of contract. Article 401 of the KCC, another provision aiming to punish wrongdoing directors, stipulates that directors who have failed to fulfill their duties either intentionally or by gross negligence are liable for damages to “third persons.” The third person implies creditors in most cases; shareholders that have suffered direct damages (e. g., those shareholders who had made a investment decision by false information from the directors) may also resort to Article 4 Art. 382(2) of KCC states, “Provisions relating to mandates shall apply mutatis mutandis to the relationship between the company and the directors.” Commercial Code, Act No. 1000, Jan. 20, 1962, amended by Act No. 10696, May 23, 2011, art. 382(2) (S. Kor.).

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401. However, shareholders with indirect damages (e. g., those shareholders who have suffered share price decreases resulting from the damage to the company by director’s misconduct) are not eligible for a claim based upon Article 401.5 Shareholders with indirect damages may raise a derivative action against the wrongdoing director. Causes of action under the Capital Market Act are mostly concerned with false disclosure and unfair transactions in listed companies. Regarding a disclosure that includes an incorrect description of material facts or omits material facts, whether in the primary market or the secondary market, the directors of the misleading company, as well as the company itself, are liable to the investors. (Article 125 on the primary market; Article 162 on the secondary market). Under the Capital Market Act, unfair transactions include insider trading (Articles 174 & 175), market price manipulation (Articles 176 & 177), and other deceitful trading (Articles 178 & 179). While Articles 399 or 401 of the KCC provide for the liabilities of directors,6 the provisions in the Capital Market Act may be applicable to not only corporate directors but also auditors and accountants involved in the disclosure. 2.1.2 Special procedures for civil enforcement: derivative action and class action Claims made under the KCC or the Capital Market Act may be exercised through ordinary civil litigation processes. Korean legislation, however, added special processes in order to strengthen the enforcement by private individuals: (a) derivative action under Article 403 of the KCC and (b) class action under the Securities Class Action Act (the “SCAA”). Under the KCC, the basic requirements and procedures for bringing a derivative action are as follows:7 (1) when a corporation fails to sue a wrongdoing director, a shareholder (or group of shareholders) with a minimum amount of shares (as stipulated by the KCC) may bring a derivative action on behalf of the corporation; (2) before bringing a derivative action, the plaintiff shareholder must demand that the corporation initiates the action in question on its own; (3) the corporation, not the plaintiff shareholder, receives any remedy that flows from the successful derivative action; and (4) the plaintiff shareholder in a successful derivative action is entitled to reimbursement for a reasonable amount of 5 Supreme Court, 91Da36093, Jan. 26, 1993 (S. Kor.); Supreme Court, 2003Da29661, Oct. 24, 2003 (S. Kor.). 6 Sometimes the auditors were subject to this provision, but the targets are directors in most cases. 7 Commercial Code, Act No. 1000, Jan. 20, 1962, amended by Act No. 10696, May 23, 2011, art. 403 (S. Kor.).

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their litigation and other expenses.8 Hence, the derivative action could be used in pursuit of director’s liability against the company. Thus, the responsibility based upon Article 399 of the KCC may be claimed via derivative action while that under the Article 399 of the KCC may not be claimed. The SCAA was introduced in 2003 to allow only limited causes of action. Claims based upon the aforementioned unfair transactions (i. e. Articles 125, 162, 175, 177 and 179 of the Capital Market Act) are all eligible for class action.9 A securities class action may be approved by the courts if the following requirements are met: (1) the number of members in the class that is harmed is 50 persons or more; (2) the sum of the securities held by the class members is not less than 1/10,000 of the total number of the outstanding securities of the defendant corporation; (3) major questions of law or fact are common to all the class members; and (4) the class action suit is an appropriate and efficient method for the members in the class to exercise their rights or protect their interests.10 The SCAA mandates that both the plaintiff and defendant appoint legal counsel to represent them in the suit.11 A person who has been engaged in three or more securities class actions as a lead plaintiff or a legal counsel during the preceding three years may not become a lead plaintiff or a legal counsel, unless the courts determine otherwise.12

2.2

Criminal sanction: director’s liability under the Korean Criminal Code and special criminal statute

Criminal charges against directors may be imposed according to the KCC or the Capital Market Act: the KCC stipulates the crime named “special breach of trust” by the directors;13 the Capital Market Act punishes deceitful disclosure and unfair transactions made by corporate directors.14 However, in most cases the errant directors are likely to be criminally charged according to the Korean Criminal Act (the “KCA”) or the Act on the Aggravated Punishment of Specific Economic Crimes (the “AAPS”), which is a special version of the KCA used for strongly culpable economic crimes. 8 9 10 11 12 13

Id. art. 405. Securities Class Action Act, Act No. 7074, Jan. 20, 2004, art. 3 (S. Kor.). Id. art. 12. Id. art. 5(1). Id. art. 11(3). Commercial Code, Act No. 1000, Jan. 20, 1962, amended by Act No. 10696, May 23, 2011, art. 622 (S. Kor.). 14 For example, Capital Market and Financial Investment Services Act, Act No. 8635, Aug. 3, 2007, amended by Act No. 11845, May 28, 2013, art. 444 (S. Kor.).

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Under Article 356 of the KCA, where a person who has the occupation to administer a mandator’s business obtains his own pecuniary advantage (or causes a third person to do) in violation of his duty, thereby causing loss to the mandator, he shall be punished by imprisonment for not more than ten years or by a fine not exceeding thirty million won. The KCA names this crime “Occupational Breach of Trust”. It is acknowledged that the corporate director has the occupational status of an agent or a trustee of the corporation. If the pecuniary advantage of the director is 0.5 billion KRWor more, the aggravated punishment under the AAPS would apply.15 Other than occupational status, the requirements for occupational breach of trust are as follows: (1) violation of duty; (2) pecuniary loss to mandator; (3) pecuniary advantage of the defendant or a third person; and (4) mens rea or intent. The violation of duty includes all actions violating a fiduciary relationship by failing to perform an act that constitutes inherent duty of oneself, or by performing an act that one is inherently not allowed to do.16 The pecuniary loss to the mandator occurs not only where loss actually happened but also where a risk of loss was caused.17 The pecuniary advantage of the defendant or third person means that profits or gains obtained through the violation of duty and the size of such an advantage shall be used to decide whether to apply the AAPS or not. The intent as the subjective element of the crime would be recognized if the defendant were aware of the violation of duty, loss to the mandatory, and advantage of the defendant or the third party.18

3

Jurisprudence by the Korean civil courts

3.1

Director’s misconduct and business judgment

As in many other jurisdictions, the Korean courts have shown respect towards the director’s strategic business decisions that satisfy several requirements. In KCC cases, so-called business judgments have been dealt by the Korean civil courts in 15 According to Article 3 of the AAPS: (1) if the amount of profit is five billion won or more, he shall be punished by imprisonment for a lifetime or not less than five years; (2) if the amount of profit is not less than five hundred million won but less than five billion won, he shall be punished by imprisonment for a definite term of three or more years. Act on the Aggravated Punishment of Specific Economic Crimes, Act No. 3693, Dec. 31, 1983, amended by Act No. 4292, Dec. 31, 1990, art. 3 (S. Kor.). 16 Supreme Court, 2004Do810, July 9, 2004 (S. Kor.); Supreme Court, 2004Do5167, Nov. 10, 2006 (S. Kor.). 17 Supreme Court, 2008Do484, May 8, 2008 (S. Kor.); Supreme Court, 2007Do541, July 23, 2009 (S. Kor.). 18 Supreme Court, 2012Do1283, June 14, 2012 (S. Kor.).

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the context of Article 399: Can a director be exempt from the liability to the corporation under Article 399 even where his decision has been disastrous? The Supreme Court of Korea explicitly referred to business judgments in 2002, where an executive officer was sued by the financial institution for which he had worked.19 In order for a director to justify his conduct as a business decision, the Courts provided that he should have acted as a rational director. Specifically, a business decision could be justified if (1) the director has appropriate information, (2) the decision is made under due process, and (3) the decision is made for the maximization of the corporation’s profit and in good faith. Although the term “business judgment” is similar to that of the “U.S. business judgment rule,” the ruling of business judgment in Korea has some distinctive features. First, the Court does not limit the applicability of the business judgment ruling to arm’s length transactions. Even where a director has executed a relatedparty transaction, he may argue for business judgment. Secondly, the jurisprudence over business judgment is associated with the issue of how to define the scope of a duty as a director. Under the ruling by the Court, a director who has made a justifiable business judgment is also regarded as fulfilling his duty. Thus, whether a business judgment is justifiable would be directly related to the content of the director’s duty. In contrast, the business judgment rule under the U.S. Delaware courts is a rule associated with the burden of proof. Because the process of business judgment estimation is also the process of defining a director’s duty, the Korean court could apply the business judgment ruling whether the transaction is at arm’s length or not. Compared to the U.S. business judgment rule, the Korean approach may imply more active ex post intervention by the courts on the director’s discretion. While the Delaware courts are not likely to give a second thought to arm’s length transactions by corporate directors, the Korean courts may look into substantial issues regarding whether a director did his best to fulfill his duty as a fiduciary. In cases concerning loan decisions by financial institutions, the Supreme Court of Korea has repeatedly provided “the issue of whether the financial institution‘s executive officer is negligent in job duties against good-faith manager’s duty of care shall be determined as a whole by considering diverse factors including loan condition and contents, size, repayment plan, collateral and its contents, debtor’s property and management circumstance, and growth possibility with regard to the usual loan executive officer’s fault in loan decisions.”20 Some scholars have argued that, similar to the Delaware courts, second thoughts on business deci19 Supreme Court, 2001Da52407, June 14, 2002 (S. Kor.). Actually the cause of action is based upon the provision of the Community Credit Cooperatives Act, which is similar to the KCC. 20 Supreme Court, 2001Da52407, June 14, 2002 (S. Kor.); Supreme Court, 2004Da41651, 41668, Nov. 9, 2006 (S. Kor.); Supreme Court, 2009Da80521, Oct. 13, 2011 (S. Kor.).

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sions should be avoided in Korea. However, the Korean courts seem fully aware of the importance of business discretion.21 Further, private lawsuits against a director, whether in derivative form or in direct form, are not common and are far from threatening a director’s adventurous activities. Thus, as far as civil enforcement is concerned, the Korean courts need not reduce their current rulings on business judgments.

3.2

The limitation on damages

The Supreme Court of Korea has developed a unique theory to limit the liability of directors under the KCC. Derived in 2004,22 this theory has become stable in Korean jurisprudence. The Court stated, When directors become liable for losses inflicted upon the company due to their actions in violation of laws or of the Articles of a corporation, or due to their neglecting of their duties, the scope of liability may be limited in accordance with the guiding principle of fair and reasonable damage liability, in consideration of the totalities of the circumstances such as the content and characteristics of the affected business, the circumstances leading to the pertinent director’s violation of duties, acts/attitudes towards such violation, objective situations involved in the original or extended losses of the company as well as in the level of involvement, the pertinent director’s general contribution to the company, the pertinent director’s profits derived from the violation, defects/shortfalls in the corporate organization, and existence of an internal risk management system, etc.

At present, the court often exercises its discretion in reducing the liability of directors, substantially based on mitigating factors such as a director’s prior contribution to the company.23 The court justifies its wide discretion based on the age-old good faith principle under the Korean Civil Act. However, the wide discretion of the court is questionable. The KCC provides only two ways to limit a director’s liability: Article 400(1) allows partial or full exemption of director’s liability with the unanimous consent of the shareholders (ex post limitation); Article 400(2) which is adopted in 2011 provides that a corporation may set a limit to the director’s liability, by the articles of incorporation, equivalent to six times (three times in the case of an outside di21 According to Supreme Court, 2009Da80521, Oct. 13, 2011 (S. Kor.), “Loss from unrecovered loans in the company could not directly lead to the presumption of a fact of debt nonperformance.” 22 Supreme Court, 2002Da60647, 60474, Dec. 10, 2004 (S. Kor.). 23 The Seoul Southern District Court, 2003GaHap1176, Aug. 17, 2006 (S. Kor.); the Seoul Central District Court, 2008GaHap47867, Feb. 8, 2010 (S. Kor.).

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rector) the annual salary of a director (ex ante limitation).24 Hence, the discretion of the court seems irreconcilable with such strict procedural requirements. In addition, the discretion of the courts has been used in inconsistent and unpredictable ways.

3.3

Facilitative interpretation of procedural requirement

Among the procedural requirements for a derivative action to be valid, is the socalled demand requirement. According to Article 403 of the KCC, minority shareholders are required to demand that the corporation sue the directors before they file a derivative action. Specifically, a derivative action can be filed if the corporation fails to sue within 30 days from the date that the corporation received the demand notice. When the demand requirement might result in irreparable losses to the corporation, minority shareholders may immediately file a derivative action without waiting 30 days.25 The demand requirement was introduced to allow the corporation an opportunity to start a lawsuit on its own initiative. Although the demand requirement is classified as a prerequisite for filing a lawsuit in Korea, some courts have adopted a liberal approach in interpreting this requirement. For example, the Seoul District Court proceeded with a case where the plaintiff shareholder did not observe the 30-day period;26 another court did not dismiss a case although a derivative action was raised without prior demand process, pointing to the fact that the company did not show intent to bring its own suit after the derivative action.27 Despite criticism based upon the literal interpretation of the demand requirement under the KCC, the facilitative interpretation by some courts should be encouraged. Particularly when the corporation does not show any intention to file its own lawsuit, it would be unreasonable to dismiss a derivative action and then to force minority shareholders to bring another action in order to satisfy the demand requirement. The flexible attitudes taken by some lower courts show the positive, active role of courts in dissolving corporate disputes.28 24 The limitation would not apply when a director’s actions, intentionally or with gross negligence, have resulted in damage to the corporation. 25 Commercial Code, Act No. 1000, Jan. 20, 1962, amended by Act No. 10696, May 23, 2011, art. 403(3) (S. Kor.). 26 Seoul District Court, 97GaHap39907, Dec. 26, 1997 (S. Kor.). 27 Seoul Central District Court, 2005GaHap97694, Nov. 30, 2006 (S. Kor.). 28 Hyeok-Joon Rho & Kon-Sik Kim, Invigorating Shareholder Derivative Actions in South Korea, in The Derivative Action in Asia: A Comparative and Functional Approach 186, 209 (Dan W. Puchniak et al. eds., 2012).

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4

Jurisprudence by the Korean criminal courts

4.1

Criminal courts’ broad interpretations on some vague terms

171

As discussed in Section 2, under Article 356 of the KCA, which is widely referred to by the prosecutor’s office to punish wrongdoing directors, the crime of an occupational breach of trust is described in vague terms. The Supreme Court of Korea seems to interpret these terms in broad and flexible ways. Above all, because “the violation of duty” includes all actions violating a fiduciary relationship, the behaviors of a director that are not acceptable in terms of any statutes, contractual clauses, and good-faith commercial customs are all potentially subject to criminal sanctions.29 Secondly, the “pecuniary loss to mandator” requirement is interpreted to be satisfied where the risk of loss was caused.30 The Court also allowed the concept of the passive loss (i. e., hypothetical loss caused by the defendant’s interruption against the mandator’s possible gain).31 Lastly, the subjective element, “the Intent of occupational breach of trust,” is also widely recognized. In a recent prosecution against securities fraud, the U.S. federal courts developed a “conscious avoidance” theory of criminal liability. Under this theory, the defendant may be found guilty of securities fraud if the defendant was in a position to know of the fraud but turned a knowingly blind eye to the possibility of fraud.32 Similarly, the defendant shall be regarded as having an intent under Article 356 of the KCA if he accepted the possibility of the mandator’s loss, even though he did not wish it.33 The defendant’s state of mind may be proved by relevant indirect evidence.34 According to the principle of nulla poena sine lege, based upon Article 12 and Article 13 of the Constitutional Law of Korea, the criminal statute should clearly prescribe the criminal offenses and their penalties (i. e., rule of clarity) so that 29 Supreme Court, 2004Do810, July 9, 2004 (S. Kor.); Supreme Court, 2004Do5167, Nov. 10, 2006 (S. Kor.). 30 Supreme Court, 2008Do484, May 8, 2008 (S. Kor.); Supreme Court, 2007Do541, July 23, 2009 (S. Kor.). 31 Supreme Court, 71Do2334, May 23, 1972 (S. Kor.); Supreme Court, 2003Do3516, Oct. 10, 2003 (S. Kor.); Supreme Court, 2005Do7911, May 15, 2008 (S. Kor.); Supreme Court, 2008Do9436, May 29, 2009 (S. Kor.). 32 Christine Hurt, The Undercivilization of Corporate Law, 33 J. Corp. L. 361, 413 (2008). Prosecutors may submit this theory of guilt to the jury if “(a) the element of knowledge is in dispute, and (b) the evidence would permit a rational juror to conclude beyond a reasonable doubt that the defendant was aware of a high probability of the fact in dispute and consciously avoided confirming that fact.” United States v. Ebbers, 458 F.3d 110, 124 (2d Cir. 2006) (citing United States v. Hopkins, 53 F.3d 533, 542 (2d Cir. 1995).). 33 Supreme Court, 2012Do1283, June 14, 2010 (S. Kor.); Supreme Court, 2007Do541, July 23, 2009 (S. Kor.); Supreme Court, 2009Do9144, Nov. 25, 2010 (S. Kor.). 34 Supreme Court, 2008Do8356, Feb. 25, 2010 (S. Kor.).

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people may predict punishable offenses and thereafter decide their acts.35 Despite the ambiguity under Article 356 of the KCA, one could not assert that this provision is unconstitutional because the rule of clarity also allows complementary interpretation by the courts of the abstract terms.36 The real problem is that the broad interpretation of several terms in Article 356 could, if combined altogether, result in excessive punishment against business activities. Even though a director mistakenly violated any duty according to statutes, articles of corporation or commercial custom, he might be at risk of indictment if he benefitted from the transaction. According to the criminal jurisprudence discussed above, the defendant need not wish to harm the mandator nor to benefit himself; his awareness of possible outcomes suffices, which could be proved by relevant surroundings; the risk of loss, not actual loss, of the mandator is sufficient. In cases of civil litigation, the director’s neglect of a duty of care would constitute civil misconduct, and such a breach of fiduciary duty would constitute a cause of action under Article 399 of the KCC. However, the breach of fiduciary duty itself should not be identified as the violation of duty in the context of a criminal charge. For example, negligent misconduct, which is a cause of action for civil liability, would not subject the director to the criminal charge. The courts in Korea should apply stricter interpretations on “violation of duty” so that directors may not be punished just because they have not served sufficient duty of care.

4.2

Business judgment rule in criminal cases?

As discussed in Section 3, the Supreme Court of Korea has shown respect toward directors’ business judgments under certain conditions. How would this jurisprudence be applied to criminal cases? The Court has often referred to the evaluation of a director’s business judgment from the perspective of criminal law: Even though a company manager discreetly made decisions in good faith, without any intention of obtaining personal interests, and had a reasonable basis for believing that the business judgment was in the best interests of the corporation, the corporation could suffer losses from incorrect predictions, because there are inherent risks in operating a business. Therefore, in determining whether a manager has the criminal intent for breach of trust as to a business judgment, the characteristic of the business judgment in operating a business must be considered.37 35 Constitutional Court, 93Hun-Ba65, Dec. 26, 1996 (S. Kor.). 36 Constitutional Court, 2006Hun-Ba53, Nov. 30, 2006 (S. Kor.). 37 Supreme Court, 2002Do3131, Oct. 28, 2004 (S. Kor.); Supreme Court, 2004Do1632, Jan. 26, 2007 (S. Kor.); Supreme Court, 2007Do5987, Feb. 28, 2008 (S. Kor.).

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According to the wording of the decision, the Court adopted the concept of business judgment as an element showing criminal intent or mens rea: if the director’s behavior was based upon a justifiable business judgment, then he did not have criminal intent. However, this approach cannot be harmonized with rulings on business judgments in civil cases. If the director made an appropriate business decision that satisfies the requirements for civil business judgment jurisprudence (i. e., decision with sufficient information, due process, etc.), no objective element for criminal charge exists. Because the director did not violate any duty, the courts need not estimate the subjective element in a criminal charge. Where the defendant director failed to satisfy those requirements for civil business judgment ruling, the director may still resort to the lack of criminal intent by showing the background and surroundings that led him to make the decision. By estimating the appropriateness of the business judgment combined with other elements of criminal intent, the Court failed to take a systematic approach to the business judgment rulings in criminal contexts, thereby blurring both the subjective element and the objective element under Article 356 of the KCA. The steps that the courts should take in deciding whether to punish a director’s business judgment are as follows: (1) The court, by exploring the explicit evidence, should try on the applicability of civil business judgment ruling. If the requirements are met, the objective element for the criminal charge is denied. (2) Even where the judgment could not be justified by the civil business judgment ruling, the director may still resort to the lack of subjective element or mens rea. By reviewing the indirect and circumstantial evidence reflecting the director’s state of mind, the courts may conclude that the director did not intend to commit the crime of breach of trust although he neglected his duty.

4.3

Criminal charge on LBO transaction

In a broad sense, the Leveraged Buy-Out (LBO) means the method of acquiring another company (“target company”) by using the funds raised from the value of the target company. There are various types of LBO: (1) the target company might provide some or all of its assets as security to secure the purchase price so that the acquiring company could finance the funds from financial institutions; (2) the acquiring company (or its wholly owned subsidiary, often the Special Purpose Company or the “SPC”) might finance the purchase price by providing its own assets as security, merge the target company with the acquiring company (or its SPC), and then replace the security by the assets of the target company; and (3) the acquiring company or its SPC might finance the purchase price by providing its own assets as security, obtain substantial shares of the target company and then receive the dividends (or distribution following capital reduction)

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sufficient to pay off the acquiring company’s debt financing. In 2006, the Court found a director of a target company in an LBO transaction guilty of occupational breach of trust:38 If the target company provided its assets as security for the LBO, it took the risk that secured assets may be disposed of in the future. Thus, such a provision of security was justified only where the target company was offered considerations equivalent to its risk from the acquiring company. . . . [T]he provision of security by the target company should be regarded as causing the pecuniary loss to the target company and the pecuniary gain to the acquiring company.

This case is classified as category (1). Regarding other LBO transactions based upon categories (2) and (3), the Court found the defendant directors not guilty.39 The Court repeatedly added that it could not be uniformly determined whether the relevant persons who took charge of the process of acquisition of a company by the LBO committed a crime of breach of trust or not.40 However, it is highly doubtful that the economic substance of category (1) is sufficiently different from categories (2) and (3) as to invite criminal charges. Fundamentally, the Court’s decision raises questions about the elements of the crime of breach of trust: Does the director violate its duty by providing the company’s assets as collateral even where such conduct is based upon business judgment for rehabilitating the company? Does such behavior satisfy the subjective requirement of mens rea? Furthermore, other methods exist for protecting shareholders or creditors, which are more appropriate than criminal enforcement: the creditors may challenge the validity of the LBO transaction by the fraudulent conveyance clause under Article 406 of the Korean Civil Act; the creditors or shareholders may bring a lawsuit seeking damages from the director’s misconduct. Lastly, the factual background of the 2006 case showed that almost all shareholders and creditors of the target company agree with the LBO transaction. It is true that the traditional jurisprudence in Korea separates the interests of a company, as an independent entity, from its shareholders or other stakeholders.41 However, the argument is not easily justified that a director should be criminally charged where he seemingly impaired the company’s benefit even though he did not actually harm the company’s stakeholders.

38 Supreme Court, 2004Do7027, Nov. 9, 2006 (S. Kor.). 39 Supreme Court, 2009Do6634, (Apr. 15, 2010 (S. Kor.); Supreme Court, 2011Do524, June 13, 2013 (S. Kor.). 40 Supreme Court, 2009Do6634, Apr. 15, 2010 (S. Kor.); Supreme Court, 2011Do524, June 13, 2013 (S. Kor.). 41 Supreme Court, 82Do2330, Dec. 13, 1983 (S. Kor.); Supreme Court, 2005Do4915, Dec. 28, 2005 (S. Kor.).

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5

175

More complex enforcement: directors in corporate groups

Although the early drafters of corporate regulations viewed the company as an individual entity, most business activities in the modern economy are exercised by a corporate group or a collection of individual companies under a uniform business purpose or control. Korea is no exception. Especially, the chaebol, or the conglomerates controlled by a handful of family members, including Samsung and Hyundai Motors, are quite common in Korea. What kinds of civil or criminal enforcements are necessary for directors belonging to corporate groups? Civil or criminal sanctions against a director in subsidiaries are particularly controversial in cases where he pursued the corporate group’s interest at the sacrifice of the interest of an individual company. In traditional jurisprudence, the duty of a director is owed to his own company, and he should not provide financial assistance to sister companies or affiliates in the face of his company’s loss. However, a director should be allowed to exercise some discretion in seeking long-term benefits by maintaining membership in huge and stable corporate group. Hence, the enforcement issues in corporate groups are complex. Among the many issues concerning the duty of directors, this paper’s focus is on financial assistance for ailing sister companies or other affiliates in a corporate group. Should the decision by a director to offer financial subsidies be subject to civil sanctions or criminal sanctions?

5.1

Civil enforcement

As far as civil enforcement is concerned, the directors were found responsible in many cases for direct or indirect financial assistance to an affiliate company. The Supreme Court of Korea applies the business judgment ruling for financial assistance to the affiliate, even though this is a related-party transaction. As in a trial on arm’s length transactions, the Court decided whether the director had appropriate information, took due process, and sought the maximization of his corporation’s profits. The Court added that the director could not argue the business judgment exemption if his decision was based upon the general and abstract expectation that the avoidance of the affiliate’s bankruptcy would benefit the business or credibility of his company.42 Three major methods of financial assistance frequent in case law are as follows: (1) lending money to the affiliate or guaranteeing the debt of the affiliate without securing enough collateral (Lending or Guarantee Type); (2) subscription of the new shares issued by the affiliate (Subscription Type); and (3) 42 Supreme Court, 2006Da33333, Oct. 11, 2007 (S. Kor.).

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buying the asset of the affiliate at a higher price (or selling the asset to the affiliate at a lower price) (Sale or Purchase Type).43 Detailed examples of the financial assistance cases since 2005 are shown in Table 9.1 at the end of this paper. Despite the necessity and urgency of providing financial assistance to ailing affiliates from the corporate group’s perspective, the directors that decided to help other corporate group members are likely to be found liable. According to Table 9.1, the director succeeded in justifying his decision to assist the affiliate in only one case out of ten. This statistic shows that the Korea is reluctant to accept the “corporate group interest” concept and tends to estimate profit or loss from only the perspective of the individual company.

5.2

Criminal enforcement

Based upon the separate entity approach to the transactions involving corporate groups, Korean criminal courts seem to apply the general jurisprudence of the (occupational) breach of trust crime. Accordingly, the argument by a director that the financial assistance to its affiliate company was made for the long-term benefit of a corporate group member, if accepted, shall negate mens rea. The Supreme Court of Korea stated, If a company director lends others company funds or guarantees others’ debt with knowledge that others did not have debt payment ability and loss would occur, or without receiving sufficient security, such an act caused a loss to company as a breach of trust, and a company director cannot avoid punishment for the crime of a breach of trust just based on business judgment. It does not change if others are affiliate companies.44

In addition to the three types of civil enforcement aforementioned (i. e., Lending or Guarantee, Subscription, and Sale or Purchase), mergers with an ailing affiliate are often criminally investigated (Merger Type). It is unreasonable, however, to impose any liability against the director in Merger Type assistance because the shareholders or creditors, through the appraisal remedy and special procedure for the creditors, are fully protected in the statutory merger process. This section focuses on the three types of assistance shown in Table 9.2. As Table 9.2 indicates, once a director has provided financial assistance to an ailing affiliated company via Lending or Guarantee-Type, Subscription-Type or Sale or Purchase-Type transactions, he is very likely to be found guilty. The strict 43 Ho-Joon Moon & Sung-Min Kim, Legal Issues on the Ailing Affiliate Companies in Korea, 59 Business, Finance & Law 59, 62 (2013) (in Korean). 44 Supreme Court, 2004Do5167, Nov. 10, 2006 (S. Kor.); Supreme Court, 2009Do1149, Oct. 28, 2010 (S. Kor.); Supreme Court, 2012Do1283, June 14, 2012 (S. Kor.).

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stance taken by the court in corporate group transactions is subject to criticism from various perspectives. First, the Korean courts intentionally ignore the concept of the corporate group in the statement, “it does not change if other (the counterpart of the transaction) is the affiliated company.” Although this approach is in line with traditional individualism in corporate law, it does not reflect the reality of the business world. Because each transaction among corporate group members often constitutes one fraction of the whole picture, the court should be cautious in punishing just one frame. Even though the concept of “corporate group interest” is still unknown in Korean courts, directors who temporarily allow losses to their company for eventual goals and benefits of the corporate group shall be short of mens rea. Secondly, the risk of over-criminalization is high. In the eyes of corporate directors, criminal punishment is drastically different from civil liability. As shown in Table 9.2, criminal sanctions are common and easily approved. The liberal application of the crime of breach of transaction to transactions in a corporate group threatens the positive function of that corporate group, including its group synergy and organized management.

6

Towards balanced enforcement in Korea

6.1

The criminalization of corporate law and its limits

Generally speaking, criminal prosecutions have demanded stricter requirements than civil actions have. For example, although the law of torts allows recovery in some areas for mere negligence, most criminal laws require some degree of at least recklessness, if not intention.45 However, when it comes to enforcement against a director’s misconduct, criminal sanctions are used commonly and actively. While the phenomenon of “over-criminalization” seems to be worldwide,46 this paper is concerned with Korean practices in which criminal punishment against the wrongdoing of directors is more frequent than civil sanction is. For the past 10 years, prosecutors in Korea have conducted a number of highprofile corporate crime prosecutions that have resulted in guilty convictions. Most of these prosecutions were based on the crime of the occupational breach of trust. Criminal sanctions have played a main role in lieu of civil sanctions for many reasons. 45 Hurt, supra note 32, at 412. 46 John C. Coffee, Does “Unlawful” Mean “Criminal”?: Reflections on the Disappearing Tort/ Crime Distinction in American Law, 71 B.U. L. Rev. 193 (1991); Hurt, supra note 32, at 371–79.

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First, unlike the legislations in other countries, the KCA provides general punishment against wrongdoing directors under the “occupational breach of trust.” Korean courts have broadly interpreted the vague terms in the Act. The behavior of directors which later turned out to be detrimental to the company shall be potentially subject to criminal charges. Second, civil enforcement is not actively practiced in Korea. Although the SCAA came into effect on January 1, 2005, only one securities class action has been filed and approved by the court, as of May 2010. Derivative actions are also uncommon. During the period between 1997 and 2010, only 55 cases were brought to the courts.47 The rarity of class actions or derivative actions seems attributable to the lack of entrepreneurial lawyers and strict limitations on standing for plaintiffs, including shareholding requirements. Third, now that investors have greater chances of success in civil lawsuits with criminal convictions, they turn to the prosecutor’s office instead of civil courts when a director’s misconduct is suspected. Last, since the financial crisis of the late 1990s, the atmosphere in Korean society has changed. Because opaque corporate governance and illegal transactions in Korean enterprises were among the main causes of the financial crisis, citizens have demanded increasingly strict and severe sanctions against wrongdoing directors. Prosecutors, in their investigations and indictments of highprofile management, respond to this public outcry, which enables them to maintain their authority over powerful chaebols. However, the over-criminalization of corporate law or the blurring of the border between tort and crime would result in injustice and eventually weaken the efficacy of criminal law as an instrument of social control.48 It is widely accepted that criminal punishment should be limited to serious cases where a prohibition of disfavored behavior is strongly required: if everything wrongful is made criminal, society’s ability to reserve special condemnation for some forms of misconduct will either be lost or simply reduced to a matter of prosecutorial discretion.49 The possibility of criminal charges would generate over-deterrence in business activities, whose natural virtues should include creativity and an adventurous spirit. Even where criminal charges are baseless, it would be impossible for the defendant to recover fully from the inappropriate indictment. In considerations of insufficient private enforcement in Korea and the positive role of criminal sanctions, it would be unwise to drastically limit the function of the criminal enforcement. However, the balance between criminal prosecutions and civil litigations cannot be overly emphasized. Current criminal juris47 Rho & Kim, supra note 28, at 214. 48 Coffee, supra note 46, at 193. 49 Id. at 201.

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prudence regarding business judgments is far from balanced. Particularly in transactions including LBO or corporate groups, the criminal courts should not adhere to partial instances, but should consider the entire transaction, and, if possible, leave the sanctioning of errant directors to the authority of the civil courts.

6.2

The role of courts in corporate governance

In contrast to their colleagues in common law countries, traditional Korean judges showed passive and reserved attitudes in adjudication and tended to adhere to the literal implication of statutory texts. The courts have long been regarded as having nothing to do with improving transparency in Korean enterprises; therefore, this role was taken by the government, which used unofficial guidelines and directions. In the wake of the financial crisis of the late 1990s, and under the influence of common law courts, Korean courts started to become flexible and active in dealing with errant directors: as Sections 3 and 4 show, Korean civil courts made facilitative interpretations of procedural requirements and used their discretion to decide the scope of damage; Korean criminal courts adopted broad interpretations of the KCA provisions, thereby imposing strict sanctions against wrongdoing directors. Lawsuits against errant directors, whether direct or derivative, are not common in Korea and facilitative interpretations by civil courts could contribute to protecting investors and deterring wrongdoing behavior by directors. A flexible approach taken by the criminal courts, however, might posed an excessive burden on venturous entrepreneurs. This paper showed the risk of over-criminalization and emphasized the importance of balance between civil and criminal charges. Another balance that should be noted in relation to courts is that between the ex post and ex ante roles of courts. While the concept of “enforcement” is mainly associated with the ex post mechanism, the role of the courts might not be confined to the ex post function. While the ex post system is inevitable in setting a “standard” and interpreting it, the ex post function of the courts cannot secure clarity and predictability. Furthermore, it is almost impossible for the court to harmonize conflicting interests surrounding a company once a transaction has been completed and disgruntled parties or prosecutors instigated a formal process. Hence, the ex ante involvement by the courts might provide substantial protection for interested parties, and deter directors from seeking personal benefits. The U.K. Companies Act adopted the idea of ex ante involvement by the courts in the name of a “scheme of arrangement.”50 The KCC also has provisions 50 Companies Act, (2006), c. 26 (U.K.).

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for the court’s ex ante involvement, but only in some uncritical situations, including in-kind contributions.51 Statutory reform enabling the ex ante role of the courts should be made. For example, a new legislation may require that a fundamental change of critical decisions, including LBO and financial assistance toward affiliate companies, should be made under the court’s prior review on the procedural protection of stakeholders. In order to avoid paternalistic and excessive intervention by the courts in business decisions, the subject of the court’s approval is limited to whether the company took appropriate procedures for protecting its stakeholders. Procedural protection for stakeholders may refer to the appraisal remedy for shareholders and for an early redemption for creditors, as already stipulated in the KCC regarding statutory mergers and corporate divisions.52 Such a reform would free honest directors from criminal charges against LBO or from providing financial assistance to affiliate companies, which is reasonably transacted but based upon a traditional, separate entity theory, and is attacked by disgruntled stakeholders. Because the ex ante involvement of the courts cannot extend to all transactions by companies except fundamental ones, the traditional ex post role of the courts is still important under such reform. The Korean economy has made dazzling progress since the 1960s. In order for Korean enterprises to achieve sustainable growth, however, transparent and efficient corporate governance is both necessary and inevitable. The courts, which are one of the most respected and independent institutions in Korea, could and should contribute to the development of corporate governance by deterring and punishing the wrongdoings of directors. Specifically, the courts should make interpretations that facilitate shareholders’ civil suits but limit excessive criminal charges. In addition, the Korean legislature needs to adopt a reform of corporate law to allow the courts to play an ex ante role in major corporate transactions.

51 Commercial Code, Act No. 1000, Jan. 20, 1962, amended by Act No. 10696, May 23, 2011, arts. 299 & 300 (S. Kor.). The courts may change the terms and conditions of in-kind contributions where found inappropriate. 52 Commercial Code, Act No. 1000, Jan. 20, 1962, amended by Act No. 10696, May 23, 2011, arts. 530(2), 374–2, 527–5, 530–9, 530–11 (S. Kor.).

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Table 9.1: Civil Enforcement against Financial Assistance to the Ailing Affiliate53

1 2

Year of Decision 2007 (S. Ct.) 2010 (S. Ct.)

Donor Korea Express Co. Dong-A Construction Co.

Methods of Assistance

Court’s Decision

Subscription

Liable

Subscription

Liable

Hyundai Space and Aircraft Co. Hyundai Hysco. Co.

Subscription

Liable

Subscription

Liable

Donee Dogn-A Life Insurance

3

2010 (Seoul Ctr. Hyundai Motors District Ct.)

4

2008 (Seoul High Ct.)

Dong-Kuk Dong-Kuk Electronics Synthetic Fibers Co. Woo-Il Industry

2005 (S. Ct.) 2011 (S. Ct.)

Samsung Yi-Cheon Electronics Electricity Ko-Hap Co. & Seoul Dye Tech. Korea Chemical Co.

5 6 7 8

2007 (S. Ct.) 2007 (S. Ct.)

Subscription & Not Guarantee Liable Lending

Liable

Daewoo

Leading Edge Product Inc

Lending Liable (through SPC)

Dae-Han Life Insurance

SDA

Lending

Liable

Korean Music Broadcast.

Lending

Partly Liable

Hyundai Mobil

Purchase at Higher Price

Liable

2011 Hynix (S. Ct.) 2011 10 (Seoul Ctr. Hyundai Motors District Ct.) 9

Table 9.2: Criminal Enforcement against Financial Assistance to the Ailing Affiliate54

1

2

Year of Decision 2005 (Seoul High Ct.) 2008 (S. Ct.)

Donor

Donee

Korea Express Co. Dong-A Life & Dong-A ConInsurance struction Co.

Hyundai Motors

Method of Assistance

Court’s Decision

Subscription

Guilty

Hyundai Space and Aircraft Co. Hyundai Hysco. Subscription Co.

Guilty

Woo-Il Industry 53 These are major cases where a listed company was involved since 2005. Moon & Kim, supra note 43, at 62. 54 These are major cases where a listed company was involved since 1990. Id. at 63.

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Table 9 (Continued)

3 4

5 6 7

Year of Decision 2011 (S. Ct.) 2012 (S. Ct.) 2009 (S. Ct.) 2006 (S. Ct.) 1999 (S. Ct.)

Donor

Donee

Method of Assistance

Court’s Decision

Hancom. Inc.

Prime Venture Capital

Subscription

Guilty

C& Group affiliates

C& Hangang Land

Subscription

Guilty

Subscription & Lending (via promissory note)

Partly Guilty

Lending

Guilty

Lending & Guarantee

Guilty

Lending & Guarantee

Guilty

Subscription

Partly Guilty

C& Jindo Dong-Sung & Hyosung Machineries Kunyoung Co. Kia Motors

Yellow Sea Ferry Hyosung Metals Kunyoung Construction Co. Kia Special Steel, etc.

8

2007 (S. Ct.)

Dae-Sun Beverages Co.

9

2010 (S. Ct.)

Ssangyoung Cement Co.

10

2008 (S. Ct.)

Offshore Subsidiaries of the SK SK Securities Inc. Global Co.

2004 (Seoul Ctr. SK Shipping Co. 11 District Ct.) 2003 12 (Seoul High Ct.) 1998 (Daegu 13 District Ct.)

Dae-Sun Industry, etc. Han-Il Life Insurance Na-Ra Investment Bank Ho-Ban Remicon Co.

A-Sang Co.

Lending

Partly Guilty

SKM

Dong-San C&G

Lending & Guarantee

Partly Guilty

Affiliates of Chung-Gu Group

Chung-Gu Co.

Lending

Partly Guilty

Lending

Partly Guilty

Lending (including the purchase of bonds)

Partly Guilty

2010 (Seoul Ctr. Na-Ra Investment Bo-Sung Group District Bank Ct.) Han-Nam 2004 Investment Trust Affiliate compa15 (S. Ct.) & Korea Tungsten nies Co. 14

Derivative Option Partly Transaction Guilty

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Table 9 (Continued)

16

Year of Decision

Donor

Donee

2004 (S. Ct.)

Kabool Co. & Kabool Textiles Co. Ltd.

Kabool Electronics, Lending & etc. Guarantee

Partly Guilty

Bu-Pyung Co.

Subscription

Not Guilty

Han Distribution Co. & Wellop Co.

Real Property Purchase Merger & Division

Guilty

Han Distribution Co, Wellop Co. & Bu-Pyung Co.

Lending & Guarantee

Guilty

2013 17 (Seoul High Ct.)

Hanwha Group Affiliates

Method of Assistance

Court’s Decision

References Black, B. S. (2001). The legal and institutional preconditions for strong securities markets. UCLA Law Review, 48, 781–849. Coffee, J. C. (1991). Does “unlawful” mean “criminal”?: Reflections on the disappearing tort/crime distinction in American law. Boston University Law Review, 71, 193–246. Hurt, C. (2008). The undercivilization of corporate law. The Journal of Corporation Law, 33, 361–445. Kraakman, R., Armour, J., Davies, P., Enriques, L., Hansmann, H. B., Hertig, G., . . . Rock, E. B. (2009). The anatomy of corporate law: A comparative and functional approach (2nd ed.). Oxford, UK: Oxford University Press. Moo, H.-J., & Kim, S.-M. (2013). Legal issues on the ailing affiliate companies in Korea. Business, Finance & Law, 59, 59–77. (In Korean) Rho, H.-J., & Kim, K.-S. (2012). Invigorating shareholder derivative actions in South Korea. In D. W. Puchniak, H. Baum, & M. E. Chow (Eds.), The derivative actions in Asia: A comparative and functional approach (pp. 186–214). Cambridge

Part III: Changing Courts with Civil and Criminal Procedural Reforms

Kuan-Ling Shen

10

The Role of the Courts in Civil Disputes in Taiwan

1

Introduction

The idea of the protection of rights through courts and civil litigation is suffused with individualist and liberal ideas rooted in Western culture, with comparatively little basis in traditional Eastern culture. East Asia’s civil procedural laws began as a top-down process, launched either as a modernization tool used by the country, because of pressure for legal change from Western nations (e. g. Japan, China), or because of colonialism and the introduction of Western style court systems (e. g. Taiwan, Korea, Hong Kong). In Taiwan, Korea,1 and Japan, the implementation of civil procedural systems began in the late 19th century. Thus began a semi-autonomous adoption of Western procedural systems, including the German-style civil procedural systems, in which parties have autonomy over the beginning, ending and scope of civil litigation. They also have the responsibility to find all facts sufficient to sustaining a claim or defense as well as the sources of factual proof for contentious issues. However, the court still has the duty to elucidate (give the parties hints and feedback).2 Hong Kong, because of its status as a former British colony, followed the British legal system. By comparison, the People’s Republic of China, after establishing itself in 1949, abolished the civil procedural law promulgated by the former Kuomintang (KMT) government; it was not until 1982 that the Civil Trial Act was enacted. For 33 years, although there were courts, there was no civil procedural law, and when it was established, it followed the Soviet inquisitorial model. However, in 1991 the PRC’s Civil Procedural Law was established, which weakened the authority of the court and increased the party’s burden of proof. The principle of party control of the cause of action, used in Germany, Japan, and Taiwan’s civil procedure was

1 See Youngjoon Kwon, Litigating in Korea: A General Overview of the Korean Civil Procedure, 7 J. Korean L. 109 (2007). 2 See Peter L. Murray & Rolf Stürner, German Civil Justice 156–60 (2004).

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supported in China by a number of Chinese scholars and was introduced to the procedural rules by the Chinese Supreme People’s Court.3 Owing to historical factors, the countries of East Asia developed these three legal systems in a parallel nature. But foreign legal systems imported into different cultures still present unique difficulties and must respond to unique local needs. This research will focus on Taiwan’s reform and the localization of procedural law, and analyze the process of transformation from passive acceptance of foreign systems to active reform of said systems. Because courts have a certain authority over litigation, they therefore enjoy some discretion over the way in which procedures are carried out. It is therefore well worth examining whether this discretion is exercised in a manner that reflects the spirit of legislation, or if there are differences and why. Moreover, the role of Taiwan’s courts in different systems of dispute resolution, civil litigation and court-connected mediation, will be discussed.

2

Courts and civil procedure

2.1

From direct adoption of foreign systems to localized reform

Taiwanese civil procedural law was established by the KMT government of Nanjing in 1930–31. This system was based on another system from 1911, which itself replaced one created with the help of Japan’s legal advisor Matsuoka in 1890, called the “Great Qing Civil Litigation Law Draft.” This new system separated civil and criminal procedures, which had traditionally been joined in Chinese legal systems (as in the “Qing criminal and civil procedure law draft”). The Great Qing civil procedure law draft was never enacted because of the fall of the Qing Dynasty, but it nevertheless had a large influence on the structure and rules of the civil procedural codes that followed it, so much so that in current civil procedural law, instances of direct translations from the Japanese version can be found. The 1930 law was also influenced by the 1926 amendment of the Japanese civil procedures, and therefore also reflects the German system.4 3 See Ya Xin Wang, The Various Roots of Civil Litigation in China and the Influence of Foreign Laws in the Global Era, 2 Civ. Proc. Rev. 119 (2011). 4 In order to solve problems created by the Edo Era and the unequal treaties, Japan in the Meiji Era, under pressure from the West, adopted Western legal principles as the basis for Japanese legal reforms. In 1890 (23rd year of the Meiji period), the Japanese Department of Civil Procedure Law used the 1877 German Civil Code as the blueprint for its own law. In 1926 (Taisho¯ 15) the Austrian Civil Code was used for certain amendments to strengthen the inquisitorial principle and to focus on the importance of litigation. Examples of these changes include: unincorporated groups’ comprehensive ability to be parties, a party appointed system, and an inheritance litigation doctrine, among others. After World War II, American influence

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Following the KMT’s flight to Taiwan in 1949, this law also took effect in Taiwan. But because of prior Japanese colonization of Taiwan, the people of Taiwan had, since 1899, already been familiarized with Western-style civil procedural law (namely the 1890 and 1926 Japanese civil procedural laws.) From 1904 to 1914 the use of local government mediation systems was actually higher than the use of the courts because of the Japanese suppression of local government mediation systems. From 1915 to 1942, however, Taiwanese people’s use of the courts (including the order for payment procedure) far surpassed the use of local government mediation systems. Beginning in 1920, cases of first instance also began to outnumber cases before the administrative authority, but in following years, the two would continue to compete for supremacy of numbers. Calculating cases of first instance against local government mediation from 1941 to 1942, the former (200,072) was still slightly less than the latter (219,296), but if the order for payment procedural cases were added, that number would rise to 350,609, higher than the number of local government mediation cases. Civil courts had gradually come to play a very important role in civil dispute resolution. Because the civil procedural law was enacted in Taiwan during the period of Japanese rule and was based on the Japanese system, both the Japanese and KMT systems were in turn both based on Germany’s civil procedural system. Due to this, the KMT encountered few difficulties in converting the island to their civil procedural system. The pre- and post-war systems of civil procedure in Taiwan shared many similarities. That said, although Taiwan adopted the German legal system, the two still have critical points of dissimilarity. In particular, compulsory representation by counsel, litigation insurance, and the lawyer’s responsibility under German law were not introduced into Taiwan’s law; therefore, Taiwanese procedural law is not an exact copy of German law. The training of lawyers and judges in Taiwan is also not the same as it is in Germany. The German system relies on the idea of the “complete jurist,” a system wherein lawyers and judges receive the same training, which trains them in both judgment and dispute resolution. In circumstances where a party independently brings litigation without counsel, it was feared that if Taiwan merely implemented the German model of the allocation of the burden of evidence and facts between parties and courts, adopting a liberal-style system, such a system would not sufficiently protect parties’ rights.

on the legal system was also felt. Beginning at this time, Japanese law was no longer purely continental law, but gradually altered the German focus on close textual interpretation, and thereby began to become Japan’s own unique law.

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The first amendment to the Code of Procedures of 1935 undertook measures to strengthen judges’ discretionary authority to clarify evidence,5 examine evidence,6 examine expert evidence,7 and call experts to give evidence,8 among others. However, these reforms were based on the thinking of judicial authorities at the time, in order to ensure smoothness of implementation. The most farreaching and influential reform came after the 1949 move to Taiwan, which was then continued in 1999, 2000, and 2003 under the so-called “new Code of Civil Procedures.” Due to problems arising from civil justice delays and a lack of preparatory stages to formulate issues, the new Code divides proceedings into two parts: firstly a preparation phase in which clarification is undertaken, and secondly, an oral trial phase. Unlike the code of the 1930’s, which was based entirely on the adoption of foreign systems with no regard for the local legal culture, the newer system not only reduced the burden on the court system, but did so using a locally developed legal theory, especially the protection of procedural parties’ rights, which was significantly different from the 1935 amendment of the courts’ authority. Taiwan’s theory of procedural rights protections can be traced back to the first Civil Procedure Law Research Conference of 1980. Since then, the idea of “procedural protection” has been used as the basis of procedural law legislation and interpretation, and is furthermore one of the critical characteristics of civil procedural law’s localization in reference to the specific needs of Taiwanese society. Another part of the localization of procedural law is seen in the difference in the conception of civil procedure’s purposes. Taiwan’s new Code of Civil Procedure is designed to balance procedural interests with substantive interests, to protect a parties’ procedural status, and to avoid surprise (unforeseen) judgments. To strengthen evidentiary and fact collection, strengthen party and third-party procedural obligations, and increase court discretion, judgment methods and issue clarification are both geared towards gathering related disputes into a single proceeding.

2.2

Important characteristics of Taiwan’s civil procedural law

Taiwan is a civil law system country, wherein the judges are only bound by statutes and not by judicial precedents in law. The court system in Taiwan is divided into two distinct jurisdictional branches: the “ordinary” courts and the 5 6 7 8

Code of Code of Code of Code of

Civil Procedures, art. 203 (1935). Civil Procedures, art. 288 (1935). Civil Procedures, art. 290 (1935). Civil Procedures, art. 327 (1935).

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“administrative” courts. Civil and criminal matters are handled by the ordinary court, which is comprised of three levels: the district court, the high court and the Supreme Court. A third instance appeal may be made to the Supreme Court only on the grounds that the second instance appellate court’s judgment is in contravention of the laws and regulations. A jury trial system has not been adopted in Taiwan. The principle that parties have control over the initiation, termination and scope of a lawsuit is a fundamental guiding principle of Taiwan’s civil procedure. Parties also have also the responsibility to describe to the court the facts and the means of proof in principle. Courts, however, still play an active role in Taiwan’s civil litigation. Courts are obligated to elucidate to the parties to avoid any surprising decisions and to promote a fair and just judgment. Courts can question the parties or direct them to make factual and legal representations, state evidence, or other necessary statements and representations; when the presented statements or representations are ambiguous or incomplete, the judge will direct the presenting party to clarify or supplement.9 In addition, when the disputes involve more explicit public policies or collective interests than others, such as an association’s suit for injunction, and the court cannot obtain a conviction from the evidence provided by the parties, the court may take evidence on its own initiative if such is necessary for finding the truth.10 The 2000 Reform to Taiwan’s Code of Civil Procedure laid more emphasis on the courts’ and parties’ obligations to prepare before the oral hearing. The court shall support parties in formulating and simplifying contested issues of facts, evidence or laws according to Article 268, paragraph 2 of Article 268–1, Articles 270–1 and 271 of the Code of Civil Procedure. Before taking evidence, the court shall clarify to the parties the issues involved in the action, and then examine the witnesses and the parties in person, in a consecutive manner, in oral hearings according to Article 396 of the Code of Civil Procedure. This method is the socalled “concentrated model.” The American discovery process does not exist in Taiwan. However, the advantages of American pre-trial discovery for evidence preservation proceedings were considered in the Reform of Taiwan’s Code of Civil Procedure in 2000.11 According to Article 368 of the Code of Civil Procedure, the party who has legal interests in ascertaining the status quo of a matter or object may move for expert testimony, inspection or perpetuation of documentary evidence. The scope of evidence preservation is wider in Taiwan than in Germany. In this way, the parties may obtain or observe the means of proof possessed by the other party before the 9 Code of Civil Procedure, art. 199 (2000). 10 Code of Civil Procedure, art. 288 (2000). 11 Code of Civil Procedure, art. 368 (2000).

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oral hearing and prepare for it. But the principle differences between American discovery and the development in Taiwan appears to be the greater participation by the judge in Taiwan, as well as the absence of oral examinations of witnesses in the evidence preservation proceedings. In Taiwan, there are five forms of evidence available: proof by documentary evidence, proof by inspection by the court, proof by witness testimony, proof by expert testimony and proof by party testimony. Where the document identified as documentary evidence is in the opposing party’s possession, a party shall move the court to order the opposing party to produce the document.12 The court orders the opposing party to produce the document by a ruling when the disputed fact is material and the motion is just. If a party disobeys an order to produce documents without giving a justifiable reason, the court may, at its discretion, take as the truth the opposing party’s allegation with regard to the document or the fact to be proved by such a document.13 When a dispute involves professional knowledge such as scientific or technical issues, relevant evidence may be investigated through an expert witness. The so-called “expert witness” in Taiwan refers to an expert appointed by the court, and is different from the American “expert witness” that is appointed by the parties. Before appointing an expert witness, the court may accord the parties an opportunity to be heard; where the parties have agreed on the designation of an expert witness, the court shall appoint such an expert witness as agreed-upon by the parties, except where the court considers that the expert witness is manifestly inappropriate. While the expert testimony does not bind the court as a matter of law, the judicial practice in Taiwan is that courts will heavily rely on such testimony. In addition to the expert appointed by the court, parties may also submit the expert opinions they have gathered. These opinions, however, are not the expert testimony as prescribed by the Code of Civil Procedure, but merely part of the party’s pleadings. Civil litigation expenses in Taiwan mainly cover court and other costs, including: taxable fees for photocopies, video recordings, transcripts, translation, daily fees, the travel expenses of witnesses and court-appointed expert witnesses,14 as well as other fees and disbursements necessary for the proceeding items. Court costs are calculated on the basis of the value in dispute. A detailed regulation is provided in Article 77–13 of Taiwan’s Code of Civil Procedure. For class actions there are some special rules with respect to the court costs. The losing party shall bear the litigation expenses in principle,15 but the attorney fees are not included. Nevertheless, in matters of appeal to a court of third instance, 12 13 14 15

Code of Code of Code of Code of

Civil Procedure, art. 342 (2000). Civil Procedure, art. 342 (2000). Civil Procedure, art. 77–23 (2003). Civil Procedure, art. 78 (2003).

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since an appellant is required to appoint an attorney as his/her advocate,16 the attorney fees in the court of third instance shall be exceptionally included as parts of the litigation costs, and the losing party must bear them.17 This means that a party who fails to sustain his position in court must not only pay his own costs of litigation, but also defray the litigation costs of his victorious opponent. A final judgment bears a binding effect (the so-called res judicata) upon parties to the litigation.18 When the final judgment is in favor of the plaintiff ’s claim of payment, the final judgment may also serve as an execution title. The plaintiff may file for compulsory execution based on the final judgment. Before reaching the final judgment, the plaintiff may also take advantage of provisional remedy proceedings, including filing for provisional attachment of the defendant’s assets in order to secure the plaintiff ’s future execution of his/her monetary creditor’s right,19 or filing for provisional injunction relief to restrict the defendant’s disposal of its assets or fix the status quo.20

2.3

From party autonomy to court coordination

2.3.1 The purpose of the civil procedure At the beginning of the 20th century, although Germany had theories regarding interpretation, civil procedure did not produce judgments regarding conflicts of interest, it only stipulated procedural methods.21 However, because the grounds for the content of a final binding judgment hinged on the facts and on the determination of the facts, they also hinged on the process through which facts were sought. How the procedure for seeking facts is constituted is also related to the designation of the civil procedure’s purpose. In determining the purpose of the civil procedure, a critical decision is whether, without regard to cost, to pursue an objective and correct judgment in order to guarantee substantive rights, or whether speed and economy of adjudication must be given equal weight, because there is conflict and tension between the two. Therefore, civil 16 Code of Civil Procedure, art. 466–1 (2000). 17 Code of Civil Procedure, art. 466–3 (2000). Additionally, according to the Code of Civil Procedure, article 77–25, if the attorney is appointed by the court or the presiding judge to act as the special representative or advocate for a party, such as in an association suit by parties or by statutory assignment or in an adoption suit, the litigation costs would include the attorney fees. 18 Code of Civil Procedure, art. 400, para. 1 (2003). 19 Code of Civil Procedure, art. 522 (2003). 20 Code of Civil Procedure, arts. 532 & 538 (2003). 21 But see Alois Troller, Von den Grundlagen des Zivilprozessualen Formalismus 15 (1945) (in German).

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procedural provisions should not simply be considered technical regulations with no value in judgments concerning such conflicts of interest. If the protection of substantive rights no longer is to be or only is to be the sole purpose, then civil procedure itself seeks something with its own value.22 In Germany, the purpose of civil procedure is commonly considered to be the determination and protection of subjective rights (Schutz subjektiver Rechte), hereinafter referred to as doctrine of the protection of rights.23 However, based on whether or not this “protection of rights” refers to a right that is objective and correct and in accordance with the actual facts is somewhat unclear, especially when in civil procedure the responsibility for producing facts and evidence is in principle placed on the party, and not on the court. In this case, the truth as discovered through civil procedure is “formal truth” (formelle Wahrheit),24 “subjective truth” or “procedural truth,” and not “substantive truth” or “objective truth”; accordingly, the rights and duties recognized might not be fully consistent with the objective existence of rights and duties. The doctrine of finding the law between parties proposed in Taiwanese theory25 therefore contains an amended, deepened sense of the major German doctrine of the protection of rights. Early on, German academia recognized that civil procedure was a process of “finding the law” in a case (Rechtsfindung),26 though it is considered exclusively the responsibility of the court (iura novit curia).27 Compared to this, the doctrine of finding law between parties advanced by Taiwanese scholar Professor Lian-Gong Chiou increases the emphasis on what is pursued in the law of civil procedure being based upon the truth as believed by the parties, and in law based upon a balance between substantive and procedural interests, and does not only take pursuit of the protection of substantive objective interests 22 Peter Gilles, Zum Bedeutungszuwachs und Funktionswandel des Prozessrecht: Ein Überblick über interdisziplinäre Entwicklungen im Zivilprozessrecht, 1981 Juristische Schulung 402, 403 (1981) (in German). 23 4 Friedrich Stein & Martin Jonas, Kommentar zur Zivilprozessordnung (22d ed. 2003) (§ 1 Rdnr. 9) (in German); Peter Gilles, Zur Zweckvielfalt zivilprozessualer Verfahrensvielfalt, in Gedächtnisschrift für Manfred Wolf 377 ( Jens Dammann et al. eds., 2011) (in German). 24 Hein Kötz, Civil Justice Systems in Europe and in the United States, 13 Duke J. Comp. & Int’l L. 61, 67 (2003). See also Leo Rosenberg et al., Zivilprozessrecht (17th ed. 2010) (§ 77 Rdnr. 6.) (in German); Peter Roth, Die Wahrheitspflicht der Parteien im Zivilprozess 17 (1991) (in German); Rolf Stürner, Die Aufklärungspflicht der Parteien des Zivilprozesses 51 (1976) (in German). 25 See Lian-Gong Chiou, Goals of Civil Procedure, in On Functions of Civil Procedure 147, 158–60 (1996) (in Chinese). 26 See Yasutomo Morigiwa, Interpretation by Another Name: The Function of Rechtsfindung in the Modern State, in Interpretation of Law in the Age of Enlightenment: From the Rule of the King to the Rule of Law 125 (Yasutomo Morigiwa et al. eds., 2011). 27 Othmar Jauernig & Friedrich Lent, Zivilprozessrecht 69 (29th ed. 2007) (in German).

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as its primary goal. One aspect of this viewpoint is that it can avoid a procedural process that is overly labor intensive, time-consuming, and costly, and which neglects effective protection of rights. Another aspect is that it can also avoid a situation in which the court, because it considers that fact-finding and application of law are obligations and privileges of the judge, therefore neglects what should be a dedication to avoiding circumstances in which the finding of facts and application of the law results in an unforeseen judgment to the parties. Although it’s not possible to completely deny that civil procedure pursues substantive justice, because parties possess certain privileges over the related substantive rights and duties, and makes decisions based upon evidentiary and procedural information – rather than a result that completely conforms to an objective and corrects substantive justice – civil procedure’s purpose should instead be the pursuit of equally valued substantive and procedural interests, and not only the protection of substantive rights. This viewpoint not only serves as the guiding principle of the new Code of Civil Procedure, but also has influenced interpretations of procedural law by Taiwanese civil courts. The judgments of the Taiwanese Supreme Court prior to 2000 do not appear to have the “considered balanced of procedural interests and substantive interests” viewpoint. But under the influence of the aforementioned doctrine of finding the law between parties, the Taiwanese Supreme Court decisions after 2000, since the implementation of the new Code of Civil Procedure, in numerous cases used this viewpoint in an explanatory way, for example: (1) On the topic of the relationship between civil litigation and the arbitration, an example is the Supreme Court decision 93 Tai-Shang No. 1690: Regarding the causes of revocation of an arbitral award, legislators, besides pursuing a relatively prudent and correct judgment via the court litigation system, also created a relatively fast and economic system of arbitration, mediation, and so on, to resolve civil disputes, and also stipulated that the resolution’s formal document of this other system, in certain conditions, has the same force as a final court judgment to make effective use of limited national judicial resources. Parties enjoying the right of control in substantive and procedural law are entitled to choose the most suitable and beneficial proceedings system for resolving the dispute after carefully considering the balance of substantive and procedural interests. Each dispute resolution system has its own special features; if through the choice of an alternative dispute resolution (ADR) system, the parties receive a final binding judgment, they should be bound by it and not be allowed to continue disputing; in addition, the court must only intervene in exceptional circumstances under the provisions of law, in order to avoid the dispute flaring up again. Only in this way can the matter be smoothly resolved.28

28 Supreme Court, Civil Division, 93 Tai-Shang No. 1690 (2004) (Taiwan).

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(2) Regarding the judge’s responsibility to elucidate, the Supreme Court decision 100 Tai-Shang No. 1013 stated: If the intellectual property trial courts possess the professional expertise related to the matter, or obtain such expertise through a statement of professional opinion of a technology officer, and uses such expertise as the basis for a ruling, they should grant the opportunity for debate to avoid a surprise decision and to equally protect the litigants’ substantive and procedural interests.29

(3) As for the allocation of the burden of proof, regarding the interpretation of the new Code of Civil Procedure’s Article 277 “manifestly unfair” proviso, the Supreme Court decision 99 Tai-Shang No. 836 stated: The burden of proof should be allocated according to the respective characteristics of the type of litigation and the character of factum probandum under deliberating factors such as the parties’ abilities, financial inequities, evidence biased to one side, the difficulty of gathering evidence, the difficulties in proving causality, and the lack of regulations through interpretation of substantive law by means of policy theory and comparison between the size and seriousness of the substantive and procedural interests involved. The court should, according to the distance between the factum probandum and the evidence, the ease of proof, the probability based upon life experience and statistical measures, and based on the principal of good faith, determine parties’ burden of proof or whether or not to reduce the standard of proof.30

(4) Regarding the binding effect of agreements to simplify controversial issues, the Supreme Court decision 96 Tai-Shang No. 1421 stated: As controversial issues are sorted out and simplified by agreement of parties, in order to respect the status of parties as procedural subjects, parties are entitled to control the scope of a hearing, the assertion of facts and the presentation of evidence to balance the protection of substantive and procedural interests, and to save on the expenditure of judicial resources. The court should, according to the parties’ statement in the agreement, simplify issues to make a judgment without further investigating if this statement’s contents are correct or not.31

2.3.2 Increasing importance of the court’s responsibility to elucidate to avoid surprise verdicts While the new Code of Civil Procedure was being amended in 2000 with a view towards guarding against surprise rulings, regulations for the elucidation by the court were also revised and added to many provisions. Before 2000, the court’s responsibility to elucidate was very restricted within court practice. Nevertheless, 29 Supreme Court, Civil Division, 100 Tai-Shang No. 1013 (2011) (Taiwan). 30 Supreme Court, Civil Division, 99 Tai-Shang No. 836 (2010) (Taiwan). 31 Supreme Court, Civil Division, 96 Tai-Shang No. 1421 (2007) (Taiwan).

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because the court is also one side of a three-sided relationship in litigation, to protect parties from surprise and to prevent against injustice, the court should bear the responsibility of asking parties questions and urge them to complete arguments about the facts and the laws regarding the matters involved in the action, so that parties may predict what decision, in both fact and law, might been made, and have the opportunity to correct their (cognitive) knowledge of the law and the facts, and particularly, to supplement sufficient references to the relevant facts or put forward an assertion that in law or in fact may have been neglected or considered unimportant by the court; and thereafter, through an appropriate claim based on the facts asserted, or by designating the means of proof, avoid a surprise judgment.32 This also grants parties, via the procedural process, the ability to mutually understand and learn what are the law and facts, and helps both the truthful resolution of disputes and the establishment of standards for the future (lives) of parties.33 General provisions of the court’s responsibility to elucidate are found in Articles 199–134 and 19935 of the Code of Civil Procedure. Besides this, there are also special provisions regarding the minimum amount claimed for injury compensation,36 amendments or additional claims raised regarding a declaratory judgment,37 and explicit instructions for issues of dispute prior to the investigation of evidence.38 After the above mentioned amendment in 2000, the Taiwanese Supreme Court for the first time in the 2001 Third Conference of Civil Panels, decided that 32 See Lian-Gong Chiou, On Surprise Judgments, in 1 Research of Civil Procedure Law 28 (1986) (in Chinese). 33 Kuan-Ling Shen, On the Elucidation Duty of the Judge and Information Obligation of Parties in the New Code of Civil Procedure, in Evidence Law and Fairness of Procedure 3, 3–7 (2007) (in Chinese); Richard Zöller, Zivilprozessordnung (28th ed. 2007) (§278 Rdnr. 5) (in German); Leo Rosenberg et al., Zivilprozessrecht 429 (15th ed. 1993) (§ 78 III.1) (in German). 34 Article 199–1 states: Where the plaintiff ’s statements and factual presentations may lead to an assertion of several legal relations and his/her assertion is ambiguous or incomplete, the presiding judge shall direct him/her to clarify or supplement.Where the defendant asserts a reason to extinguish or prevent the plaintiff ’s claim and there exists ambiguity as to whether such reason is raised as a means of defense or counterclaim, the presiding judge shall elucidate. 35 Article 199 states: The presiding judge shall exercise care when directing the parties to present appropriate and complete arguments about the facts and the laws regarding the matters involved in the action. The presiding judge shall question the parties or direct them to make factual and legal presentations, state evidence, or make other necessary statements and presentations; where the presented statements or presentations are ambiguous or incomplete, the presiding judge shall direct the presenting party to clarify or supplement.The associate judges may, after informing the presiding judge, question or direct the parties. 36 Code of Civil Procedure, art. 244, para. 2 (2000). 37 Code of Civil Procedure, art. 247, para. 3 (2000). 38 Code of Civil Procedure, art. 296–1 (2000).

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Supreme Court Precedent 71 Tai-Shang No. 2808, in which the old provision was interpreted such that courts may not instigate a party to enlarge his demand or add another claim or element to enlarge the subject matter,39 will not be invoked in the future. This decision means that active elucidation is not prohibited any longer. Before 2000, the problem of “surprise judgments” was not in the Supreme Court’s consciousness, but after the amendment of the Code in 2000, beginning with Supreme Court decision 91 Tai-Shang No. 947, it has often been used in cases where the lower trial courts’ fail to elucidate grounds for reversal or remand of the decision on appeal, and lower courts are constantly required to fulfill their responsibility to elucidate. Such judgments of the Supreme Court on the responsibility to elucidate possess the following significance: they get rid of the “judge shall keep silent” dogma of the past, moving toward a manner of “disclosing the judge’s inner conviction”, implementing dialogue, and helping to satisfy the requirements of procedural participation and procedural justice. A. Clarification of subject matter of the controversy (Streitgegenstand) The principle that parties have control over the nature and scope of civil litigation (principle of party control of litigation, Dispositionsmaxime) is a fundamental principle of Taiwanese civil procedure law, which is the same in Germany. The complaint determines “the matter in controversy” (Streitgegenstand) and therefore the scope of claims preclusion. However, differing with German Civil Courts, where an explanation of legal basis for the claim is not required,40 Taiwanese courts have always inclined toward adopting an “old claim theory” that the matter in controversy is to be determined through the legal basis of the claim. The plaintiff shall state the applicable legal rule. If the plaintiff was not represented by counsel, it would be difficult for her/him to state all legal bases. The result is that one dispute could not be resolved through one litigation procedure. For example, “Claims for surrender based upon the right of property and those based upon the right of contract of loan for use are not the same, and their matters of controversy are different.”41 Therefore, even if one suit could be concluded in a timely manner, for the overall resolution of the dispute, the problem of procedural delays will still exist. In other words, even if Taiwanese and German civil procedure law both adopted identical principles of party control of litigation – yet because in actual interpretation, the understanding of the “matter

39 See Supreme Court, Civil Division, 71 Tai-Shang No. 2808 (1982) (Taiwan). 40 Murray & Stürner, supra note 2, at 194. 41 Supreme Court, Civil Division, 47 Tai-Shang No. 101 (1958) (Taiwan).

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of controversy” was different – the settlement of disputes in actuality will likewise be somewhat different. For this reason, the 2000 amendment to the Code of Civil Procedure revises Article 244, paragraph 1, subparagraph 2 to read “the matter of the controversy and the transaction or occurrence giving rise to such claim.” Even more important is the newly added Article 199–1: “Where the plaintiff ’s statements and factual presentations may lead to an assertion of several legal relations and his/ her assertion is ambiguous or incomplete, the presiding judge shall direct him/ her to clarify or supplement.” This shows more clearly that, when determining what the matter of controversy is, there cannot be a departure from the facts asserted by the plaintiff (though not limited to the transaction/occurrences giving rise to the claim recorded in the complaint, but also including facts presented during proceedings). Therefore, even if a judge has adopted the old theory of claims, it is still necessary to elucidate whether or not the plaintiff would like to assert all legal bases, and whether or not there are multiple claims, or additional claims being raised,42 so that the dispute may in one process be completely resolved. As a result, the scope of court hearings are almost no different than the result of adopting the new theory of claims, but the parties are better able to clearly recognize what the matter of controversy of the trial is, and courts are better able to avoid surprise decisions. Many Supreme Court decisions since the legislative implementation of Article 199–1 have been rectifications of lower courts failing to give appropriate clarification of claims to parties. Following its February 9, 2000 implementation, in April 21 of the same year, the Supreme Court immediately produced Supreme Court decision 89 Tai-Shang No. 907, stating: At the time of the contract signing, if the appellee would not have agreed to register the land to a third party who is a farmer, the court should examine whether the contract was valid or invalid. If this purchasing agreement was invalid, based on the factual presentations, the appellant appears to be able to request the return of the disputed land. If the appellant is without knowledge regarding this, based on the February 9, 2000 amended Article 199–1, paragraph 1 of Code of Civil Procedure, the presiding judge of the Appeal Court should exercise his/her responsibility to elucidate to the appellant to clarify or amend the claim.43

Another example is Supreme Court decision 90 Tai-Shang No. 204, in which the Supreme Court stated: According to the particularized claims for relief as well as a definite factual statement, the plaintiff could have the right to repayment of the loan and the right to the payment of the check; if the presiding judge of the court of first instance elucidated to the plaintiff 42 Code of Civil Procedures, art. 255, para. 1, proviso (2000). 43 Supreme Court, Civil Division, 89 Tai-Shang No. 907 (2000) (Taiwan).

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and the plaintiff clarified that he/she claimed for repayment of the loan, this does not contravene the law.44

Recently, the Supreme Court has gone even further, stating that the purpose of the court’s responsibility to elucidate is “defining the matter of controversy and the scope of the means of attack and defense in litigation,” and to “make known in advance the objective scope of claims preclusion (res judicata), in order to promote concentrated hearings and to prevent surprise outcomes for the defendant.”45 From this it can be seen that even if in positive procedure law, Taiwan and Germany both have identical provisions regarding claims, based upon differences in the two countries’ actual practice, to wholly accept the German concept of the controversial matter presents difficulties. When faced with understanding actual existing court opinion, it is necessary to develop an interpretive theory and mode of operation acceptable to practice in Taiwan. The related provisions of the new Code of Civil Procedure can be evaluated as a successful case in dealing with the problem of how claims should be particularized. B. Clarification of issues of facts, evidence or law Court clarification serves also to spur parties to debate the appropriateness or completeness of the matters of law or facts involved in the litigation.46 Although the application of the law is a responsibility and power belonging to the judge, the judge should disclose the interpretation of the law he or she holds, and what the parties have ignored, to avoid these being surprises when the law is applied. For example, what the nature of legal relationship is, or uncertain legal concepts (such as “public order and good morals,” “good faith,” and “manifestly unfair”). 2008’s Intellectual Property Case Adjudication Act already clearly required: Before any special professional knowledge already known to the court is adopted as a ground for judgment, parties should be accorded an opportunity to present their arguments regarding such knowledge. The Presiding Judge or Commissioned Judge shall direct the parties to issues concerning the legal relations of the disputed matters, and shall, whenever appropriate, provide his legal opinions and disclose inner conviction.47

Timely elucidation by a judge can also avoid ineffective proceedings by requiring parties to formulate and agree on simplifying the issues.48 Clarifying to the parties the issues involved in the action can concentrate hearings and further proceedings. Besides this, elucidation by the presiding judge can also make clear 44 45 46 47 48

Supreme Court, Civil Division, 90 Tai-Shang No. 204 (2001) (Taiwan). Supreme Court, Civil Division, 99 Tai-Shang No. 948 (2010) (Taiwan). See Code of Civil Procedure, art. 199, para. 1 (2000). Intellectual Property Case Adjudication Act, art. 8 (2008). See Code of Civil Procedure, art. 268–1, para. 2 (2000).

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the duties and obligations of the parties, legitimizing sanctions on a party’s dilatory presentation of a means of attack or defense.49 After the new Code was passed, the Supreme Court required that lower courts clarify facts, evidence or legal interpretations to parties. For example, Supreme Court decision 100 Tai-Shang No. 1530 states clearly: To enrich the content of an oral argument, protect parties’ procedural rights, and prevent surprise verdicts, before taking evidence, the court shall clarify to the parties the issues involved in the action (including issues already formulated and agreed upon, issues in law, issues in evidence, and issues involving the means of attack or defense), making known to the two parties the disputed points and the relationship of the evidence to the alleged facts. Starting with the taking of evidence, to enable parties as appropriate to fully debate, in order to concentrate proceedings, in the interest of finding the truth, and to achieve balance in protecting parties’ procedural interests (saving the cost, time and labor of litigation) and substantive interests (the benefits of finding the truth), this view is self evident in the legislative purposes of Article 296–1 Paragraph 1 of Code of Civil Procedure.50

There is some controversy about whether the legal opinion of the court should be elucidated. But for the guarantee of the right to be heard, even if the application of the law falls within the authority of the judge, it also is in need of elucidation to prevent surprise decisions stemming from a court’s application of the law. Recently, the Supreme Court has moved toward holding an approved opinion. For example: (1) Supreme Court decision 100 Tai-Shang No. 1000 states: What law should be applied based on the facts asserted by the parties, often does influence the result of the court’s decision. To avoid a surprise decision for parties because a judge has forthwith applied law without elucidation, the court shall not only let parties make appropriate presentations and arguments about the factual issues of the case, but will also urge parties to make all necessary statements as well as appropriate and complete arguments in regards to their view of the legal issues. In the event that that a court does not perform this duty of elucidation to let parties make great effort to attack and defend to the best of their abilities, but make instead a hasty judgment, it violates the provisions of the Article 199, paragraphs 1 & 2, and Article 296–1, paragraph 1 of Code of Civil Procedure.51

(2) When the interpretation held by a party is inconsistent with that of the court, it should also provide elucidation. Supreme Court decision 98 Tai-Shang No. 2371 states:

49 See Code of Civil Procedure, art. 196, para. 2; art. 268–2, para. 2; arts. 276 & 447 (2000). 50 Supreme Court, Civil Division, 100 Tai-Shang No. 1530 (2011) (Taiwan). 51 Supreme Court, Civil Division, 100 Tai-Shang No. 1000 (2011) (Taiwan).

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As the applicability of law belongs to the authority of the court, it is not bound by the opinion indicated by a party. In the event that a party’s presentations related to the law are inconsistent with the interpretation of the court, the presiding judge shall clearly explain the legal issues to the party, and order the party to make the necessary presentations and appropriate and complete arguments on its view of the law, in order to protect its procedural legitimate rights and interests, and avoid a surprise decision in legal issues.52

(3) Supreme Court decision 100 Tai-Shang No. 1060 states the following about clarification of the burden of proof: In clarifications concerning evidential issues, if a party has some dispute in regards to the allocation of the burden of proof or if the burden of proof has been shifted, the court shall in a timely and moderate manner disclose its opinion to make the two sides aware of the alleged facts’ allocation of the burden of proof, and to elucidate to prompt a party bearing the burden of proof to introduce evidence, and then with the results of the taking of evidence, in accordance with the provisions of Article 297, paragraph 1, direct parties to present appropriate and complete arguments, the performance of the civil procedure may be said to be without fault.53

2.4

From protection of individual interests to protection of group interests

With the social and economic changes of the 21st century, civil procedure is faced with the issue of procedural protections not limited to the rights of the individual, as civil disputes can arise between multiple people from a singular cause. These damages are divided between “severe damage” (Großschäden) and “diffuse damage” (Streuschäden). So-called diffuse damage refers to events where the same cause infringes upon the rights of a number of victims, but perhaps did not occur in the same place, or the damages are widely distributed geographically. The suffering of each victim is small, and they may not have a sense of victimization, but the total amount of damage to all victims is very large. Example: data carriers’ leakage or improper use of customer data, or overcharges which are small for the individual but add up to large sums when spread across many individuals. On the other hand, so-called severe damage cases are cases wherein a large number of victims’ rights are infringed by the same cause, but the damage is severe and the sense of victimization and motive to seek recourse are very high. Example: an airplane crash. Diffuse and severe damage events are not clearly differentiated merely by dollar amounts, however, but in cases where damage is relatively small, victims may have less reason to pursue their rights. For this reason, those seeking recourse for severe damage may have an easier road to 52 Supreme Court, Civil Division, 98 Tai-Shang No. 2371 (2009) (Taiwan). 53 Supreme Court, Civil Division, 100 Tai-Shang No. 1060 (2011) (Taiwan).

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travel in the protection of their rights while diffuse damage sufferers may face more obstacles. In addition to the protection of individual rights, these cases also involve the protection of collective interests (Kollektive Interesse) or public interests. The “collective interests” are not simply an aggregation of all individual interests, but also include the overall interests summed on behalf of the individual, as well as trans-individual group interests. For example, consumer collective interests would include consumers’ aggregated interests and consumers’ interests as a group, which could be recognized as a claim in civil procedure. Under the concept of claim is a somewhat different concept wherein substantive rights and collective interests can be used as the cause of action to resolve social conflicts in mass dispute. Because of the requirement to protect collective interests, courts will face more opportunities and requirements to develop law through civil procedure. For example, in a claim for injunction, because the substantive law does not explicitly regulate content of such a claim, the way and art of injunction must pass through courts or other dispute resolution processes to be clarified and specified. Even in the claim for damages, because they involve an evaluation of both collective interests and damages, damage claims must also pass through the dispute resolution process to be accurately described and verified. Therefore, parties in a civil procedure must deal with the courts to find out what the law is regarding their case. Civil procedure has traditionally dealt with individual rights and obligations, but because of the appearance of diffuse damage cases, the possibility of pursuing collective and public interests through civil law has gradually increased in importance. It is not only in the American system that the pursuit of public interests through civil procedure (private law enforcement) is recognized. Private individuals can become representatives of public interest by providing damage requests and can become extra-administrative actors in the protection of public or collective interests. European nations have also recently recognized that suits brought by consumer protection groups, for example, not only protect the rights of the individual consumers involved in the proceedings, but also clarify the law on contractual relationships by determining whether or not consumers may request payment for new matters. This serves the protection of collective consumer rights. Taiwan’s civil procedural law reforms of 2003 improved the party appointed system.54 According to Article 44–1, multiple parties with common interests who are members of the same incorporated charitable association may, to the extent permitted by said association’s purpose as prescribed in its bylaws, appoint such association as an appointed party to sue on behalf of them, which differs from 54 Code of Civil Procedures, art. 44–1, paras. 1 & 2 (2003).

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Article 50 of the Consumer Protection Law which states that a consumer protection group may claim for damages only when it was assigned by 20 or more victims. Article 44–1, paragraph 2 of the Code of Civil Procedure also recognizes that if the group members have reached agreement to grant the full amount of a monetary award to them as a whole body and prescribes how such total award shall be distributed, the court may award a total sum of money to the entire body of the appointing parties without specifying the amount that the defendant must pay to each of the appointing parties respectively. Furthermore, the reform acknowledged the right of groups to file a suit for injunction so that an incorporated charitable association or a foundation may initiate, with the permission of its competent governmental business authority and to the extent permitted by the purposes as prescribed in its bylaws, an action for injunctive relief prohibiting specific acts of a person who has violated the interests of the majority concerned. From a comparative law perspective this reform is quite unique since this does not exist in Germany or Japan. Taiwan has also not introduced the “opt-out” system of American class action suits. In cases of public nuisance, traffic accidents, product defects or other similar cases in which multiple parties have common interests and they appoint one or more persons from amongst themselves in accordance with the provision of Article 41 to sue for the same category of legal claims, the court may, with the consent of the appointed party, or upon the original appointed party’s motion which the court considers appropriate, publish a notice to the effect that other persons with the same common interests may join the action by filing a pleading within a designated period of time specifying: the transaction or occurrence giving rise to such claim; the evidence; and the demand for judgment for the relief sought. Those persons so joining shall be deemed to have made the same appointment in accordance with the provisions of Article 41. When the appointed party does not agree to such joinder, the court may, on its own initiative, publish a notice to inform other persons with the same common interests to initiate actions and then the court will consolidate the actions.55 As a result of reduced litigation fees and the counsel representation system, interested parties are encouraged to join the litigation.56 However, because of German consumer protection groups’ suits, which average 1,200 cases per year, most of which are motions for injunction, consumer protection policies have been shaped by judgments in civil courts, which have guided positive development in German contractual specificity. Japan began to implement a consumer group litigation system in June of 2007, and there have 55 Code of Civil Procedures, art. 44–2 (2003). 56 See Kuan-Ling Shen, Class Action in Taiwan: A New System Created Using the Theory of “Right of Procedure Options”, 5 Nat’l Taiwan U. L. Rev. 39 (2010).

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since been more than 20 cases. In Taiwan, on the other hand, other than investor protection centers, which are very active in suing over securities and futures, other groups, especially consumer protection groups, are not very active, particularly in motions for injunction. So far the consumer protection foundation has only filed one suit for injunction to prohibit 9 banks from using unfair terms in consumer adhesion contracts. However, the Taipei District Court dismissed the claim in 2012. The main ground of the decision is that the disputed provisions would be void ad initio, if the adhesion contract is unfair to consumers; therefore, it is unnecessary to file a suit prohibiting the provisions.57 This decision is not appropriate because it ignored the role of courts in consumer protection litigation and the function of group litigation for injunction. With injunction relief, the Courts could adjust unfair provisions of adhesion contracts for all consumers’ interests in advance, in order to restrain the continued commission of an ongoing wrong. This injunction relief would effect erga omnes; therefore, individual consumers would not need to file a single suit for invalid provisions of his/her contract. This is also beneficial for procedural economy. As regards mass claims, how to keep dispute resolution effective and meet the requirements of procedural justice has become one of the major challenges of civil procedural law. In past discussions in Taiwan, focus was placed on who had legal standing to become a plaintiff, but now should be turned to discuss how to make proceedings more convenient and accessible to resolve the problem of infrequent use of the system, and if courts should have a more active role to play to assure speedy and appropriate resolution. The recognition of the standing of groups to be parties is an important step, but not the last that should be taken. The lack of further specific regulations is one of the reasons that group suits are still rare in Taiwan. In severe damage cases, the individual usually has a motivation to pursue his rights and so might be more inclined to exercise his right to become a party or use the party appointed system. However, victims in diffuse damage cases may not comprehend or may have no intention to claim. If they will file a suit, they still cannot assign a public interest association to be plaintiff, when they were not a member of a public interest association according to Article 44–1 of Code of Civil Procedure. This restriction is not appropriate. Another point to consider is whether a public interest group may bring a motion both for injunction and for damages at the same time without assignment of an individual person.

57 See Taipei District Court, Civil Division, 100 Hsiao No. 16 (2011) (Taiwan).

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Court-connected mediation

Compared with Europe and the U.S., traditional Chinese society has viewed litigation as a path to be avoided. Since ancient times, the systems of thought that have flourished maintain that “litigation is an evil” (Yijing; The Book of Changes), “people shouldn’t file suit” (The Analects of Confucius), should “view peace as a treasure” and that “law doesn’t enter into/ exist within a family.” Such thought proposes use channels outside of litigation to resolve disputes.58 Within the traditional village, disputes were resolved through the mediation of clan elders who joined in negotiations. Based on the “minimize litigation, stress mediation” concept described above, which was embedded in traditional culture, and under the influence of Japan as well, on January 1, 1930, the Nanjing National Government promulgated the Civil Mediation Law in addition to the Code of Civil Procedure. According to the provisions of these laws, all civil matters must first undergo mediation before a suit is filed, otherwise they cannot proceed to litigation. If on the day of mediation one of the parties without justifiable reason does not appear, then they may incur a fine. The agreement resulting from mediation has the same force and effect as a judge’s verdict. But exactly because it was mandatory that prior to bringing suit, all civil matters without exception were required to first pass through the mediation process, the resolution of such a number of resulting disputes caused delays, resulting in public resentment and widespread calls for the abolishment of the civil mediation laws and the consolidation of the Code of Civil Procedure. In 1935’s first amendment to the Code, related mediation procedure provisions were added, distinguishing between mandatory mediation and non-mandatory mediation matters, and abolished the Mediation Law. In the five decades of Japanese colonial rule, in accordance with the Japanese tradition espousing “persuasion to resolve disputes through mediation without litigation,” the Japanese also strongly advocated the mediation system after taking over Taiwan. Thus, under the sway of Japanese mediation policies and a legal culture emphasizing mediation, Taiwanese society also had a “more mediation, fewer courts’ verdicts” legal consciousness, and the mediation system in traditional rural society became an important dispute resolution mechanism. The court-connected mediation system in Taiwan was also a common phenomenon in other East Asian countries, such as Japan and Korea: each possessing significant differences from Germany’s civil dispute resolution system.59 58 See Tsung-Fu Chen, Litigation and Social Development, 10 Proceedings of the National Science Council, Republic of China: Humanities and Social Sciences 435 (2000) (in Chinese). 59 Katja Funken, Comparative Dispute Management: Court-connected Mediation in Japan and

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However, in the late stages of Japanese rule, court proceedings became more and more common, and gradually played an important role in handling civil disputes, on par with mediation through the administrative agency. Since martial law was lifted in 1987, with the gradual establishment of a country and society ruled by law, the number of civil litigation cases has increased annually. In 1998 the Court of First Instance had 109,504 cases, while by 2007, this number had risen to 294,860. This was an increase of nearly one and a half times, creating a heavy burden on the judiciary. Therefore, in recent years the Judicial Yuan has strongly advocated an alternative dispute resolution system, and classified promotion of ADR as one of the most important policies for reducing this burden. From this we can see that after inheriting laws and litigation systems from countries with a Western-style rule of law, the past decade has also produced problematic circumstances, namely that the proliferation of lawsuits resulted in an increase in the number of pending cases. Overburdened courts, in turn, have an influence on the outcome of litigation, thus hindering the effective enforcement of parties’ rights, and, in turn, leading again to increased advocacy of ADR, particularly court-connected mediation. Mediation in Taiwan can be divided into mediation via courts, mediation via mediation committees in towns,60 and mediation via mediation committees in administrative agencies, such as in the Public Construction Commission of the Executive Yuan. Successful mediation in courts and in the Public Construction Commission has, among the parties, the same effect as a final judgment with a binding effect. However, mediations in mediation committees in towns bear the same binding effect as a final judgment only when a competent court has granted a recognition order.61 The court-connected mediation system is regulated by the Code of Civil Procedure. In 1999 there were significant changes, for example: to expand the scope of mandatory mediation incidents, to expand and reinforce mediators, to establish the Med-Arb system, and to establish the transformation from litigation of first instance to mediation by the agreement of the parties. As of 2007, mediation by party agreement could be used not only in the first instance but also in the second instance. Moreover, if the case is moved from litigation to mediation and mediation is successful, the plaintiff may apply for a refund of two-thirds of the court fees within three months after the date of successful mediation. Outside of the court mediation system, the most common system is mediation by town and city mediation committees. Prior to 1997, mediation in towns and Germany, 3 German L.J. (2002), available at http://www.germanlawjournal.com/article.php? id=130. 60 As regulated by the Township and County-Administered City Mediation Act of 2009 [hereinafter Towns Mediation Act]. 61 See Code of Civil Procedure, art. 416 (1999); Towns Mediation Act, art. 27, para. 2 (2009).

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cities was used at a much higher rate than court-mediation. However, since 1998, the number of court-connected mediated civil cases has increased marginally each year, while township mediation was slightly reduced. From 1999 until 2010, court-connected mediation cases grew 93 %. The success rate also rose from 10.97 % to 37.04 %. See figure 6. 90,000 80,000 70,000 60,000 50,000

Number of court mediation

40,000 30,000

Number of town-andcity mediation

20,000 0

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

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Figure 6: Number of cases of court mediation and town-and-city mediation

As for property rights lawsuits, the cases outlined below should first pass through the court mediation system before suit is brought, according to Article 403 of Code of Civil Procedure. The following are the so called mandatory mediation incidents: (1) Disputes arising from a relationship of adjacency between real property owners or superficiaries, or other persons using the real property; (2) Disputes arising from the determination of boundaries or demarcation of real property; (3) Disputes among co-owners of real property arising from the management, disposition, or partition of a real property held in undivided condition; (4) Disputes arising from the management of a building or of a common part thereof among the owners of the dividedly-shared title or persons using the building; (5) Disputes arising from an increment or reduction/ exemption of the rental of real property; (6) Disputes arising from the determination of the term, scope and rental of a superficies; (7) Disputes arising from a traffic accident or medical treatment; (8) Disputes arising from an employment contract between an employer and an employee; (9) Disputes arising from a partnership between the partners or between the undisclosed partners and the nominal business operator; (10) Disputes arising from proprietary rights between spouses, lineal relatives by blood, collateral relatives by blood within the fourth degree of relationship, collateral relatives by marriage within the third degree of relationship, or head of the house or members of the house; (11) Other

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disputes arising from proprietary rights where the price or value of the object in dispute is less than NTD 500,000. Mandatory mediation to a certain degree limits parties’ right to institute legal actions in that the parties’ access to litigation is delayed. Therefore, it is necessary to have a legitimate reason for mandatory mediation. For example, the parties have close relations (such as neighbors, relatives and friends) so the harmony of these relationships should be maintained; because the value of matter of controversy is not high enough; because it is hard to submit evidences and find the truth so that the parties would spend much time and cost through litigation; or because the disputes are not contingent and not necessary to judge right or wrong rather than to establish a new relationship for the future. Moreover, if mediation fails, the parties still could pursue litigation; therefore, the parties are not being denied access to litigation. Mandatory mediation is less limited than mandatory arbitration regarding the procedural option right.62 In addition, according to the newly implemented Family Proceedings Act of 2012, which especially emphasizes the function of mediation for family matters, all contentious family cases must in principal first go through court-connected mediation before litigation. Relevant examples would include cases such as divorce, terminated adoption, cases requiring inheritance allotment, and other cases wherein the parties have the right of disposition. The mediation proceeding in court is conducted in principal by the summary court judge.63 However, because Taiwan’s judges have the educational background expected of those working in litigation in the legal system, they may be unaccustomed to the mediation proceedings. To enable mediation to be conducted effectively, depending upon the type of dispute, mediation is to be attempted in advance by one to three mediators appointed by the judge.64 When the judge is selecting the mediator for a case, he should take under consideration the type of case, relevant legal relationships, and where disputes occurred, as well as 62 Lian-Gong Chiou, New Changes in Mediation Procedure, in The Theory of Civil Procedure Option 179, 192 (2000) (in Chinese). 63 Code of Civil Procedures, art. 406–1, para. 1 (1999). 64 According to the Selection Regulations of the Court Mediators established by the Judicial Yuan, the mediator is appointed by each Court’s President, and the number of people chosen as mediators must be in accordance with every district court’s need. A list of mediators must be made and reported to the Judicial Yuan for reference. Anyone having one of the following qualifications may be appointed as mediator: (1) a person of good character and reputation; (2) a person enthusiastic about the work involved in mediation; (3) a person with a stable life and ample time to devote to the work of mediating (4) a person in good physical and mental health; (5) a person with civil or familial experience in dispute resolution; (6) a person with extensive social knowledge or experience; (7) someone possessing other qualities deemed appropriate. After appointment, mediators are eligible to serve a two-year term, and, when the term ends, they must be reappointed by the same rules if they are to serve another term. However, the court may shorten the term according to its needs.

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professional knowledge, special skills, and work and life experience in order to select the best mediator for the case at hand. To increase the quality of mediators, in 2006 the Judicial Yuan began encouraging retired judges to volunteer to serve as mediators. This is in order to increase the possibility of reaching an agreement. In order to improve the credibility of the mediators and respect the right of the parties to select their mediators, in cases where a party has objected to any of the appointed mediators, or where the parties have agreed to appoint other appropriate persons, the judge may re-appoint or appoint such persons as agreed-upon by the parties. But when both parties have agreed to move the case from litigation to mediation, because the civil trial judge has more familiarity with the details of the case, the judge can also conduct further mediation proceedings, and the case will not be removed to the summary court judge. In addition, since 2005, in mediation cases involving family disputes, experts on family matters – including psychologists, social workers, or people with professional experience in family mediation or psychological counseling – may serve as special family case mediators. Because expert mediators are approved by both parties, effective communication of controversial issues has been attributed to mediators, and statistical analysis shows an increase in the successful rate of mediation. Therefore, beginning on April 1, 2007, all 18 Taiwanese district courts began to introduce family dispute mediation by family professionals. In the Taipei District Court’s Family Mediation, a consultative model was also introduced wherein the counselor provides the party with the necessary psychological support services, and through problem-solving orientated intervention strategies helps the client clarify his/her own ideas and achieve the goal of the proceedings. This allows the mediation to focus on the core problem as soon as possible and allows for development of effective resolution strategies. According to the principles of the mediation procedure, after different psychological consultants meet with both parties individually, if they believe that the parties should meet for a discussion and if the parties agree to a meeting, such a meeting may take place. The meeting is to be co–chaired by two psychological consultants representing both sides. This meeting can lead to an agreement reached by both parties. Mediation proceedings may end when the parties reach an agreement that settles their dispute. A successful mediation shall take the same effect as a settlement in litigation, which has the same effect as a final judgment with binding effect. To improve the possibility of success in mediation, Taiwan’s 1998 Code of Civil Procedure Amendments added two ways in which mediation can succeed, other than by agreement by both parties: (1) The first is the so-called “Med-Arb” or “quasi-arbitration” model: In the mediation of disputes over property rights, with the consent of both parties, the mediators may, at their discretion, propose the terms of mediation. Except as

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otherwise agreed-upon by the parties, the terms of mediation shall be determined by the majority of the mediators. Where the mediators are unable to determine the proposed terms of the mediation, the judge may, with the consent of both parties, determine the proposed terms or designate another mediation session or deem the mediation unsuccessful. The terms of the mediation proposed by the mediators shall be made either in a writing bearing the date, or shall be indicated in the mediation proceeding transcript by the court clerk, signed by the mediators, and forwarded to the judge for review and approval. After the judge approves the proposed terms, the mediation shall be deemed successful.65 (2) The second is via court-proposed mediation resolution without the objection of parties: In cases of mediation for disputes over property rights, where the parties are unable but are close to reaching an agreement, the judge shall take all circumstances into consideration, consult with the mediators, balance the interests of the parties, and thereafter, subject to the main intent expressed by the parties, propose a resolution on its own initiative. The proposed resolution provided in the preceding paragraph shall be served upon by the parties and the interested persons who have intervened.66 A party to the mediation or an interested person who has intervened may object to the proposed resolution of a judge within a ten-day peremptory period following the service thereof. In cases where no objection is raised, the mediation shall be deemed successful in accordance with that proposed resolution. In cases where objection is raised within the period, mediation shall be deemed unsuccessful and the court shall notify the parties and the interested persons who have intervened.67

4

Conclusion

The Taiwanese Supreme Court has been influenced by the local doctrine of finding the law between parties, and there is an increasing trend of placing importance on the protection of procedural interests; not only pursuing the realization of objective substantive rights, but also respecting parties’ autonomy over decisions regarding scope and conduct of proceedings to balance substantive and procedural interests to the best extent possible. Some American scholars are of the opinion that continental civil procedure, because it adopts the inquisitorial system, is thereby relatively unable to satisfy procedural justice. But as for Taiwan’s new Code of Civil Procedure, as was described above, on one hand, strengthening the judge’s elucidation duties has produced better inter65 Code of Civil Procedure, art. 415–1 (1999). 66 Code of Civil Procedure, art. 417 (1999). 67 Code of Civil Procedure, art. 418 (1999).

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action in the relationship between the judge and the parties involved. On the other hand, by recognizing parties may form agreements on simplification of the issues, and in strengthening parties right to procedural control, there has been a corresponding degree of augmented procedural protection. An issue that still remains is how, in the training and cultivation of judges, to make it so that judges may master the techniques of elucidating and of disclosing inner conviction, so as to be able to formulate the issues in a more timely and appropriate manner, and promote parties independently forming simplification of issues agreements or litigation settlements. With more and more civil disputes being resolved through court-connected mediation, it is worthwhile to discuss whether this could result in an uncertainty of rights, as well as in the possibility that there will be a detrimental effect on the predictability of legal decisions. Shifting cases from the court’s adjudicative processes may impact the development of law and legal certainty. The mediation and litigation systems both have their unique strengths and weaknesses, and the parties’ selection should be based on what they really consider to balance their procedural and substantive interests. Mandatory mediation should not become a barrier to trial for those who need a judicial decision. While judicial administration strongly encourages the mediation system, it is worth keeping in mind whether it should equally concern itself with ways to enrich and enhance the quality of the litigation system through development and training of judges and lawyers, and to enlarge the number of judges,68 thereby increasing parties’ confidence in the verdicts of courts.

References Chen, T.-F. (2000). Litigation and social development. Proceedings of the National Science Council, Republic of China: Humanities and Social Sciences, 10(4), 435–492. (In Chinese) Chiou, L.-G. (2000). New changes in mediation procedure. In L.-G. Chiou (Ed.), The theory of civil procedure option (pp. 179–214). Taipei, Taiwan: Author. (In Chinese) Chiou, L.-G. (1986). On surprise judgments. In Civil Procedure Law Research Foundation (Ed.), Research of civil procedure law (Vol. 1, pp. 28–45). Taipei, Taiwan: Editor. (In Chinese) Chiou, L.-G. (1996). Goals of civil procedure. In L.-G. Chiou (Ed.), On functions of civil procedure (pp. 147–196). (In Chinese) 68 The number of judges in Taiwan and Japan is insufficient. According to a statistic for the year 2002, 25.38 judges served for every 100,000 people in Germany; however, only 7.25 judges served for every 100,000 people in Taiwan and 2.43 judges in Japan. See http://www.kantei.go. jp/jp/singi/sihou/kentoukai/seido/dai15/15siryou_sai1.pdf#search (last visited Mar. 29, 2014).

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Funken, K. (2002). Comparative dispute management: Court-connected mediation in Japan and Germany. German Law Journal, 3. Retrieved from http://www.germanlaw journal.com/article.php?id=130. Gilles, G. (1981). Zum Bedeutungszuwachs und Funktionswandel des Prozessrecht: Ein Überblick über interdisziplinäre Entwicklungen im Zivilprozessrecht. Juristische Schulung, 1981, 402–409. (In German) Gilles, P. (2011). Zur Zweckvielfalt zivilprozessualer Verfahrensvielfalt. In J. Dammann, W. Grunsky, & T. Pfeiffer (Eds.), Gedächtnisschrift für Manfred Wolf (pp. 377–392). Munich, Germany: C.H. Beck. (In German) Jauernig, O., & Lent, F. (2007). Zivilprozessrecht (29th ed.). Munich, Germany: C.H. Beck. (In German) Kötz, H. (2003). Civil justice systems in Europe and in the United States. Duke Journal of Comparative & International Law, 13, 61–77. Kwon, Y. (2007). Litigating in Korea: A general overview of the Korean civil procedure. Journal of Korean Law, 7, 109–144. Morigiwa, Y. (2011). Interpretation by another name: The function of Rechtsfindung in the modern state. In Y. Morigiwa, M. Stolleis, & J.-L. Halpérin (Eds.), Interpretation of law in the age of enlightenment: From the rule of the king to the rule of law (pp. 125–138). Heidelberg, Germany: Springer. Murray, P. L., & Stürner, R. (2004). German civil justice. Durham, NC: Carolina Academic Press. Rosenberg, L., Schwab, K. H., & Gottwald, P. (1993). Zivilprozessrecht (15th ed.). Munich, Germany: C.H. Beck. (In German) Rosenberg, L., Schwab, K. H., & Gottwald, P. (2010). Zivilprozessrecht (17th ed.). Munich, Germany: C.H. Beck. (In German) Roth, P. (1991). Die Wahrheitspflicht der Parteien im Zivilprozess. Erlangen-Nürnberg, Germany: Shaker Verlag. (In German) Shen, K.-L. (2007). On the elucidation duty of the judge and information obligation of parties in the new Code of Civil Procedure. In K.-L. Shen (Ed.), Evidence law and fairness of procedure (pp. 3–21). Taipei, Taiwan: Angle. (In Chinese) Shen, K.-L. (2010). Class action in Taiwan: A new system created using the theory of “right of procedure options”. National Taiwan University Law Review, 5, 39–71. Stein, F., & Jonas, M. (2003). Kommentar zur Zivilprozessordnung (22nd ed., Vol. 4). Tübingen, Germany: Mohr Siebeck. (In German) Stürner, R. (1976). Die Aufklärungspflicht der Parteien des Zivilprozesses. Tübingen, Germany: Mohr Siebeck. (In German) Troller, A. (1945). Von den Grundlagen des Zivilprozessualen Formalismus. Basel, Switzerland: Helbing & Lichtenhahn. (In German) Wang, Y. X. (2011). The various roots of civil litigation in China and the influence of foreign laws in the global era. Civil Procedure Review, 2, 119–147. Zöller, R. (2007). Zivilprozessordnung (28th ed.). Cologne, Germany: Dr. Otto Schmidt. (In German)

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Civil Disputes in Korea and the New Role of the Court

1

Introduction

Korean society has been rapidly changing, especially due to its exceptional information infrastructure and rich artistic talent, represented by the so-called Korean Wave indicating increasing popularity of Korean culture in Asia and beyond. Due to the high conflict index of the society and a lack of an adequate dispute resolution system other than the courts, civil disputes are incomparably flourishing in Korea.1 With this dynamic society, the Korean judiciary faces new challenges almost every day. Now, Korean courts seem to be left as the virtually sole organization which can resolve all social conflicts effectively in Korean society. In the past, based on Confucian heritage, a great number of disputes were settled de facto, by informal mediators like elder members of the community or a family without making their way to the court. Yet, with western culture and thought gradually gaining ground in Korean society and a modern legal system standing firm as a central mechanism for dispute resolution, more and more disputes are resolved by virtue of law, instead of informal reconciliation. Individuals are showing more willingness to bring their civil disputes to the court. This, in turn, results in a tremendous increase in caseloads, as mentioned above.2 The new challenges that the Korean courts now face are somewhat like those at the end of the 19th century, the so called “time of enlightenment” when foreign culture invaded Korea via imperialism. This was a time of paradigm shift. The power has shifted from the public to the private, and various parties are now

1 The total number of civil cases received in the courts nationwide in 2002 was 1,015,894. It increased as high as 1,288,987 in 2006. See Supreme Court of Korea, Statistics, http://eng. scourt.go.kr/eng/resources/statistics_litigation_civil.jsp for more information (last visited Apr. 23, 2015). 2 Youngjoon Kwon, Litigating in Korea: A General Overview of Korean Civil Procedure, 7 J. Korean L. 109, 110 (2007).

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demanding judicial services from the courts like they would in a 24-hour convenient store. In this whole new situation, the traditional notion of a court’s role will not be valid anymore. People want the court to act as a guardian of their rights and welfare as well. The judicial decision-making process is required to be as transparent as crystal. The traditional concept of judges, with their authoritative image, speaking only through their decisions, might raise suspicion about the credibility and integrity of the entire judicial system. Fortunately, Korean courts have strived to meet the needs of the public and have made some notable progress in some aspects. This article intends to introduce the Korean courts’ efforts to adapt to this environmental change within society and to objectively evaluate its result. For that purpose, this article is structured as follows. Part 2 of the article describes the features of the Korean Civil Procedure, including its basic history and guiding principles with its conception change. Part 3 explains the unique features of Korean society in detail, and the new challenge for the court in accordance with the features. The courts’ effort will be discussed in three aspects, which are broadening the access route to the courts by the Electronic Litigation System, concentration of dispute resolution options, and active involvement of judges in the process. Subsequently, Part 4 covers the Electronic Litigation System which is unique in the world. A variety of new issues like the enactment of relevant laws, the establishment of a system, and pro and cons of the system are discussed. Part 5 deals with drastic changes of the court related to the ADR system of Korea, and the launching of a “Mediation Center,” which is also a unique institution. The double track of “the court-annexed mediation” and “the court-connected mediation” systems are introduced. Part 6 elaborately describes the last and most important aspect of the trio, – the active involvement of judges – which is the key factor of the new regime of civil procedures in modern society. The contents of the two recent major amendments of the Korean Civil Procedure Act and their implications are explained, and delicate issues of active elucidation and disclosure of inner conviction are also touched upon. Finally, Part 7 concludes this article by summarizing what has been discussed, as well as adding an observation on how Korean civil procedure will advance for the realization of its goal and service for the public.

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Features of the Korean civil procedure

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Brief history of the Korean civil procedure

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In Korea, the first modern system separating the judiciary from other branches of the State was initially introduced in 1894, when King Kojong introduced the 14 Articles of Hongbum. Based on this, the first court in a modern context was established in Seoul in 1895.3 Even before then, the late Chosun Dynasty had tried to introduce a modern civil procedure system to deal with the increasing conflict between social-economic development and the ineffectiveness of the old civil– criminal mixed litigation system adjudicated by government officials4, but failed, because it was attempted only by some enlightened intellectuals.5 Modernization of the civil procedure was initiated in 1895 by the promulgation of the Rule of Civil and Criminal Procedure, which was the first modern civil procedural act in Korea. It strengthened the formal requisites of suits by introducing legal concepts such as the petition, the defense, the warrant of attorney, the order of execution and so forth, and provided rules for the attorney. During the Japanese colonization period (1910–1945), Japanese laws were in force according to a Japanese government decree in Korea. Since the Japanese system was strongly rooted in a continental civil law system, current Korean civil procedures can be said to be based on a continental law system as well. After gaining independence from Japan, the Constitution of the Republic of Korea was promulgated on the July 17, 1948. After this, the Korean Civil Procedure Act was first enacted as of the July 1, 1960. The base of the continental legal system has not been changed since the enactment. The Civil Procedure Act is the most significant body of law that primarily governs the civil procedure in Korea. The Rules of Civil Procedure has been promulgated by the Supreme Court of Korea, and serves as supplemental rules to the Korean Civil Procedure Act. Since the enactment of the Korean Civil Procedure Act, it has been amended more than 20 times including minor changes. The notable amendment was made in 2002, emphasizing the pre-trial phase and the concentration of the trial for the sake of efficiency as well as separating the civil execution part from the code. It

3 Id. at 111. 4 The history of the Korean judiciary reveals that the judge – mostly local government authorities – was regarded as almost omnipotent in adjudicating the case. Furthermore, Confucianism filtered into the minds of people so intensely that it was taken for granted that one must obey and follow what the government authorities performed on behalf of the King. Id. at 142. 5 Kyoung Chan Son, A Study on the Introduction of the Modern Civil Procedure Systems in Early Modern Korea (2004) (in Korean).

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also made a so-called new model approach in civil procedure, which will be discussed in detail at Section 6 of this article. The new model approach partially introduced the discovery-like system of the US civil procedure law.6 We can arguably say that the Korean civil procedure includes both features of continental and US systems in the 2002 amendment. Since the revision of 2002, the coordination and leadership of the judges in the procedure have been emphasized. Although parties still have the disposition right of the procedure and decide the scope of the claim in an adversarial system, most Korean judges now actively lead the procedure by activities such as asking questions, sharing their inner convictions and recommending conciliation. As a consequence, the focus of the civil procedure shifted sharply from written pleadings to an oral argument during a hearing. This reflects the change of perceptions of the Korean public for the purpose of civil procedures. With this change, the guiding principles of civil procedures also have somewhat different meanings although the letters of the Act are not changed at all.

2.2

Guiding principles of civil procedure in Korea

Article 27(1) of the Constitution of Korea reads as follows: “All citizens shall have the right to be tried in conformity with the Act by judges qualified under the Constitution and the Act.” Also, Article 1(1) of Korean Civil Procedure Act reads as follows: “A court shall endeavor to have the litigation procedures progress fairly, swiftly and economically.” “Fair, speedy7 and economical8 litigation procedures for a just conclusion by an independent court” is guaranteed by the Constitution of Korea. This right to 6 One of the different features of the process in comparison with U.S. civil procedural law is the absence of discovery. There is no general obligation of the parties to submit documents contrary to his/her interest. Instead, Korean law possesses an alternative procedure: an order by the court to submit a document. The court, upon the motion of the party, may order the holder of a document to submit it under the following circumstances (art. 344). The holder of a document shall not refuse the order. In the case of refusal by the party of the litigation (art. 349), the court may admit that the claims of the other party in such documents to be true. In case of refusal by the third party, he/she will be sanctioned by a fine (arts. 351, 318, 311 I). Kwon, supra note 2, at 128. 7 The idea that justice delayed is justice denied is implemented throughout the Korean Civil Procedure Act. Parties bear responsibility for timely presentation of pleadings (art. 146). Failure to make pleadings or appear on the date of pleadings may result in disadvantageous treatment (arts. 146, 150, 268). The Act also prescribes a certain period for the rendering of the judgment (art. 199, five months as a recommendatory provision). Id. at 114. 8 According to the Korean Civil Procedure Act, the litigation costs are borne by the losing party in principle (art. 98). As an exception to the principle, the court may impose the whole or part

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fair trial is acknowledged as one of the fundamental rights and regarded as an essential element of legal justice. Traditionally in civil procedures, substantive fairness and procedural fairness are regarded as having some conflicts.9 Substantive fairness means finding out the truth and drawing a just conclusion. To make this goal feasible, parties are allowed to submit every possible argument and piece of evidence10 to clarify the facts. Procedural fairness means observing neutrality and treating parties equally. The objective of procedure law is to give parties an equal and fair opportunity to present their cases. In an adversarial model, the parties play a primary role in the process, while the judge plays only a passive role. The court should stay neutral and is not allowed to side with either one of the parties. The party determines the beginning, subject matter, and the termination of the proceedings. It is also the party who presents facts and submits relevant evidence. Parties should be given the same degree of protection and access to the process.11 The traditional notion of procedural fairness has changed a lot. The ghost of the old inquisitorial model has completely faded away. The right to fair trial includes not just fair the result of litigation, but also a fair procedure of litigation to fulfill it. The right to a fair hearing, predictability, speedy and effective process will be necessary for the fair proceedings as a whole. The parties are not the objects of the proceedings. They are respected as a subject of the process and given an opportunity to make the process by themselves. Judges should help parties to exercise the right effectively. The model of quiet and passive judges has now become old-fashioned in Korea. The parties can keep a close watch on the process and request a fair and speedy trial, also having the right to argue, produce evidence, and have access to records. Understandably, the right to a speedy trial does not mean merely a request for fast procedures. It must be properly harmonized with a fair process.

of the costs on the prevailing party who conducted unnecessary acts for his/her own advantage or who caused the delay in litigation (arts. 99, 100). In case of a partial defeat, the court determines which of the parties will bear the costs, and their percentages (art. 101). Most of the time, the costs are born by both parties with its ratio determined by the court. However, the court may have one party bear all the costs depending on circumstances. Id. at 136. 9 Id. at 113. 10 According to the Korean Civil Procedure Act, there are six types of evidence: examination of a witness, examination of parties, expert testimony, documentary evidence, inspection, and other evidence (drawings, photographs, recording tapes, video tapes, magnetic discs for computers and other articles created to put the information therein). There is no clear-cut rule concerning the probative values of each type of evidence. In practice, there is a general tendency of placing higher trust on documentary evidence than testimony by a witness. Id. at 132. 11 Id. at 113.

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In this modern era, the civil court is no longer a place where only governmental power is exercised. The decision of the court itself and the procedure to reach the decision have become a matter of primary concern. The number of methods used to resolve the dispute and dispute resolution organizations are rapidly increasing. In my view, the purpose of modern civil procedure cannot hold on to traditional ideology such as protection of individual rights or a preservation of the social order any longer. It should be connected with multiple and hybrid values such as “perfect and complete dispute resolution,” “concrete protection of procedural right,” “realization of sound social norm” and even “help for the right to pursue one’s happiness.” To reach those ends, judges should have an insight to recognize the essence of the conflict and substantial right of parties as well as finding facts and determining the relevant rules. For that purpose, they can consider the social norms and customs besides the law, exploring the area beyond the literal meaning of the statute. During that process, the procedural right of parties should be maintained as well. Before declaring what is the final right answer to the question, judges have to keep a balance between parties and consider the procedural satisfaction of a defeated party. The ultimate goal of civil procedure is giving a perfect solution to the parties in one round12 with reasonable time and cost. In this regard, I emphasize that the concept of the right to a fair trial could be interpreted more broadly. It is a comprehensive right, and consists of legal rights that a party might request for various judicial actions of the court in every stage of a civil dispute. For this, the role of the court is central, and among others, active involvement of judges in the procedure will be essential. In Korea, the term “judicial service for the people” is commonly used and accepted naturally. The downside of this change is that it requires additional human and material resources and the judiciary tends to be under-budgeted. The Korean judiciary already suffers from a recent deficiency of judges. Yet, if there is a start to making a decent return for the investment, things will be different. The goal of the judicial service must be public trust. Based on that trust, people may allow more resources for the judiciary in the future.

12 The appellate proceedings in Korea are not substantially different from the original proceedings of the first instance in that parties are allowed to make arguments and submit evidence. New allegations or submissions are permitted so long as it does not infringe upon a time-bar limitation. Therefore, the appellate proceedings have the characteristics of the continuation of the previous proceedings. Kwon, supra note 2, at 136. Therefore, it always has a possibility of being a redundant and repetitive process.

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Unique features of Korean society and new challenges for the court

According to the Samsung Economic Research Institute report in 2009, Korea ranks as the 4th worst in the social conflict index compiled for 27 OECD nations. The index for Korea was 0.71 in comparison to the overall average of 0.44. The report further said that should Korea reduce the conflict index to the OECD average of 0.44, the country would be able to add $250 billion to its annual GDP. The model features three parameters – how evenly incomes are distributed, how efficiently the government serves and how well democracy works. Reflecting this situation, it is not overstated that Korea has faced a litigation explosion. From 2002 to 2009, the number of incoming civil cases in the 1st instance court was over a million every year. In Japan, where the population is about 2.7 times larger than Korea, the number of incoming civil cases in the 1st instance court was 877,254 in 2010.13 In 2002, the incoming civil cases per 10,000 Korean people were approximately 6,981, whereas in the so-called “litigation-prone” USA, California had 4,470 cases, and Texas had 4,697 cases per 10,000 people. What is worse, over the last two decades, Korea has made the utmost efforts and is now recognized as one of the most advanced information infrastructures in the world. In 2011, Korea, whose population is at about 50,000,000 people, has 37,180,000 internet users, 27,560,000 smart phone users and 74,817,000 internet banking accounts. 82 % of Korean households have hi-speed internet connections.14 The Korean Government also ranked as the 1st place in the Egovernment Development Index of the UN’s E-government survey in 2010. This is not good news for the court. People who are experiencing conflict want quick feedback from a public service via this “high-speed” infrastructure and the opinion of the society tends to be easily divided and polarized. Some people urge that the court and judges must communicate with society directly through social media like SNS. Sometimes so-called “people sentiment law” prevails. Some predict that the traditional court system will be in danger and could be ostracized unless the court can cope with this change effectively in the near future. Interestingly, in spite of this situation, since the Korean court has cleared 93– 102 % of incoming cases every year, the overall number of pending 1st instance civil cases are not quite increasing.15 Moreover, according to the World Bank 13 Courts of Japan, Judicial Statistics, http://www.courts.go.jp/search/jtsp0010? (last visited Apr. 23, 2015). 14 National Information Society Agency of Korea, Informatization White Paper (2012). 15 See Supreme Court of Korea, Statistics, http://eng.scourt.go.kr/eng/resources/statistics_ litigation_civil.jsp (last visited Apr. 23, 2015).

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report in 2011/2012 Doing Business – which measures the time, cost and procedural complexity of resolving a commercial lawsuit between 2 domestic businesses – Korea is the 2nd easiest country for enforcing contracts. It takes 230 days, 33 procedures and 10.3 % cost of the value of the claim to enforce contracts in Korea.16 Admittedly, the World Bank report has limited implications, but we can arguably say that the Korean civil litigation system has some efficient features. This could be the result of the Korean judiciary’s effort to respond to the rapid change of the society. The recent survey conducted by the Seoul Central District Court17 shows that public awareness of the civil procedure is relatively good. Among 453 respondents who have been a party of civil procedures in Seoul Central District Court, 83.4 % are satisfied with the trial process. 78.5 % of respondents replied that the trial was fair and 76.7 % said that they could communicate with judges during the process. However, only 59.6 % answered that the procedure was predictable and only 7.7 % chose a speedy trial over a slow but elaborate process. The speed and cost of a civil procedure does not seem to be a big issue in Korea. What makes the Korean system efficient and what are the pros and cons of the system? I will try to answer the questions in three aspects, and conceive a desirable future for them. These aspects are: the broadening access route to court, concentration of dispute resolution options and active involvement of judges in the process. Korea has adopted the Electronic Litigation System (ELS) to dramatically increase accessibility to the court, established a court annexed Mediation Center as a central dispute resolution institute and made a new model for active case management and hearing processes, mainly led by judges. In these three aspects, it is possible to evaluate that the Korean judiciary has designed effective methods to meet unprecedented needs of the society, but in the course of the change, the diversity of dispute resolution is hindered and the court suffers from intense workloads. Also, balancing between fairness and efficiency in civil procedures is the main task that the Korean court is now requested to accomplish by the public.

16 Doing Business, Doing Business 2013: Smarter Regulations for Small and MediumSize Enterprises (2012), available at http://www.doingbusiness.org/reports/global-re ports/doing-business-2013. 17 Changwon District Court, Report on Civil Judges Forum (2013) (in Korean).

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Electronic litigation system as an access route for the court

The Law on the Use of Electronic Documents in Civil and Other Procedures (ELS Law) was enacted and promulgated on March 24, 2010 in Korea, and the Electronic Litigation System was implemented on April 26, 2010. The law and the system were not made in a short period of time. To acknowledge effectiveness of electronic signatures and regard electronic documents as original ones, The Law on the Use of Electronic Documents in the Payment Order Claims was enacted first in 2006 as a pilot program. The first attempt to enact an E-filing law in 2004 was frustrated due to a lack of social consensus and a groundless security concern, but the development of technology and a vast public awareness of electronic transactions made an ELS dream come true. ELS Law defines electronic documents in two ways. First, electronic documents are not required to be standardized as a form of documents. This means that even sounds, images and videos can fit into the concept of electronic documents. Parties can make their arguments more dynamic and persuasive by using sounds or real video images as well as papers. Secondly, electronic documents include electronically transformed documents. The ELS Law allows scanned documents as electronic documents when the original document already existed in the form of a paper. In principle, a party has a duty to scan papers and upload them on the ELS system. The presence of a so-called “digital divide” always raises constitutional problems, such as the right to a fair trial and equality in the ELS. So, the ELS Law grants the parties, including lawyers, a right to choose between ELS and traditional paper-based litigation, but the government and some public institutions that are enumerated in the ELS Law have an obligation to file electronically. In cases where one party wants electronic filling and the other party does not, the court officials do the scanning work on the behalf of the paper-based party. The ELS Law defines the filling-date as the time when the electronic documents are electronically recorded on the ELS system. Parties can file a suit electronically at the ELS portal and may pay litigation fees such as fees for a stamp or service by a credit card or bank account transfer. The fee of the ELS is cheaper than that of the paper litigation. Documents are also served to parties electronically by the court and they can be immediately viewed after receiving an email or a text messages on a mobile phone they declared in the registration process of the ELS. The effective service date is not the date when the document is stored on the party’s account but the date when the served party actually checks the document on the ELS. In case the party does not check the served document for 7 days, the effective service date is the next day after the 7th day. The court has to print the

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electronic documents and serve them in a paper form to the party who does not enroll in the ELS. The method of examining electronic evidence is by viewing or hearing it with the help of electronic devices installed in the courtroom, such as a big screen or via computer speakers. The electronic evidence does not clearly fit into one of the traditional evidence categories. So, electronic viewing and hearing are totally new types of examining evidence in Korean civil procedures. E-Filers can save time and cost that stem from the inconvenience of having to visit a court to file documents. One can file a suit at home at any time. In effect, the 1st Electronic case in Korea was filled at 08:39, before the official opening time of the court. Parties may separately manage their records for ongoing cases processed by ELS, enabling them to view or download court records anytime for free. The biggest advantage of e-filing is that parties can track the status of their cases easily without the help of legal experts. Trial procedures have become much more transparent by enabling parties to view and share the entire case information in real-time on the Internet, laying a firm foundation for a satisfactory court judgment for parties. For the court, the ELS has eliminated the whole work of storing and transferring huge paper documents and the court officials can save the effort of making a court record with the help of a courtroom-recording system. The method of conducting oral arguments has been drastically changed. The computer and visual presenter installed in the courtroom are the essential devices for the hearing process. Improved court efficiency through ELS enables the court to concentrate all its capability on hearing in the courtroom. The courtroom gradually has become the place where lively debate prevails over exchanging papers. In 2011, the number of electronically filed civil cases was 134,474, which was 21.4 % of the entire civil cases, and it became 366,214 in 2013, which was 37 % of all the civil cases. In 2013, more than 40 % of cases were electronically filed and resistance to the ELS had almost diminished. It would be a positive change that the ELS, eliminating any middle steps of litigation, had broadened the accessibility to the court. In my personal experience, I have met a pro-se plaintiff who writes a brief to me every day like an online diary. Yet, one challenge that the Korean court could face is a Big Data problem. The Korean court has been requested to disclose all database and information regarding litigation. Besides privacy issues, with the database analysis, new private business could emerge that provides information like the wining rate of lawyers, the tendency of specific judges to rule a certain way etc. Another problem relates to the traditional but important value of the civil procedure. Efficiency and transparency are not absolutely good. We must re-

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member that the judicial process is not just for enforcing business contracts. For people who visit the court once in a lifetime, the ELS could be an excessive measure. They just want the court to correct a wrongdoing and declare what is justice in an adequate time and way. We should always be careful not to sacrifice the other values of civil procedure for the sake of efficiency. The Korean judiciary has provided much information for the pro-se litigants. They can easily file a suit by only filling in a blank on the provided online form (http://pro-se.scourt.go.kr). By virtue of high internet connectivity in Korea, a large portion of ELS users are pro-se litigants. Nonetheless, ELS must be advanced to assure peoples’ rights to a fair trial from all aspects.

5

Court Mediation Center as a hub for dispute resolution

It is evident that the court cannot resolve all civil disputes in the country. One of the reasons for the litigation explosion in Korea may be the absence of a competent alternative dispute resolution (ADR) process to replace court litigation. Even in the cases that are pending in the court, only 18.4 % of cases were settled by mediation in 2010, which was a very low rate in comparison to the other countries. This phenomenon may stem from various factors like dispute resolution culture, public awareness and attitude for dispute resolution, litigation cost, etc. Some indicate that Koreans prefer to see the finale of the dispute and regard a compromise as the second justice even when they know that they are in a “chicken game.” Rapid dissolution of traditional communities due to industrialization also makes traditional authorities disappear. As we see above, the litigation cost in Korea is relatively low and there is not much resistance for increasing the judiciary budget so far. However, ADR, especially the mediation, is conducted in a way that party’s self-determination is emphasized in every country. It is more future-oriented and explores a party’s real interest, giving an opportunity to find the best solution through assessing various options. It is globally accepted that mediation is always a cheaper and faster way to solve the problem than through litigation. Korea enacted the Civil Mediation Law on January 13, 1990. According to the law, court mediation is started by a party’s application or referral from a trial judge to hear the case. The application fee for the mediation is only 20 % of the normal litigation fee. The trial judge hearing the case can always refer the case to mediation without consent of the parties at any stage. Referred mediation cases can be mediated by a mediation judge, a mediation committee or even the trial judge him/herself who referred the case.18 18 The Korean Civil Procedure Act Article 145(1) articulates that the court may recommend

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When parties reach an agreement in mediation, the lawsuit is regarded as dropped, if not, the referred case returns to trial and the case is deemed to have been filed as a lawsuit at the time of mediation application. The desirable mediator in the Korean system is a mediation judge who decides whether the case should be referred to the mediation committee, which is composed of non-judge mediators or is handled by a mediation judge himself/herself. There may be some different opinions as to the appropriateness of the court aggressively stepping in for the purpose of a settlement. It might be proper to suggest a settlement once the issues of the case are revealed. However, there is a possibility of parties being coerced into a settlement, especially when the court suggesting the settlement is the same court adjudicating the case. This is sometimes the case in Korea. Basically, the mediation judge or mediation committee will be in charge of mediation. However, it is still possible for the adjudicating court to mediate the case itself. In reality, this has been mostly the case up until recently.19 The percentage of trial-judge mediation was 89.9 % in 2002 and 96.2 % in 2009. The statistics shows some distortion within the system. Moreover, a notable feature of the Korean mediation system is compulsory mediation, which seems like an oxymoron. In most cases where the parties fail to reach an agreement, the mediation judge is recommended to render a decision which can replace an agreement, to which the parties can raise objections within 2 weeks to invalidate the agreement-deemed decision. Because of this compulsory mediation, the mediation in Korean courts is close to “med-arb” in the USA. As we see above, the original concept of a mediator is a third party who assists parties to negotiate a settlement, not a trial judge who will hear the case if the negotiation fails. The compulsory mediation decision is more like a final opinion of the court without reasons for the decision. It serves as an effective tool for fast disposal of a case and reduces the workload of trial judges, but it raises a serious ethical problem regarding confidentiality and a conflict of interest between the roles of a mediator and those of a trial judge. When the court fails to lead parties to a settlement, the very court which was involved in the settlement process will be making a final decision. The party who has not accepted the suggestion of the court to settle the case may fear disadvantages by the court in the proceedings to come, and in the judgment of the case. Therefore, the direction for improvement is clear; from trial judge mediation to real mediator mediation. Korea revised the Civil Mediation Law on February 6, 2009. A Standing Mediators System was introduced and Mediation Center was reconciliation to parties, but mediation is a different type of ADR from reconciliation. Civil Procedure Act, Act No. 547, Apr. 4, 1960, amended by Act No. 10373, July 23, 2010, art. 145(1) (S. Kor.). 19 Kwon, supra note 2, at 139.

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established; Seoul Mediation Center (April 13, 2009), Pusan Mediation Center (April 20, 2009), three more Centers (April 18, 2011) and four more Centers (April 12, 2013) were established in courthouses all across the country. The standing mediators are appointed by the court among lawyers who have over fifteen years of experience. Several former Supreme Court Justices were appointed as standing mediators. They have the same power as a mediation judge and serve two-year terms with the obligation of a prohibition against concurrent offices. The system clearly aims to fix the past problems of the trial-judge mediation system. By the mediation of independent non-judge mediators, a party’s confidentiality is secured and more creative and relaxed negotiation is possible. The number of cases in the Mediation Centers is increasing. In 2009, there were only 2,444 mediation cases, but in 2011, incoming cases were 15,000 and approximately 40 % of cases were settled in the Centers. With the launching of the Mediation Center, the Early Mediation system was also started in April of 2010. The trial court chooses cases that seem to be suitable for mediation before the oral hearing date and refers them to the mediation judge. The oral hearing date is usually set at least two months later from the filing date. The Early Mediation focuses on this period. The time limit for the Early Mediation is 40 days, and it can be extended with the consent from both parties. In the Early Mediation, the mediation judge divides the cases into two tracks, which are the court-annexed mediation and the court-connected mediation. The court-annexed mediation is mainly conducted by the standing mediators in the Mediation Center, and the court-connected mediation is conducted by non-judicial ADR institutions outside the court such as the Korean Commercial Arbitration Board, the Bar Association Arbitration Center, the Korea Fair Trade Mediation Agency, the Korea Consumer Agency, the Korea Exchange Mediation Center, the Korea Copyright Commission, the Korea Creative Content Agency, the Korea Christian Conciliation and Arbitration Institute etc. In the Early Mediation, the mediator initiates the process in the place outside the court and helps the parties reach an agreement. The mediator facilitates the negotiation for a constructive and tailored outcome. The settlement rate is about 43 % from using Early Mediation. The court now plans to adopt a certification system for “unpopular” ADR institutions to broaden the scope of the court-connected mediation, and the new connecting system with law schools and local governments is also under consideration. The Mediation Center system is partially similar to the Multi-door Courthouse project of USA courts, but with the combination of a connecting system to a great part of non-judicial ADR institutions in Korea, the Korean court has become a front desk or a hub for all types of civil dispute resolutions. I would like to call it a “Court-concentrated ADR system.”

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The World Justice Project released a report entitled Rule of Law Index 2011 on November 28, 2012.20 In the sub factor “ADRs are accessible, impartial, and effective,” Korea ranked 1st place with Austria. The combination of the ADR system and the ELS system in Korea may create a synergy effect. English courts have already run a pilot program of the Online Dispute Resolution for small claims.21 In Korea, some ADR institutions conduct online dispute resolution systems regarding E-commerce disputes. The next step will be connecting or merging the online systems together with the court and developing it. The disputing parties rarely know how to solve their issues. The ultimate goal of the Korean court is that every disputing party visits the Uniform Dispute Resolution Center in the court first, and then the court recommends to them the best way of solving the problem, which could include court-annexed or courtconnected mediation. This is quite feasible because the Korean court is relatively easy to access. In the future, it is desirable that the court get more detailed feedback about the outcomes of referred cases from ADR institutions, while simultaneously protecting confidentiality. By accumulating this feedback data, the court could make the process faster and more effective, and the whole process might even be automatically conducted someday.

6

A whole new model: active involvement of judges in the process

6.1

Emergence of a new model

In the late 20th century, many countries tried to change civil procedure into socalled concentration or main hearing systems. The reason for the change was to overcome the limitation of judicial resources. For this purpose, the court needed to manage a case thoroughly from the early stage, and concentrate judicial resources to the main hearing which was scheduled to be held in the final stage. Consequently, courts made an attempt to redesign the civil procedure structure from the beginning. Throughout that process, the judges’ role has inevitably become more important than ever before, and extra attention is fo20 Mark Agrast et al., The Rule of Law Index 2011 Report (2011), available at http:// worldjusticeproject.org/publication/rule-law-index-reports/rule-law-index-2011-report. 21 Marc Mason & Avrom Sherr, Evaluation of the Small Claims Online Dispute Resolution Pilot (2008), available at http://ssrn.com/abstract=1407631 or http://dx.doi.org/10.2139/ssrn. 1407631.

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cused on the pre-trial phase, wherein the parties prepare for the final main hearing. The Korean court also introduced a new model of civil procedure in 2002 by revising the Civil Procedure Act. Even before then, the court had struggled to establish a concentrated model of civil procedures for a long time. The old model of the Korean civil procedure also had some vehicles to expedite the proceedings. The presiding judge usually sets a time limit for each pleading. Basically, parties are to present all the arguments and written evidence in support of their claims or defenses at this stage. Failure to abide by the time limit can lead to a sanction of being barred from submitting them in the trial stage. However, this restriction does not seem to be aggressively imposed in practice. It has been a long-standing, implicit belief amongst Korean judges that substantive justice overrides procedural justice. This is the part of the reason that judges have been much too cautious in exercising their authority to block the lately submitted claims or evidence.22 The old-fashioned way of Korean civil procedure was like dripping water, i. e. parties could argue about any issue and could submit evidence at any time they wanted. The preparatory procedure only nominally existed. In the courtroom, several cases were supposed to be heard at the same time period by order of arrival or case number. Most hearings resumed 1–2 months later for further discussion. After many hearings and exchanges of briefs, the parties and the courts got to find the real issues of the case. Ironically, the examining of witnesses was better prepared than the arguments. Since the parties were requested to prepare detailed questions in advance and submit them to the court for the screening of a judge, in most cases, their witness’s answers were only yes or no. This old practice has an advantage in that it ensures a ceaseless process in a courtroom during the day when the judge can use the courtroom and a judge can examine as many witnesses as possible at one time. It maximizes the availability of limited judicial resources and the simple cases can be efficiently handled through a factory-like process. Actually, in Korea, without the American discovery system, a court hearing process led by a judge could be the only opportunity to obtain decisive evidence from the opponent party. However, the practice has sent oral hearings into a coma by eliminating its dynamic aspects. The parties have to wait for a long time in a courtroom for their turn, even when the time allocated to them may be only a few minutes. In a sense, the courtroom hearing date has only the meaning of a deadline for the submission of a brief, and sometimes the parties exchange the briefs manually on the very hearing day. Consequently, the judge has no time to review the brief and nothing to do but continue the process and to read the brief later. There is 22 Kwon, supra note 2, at 128.

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virtually no argument to “hear” in the hearing process; therefore, even if a party attended the hearing, he/she never understands what’s going on in the courtroom, just guessing his/her fate by the judge’s few words or by an analysis of the judge’s facial expression. With this old model, the judge and parties hardly have a common perception about the facts and the real issues of the case, which leads to a distrust of the court and a block in the way of an economical and peaceful solution. The judge also has to review the whole record again before every hearing day, and in the course of handling a number of cases at the same time, certain cases can lose direction and will be delayed for a long time. The frequent transfer of a judge’s position in Korea has made this situation worse. The key point of the 2002 reform of the Civil Procedure Act was the creation of a preparatory procedure which became mandatory by the revised law. In the preparatory procedure, the judge and the parties prepare oral hearings by planning the whole process, clarifying the issues and examining evidence except witnesses. The result of the preparatory procedure is brought together during the oral hearing afterwards, which can make the hearing process simpler and more concentrated. The revised law provides that after the end of the preparatory procedures, the court shall close the case at the first hearing. The two categories of preparatory procedure are the document-based procedure and the pre-trial conference. The document-based procedure proceeds in every case from the filing date, while the pre-trial conference can be held selectively by a judge’s decision. A unique feature of the document-based procedure is that the process is supervised by court officials, unlike the pre-trial conference that judges preside over. In the document-based procedure, parties exchange briefs and other documents, including evidence via a court. The court officials set a time limit for the submission of documents, check the compliance of the parties and report them to the judge in charge. The pre-trial conference is a meeting usually held at a conference room or a judge’s chamber. The presiding judge or a commissioned judge clarifies the issues and makes decisions on the motions of parties. During the conference, the judge and the parties also develop a plan for the upcoming procedures. For instance, these plans might include: setting the date of hearings and the limitation of the number of witnesses. Although this conference is in principle open to the public, it is usually held in a chamber specifically prepared for this purpose, in a more casual setting, instead of in a courtroom. In principle, after the end of the pre-trial conference, parties are not allowed to raise a new issue or submit new evidence. The reform shifted the focus of civil procedure from hearings to preparatory procedures. In most cases, since the parties already argue on the key issues before a judge at the pre-trial conference, the oral hearing is practically changed to a witness examining procedure.

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The possibility of reaching a settlement can also be deliberated upon. In practice, the presiding judge frequently makes an attempt to conciliate the case at this stage. Most of the time, this is the stage when issues have been made clear both to the court and to the parties, misunderstandings have been mitigated, and the parties have become less combative. A separate settlement conference may be planned and conducted. Against this backdrop, a considerable number of cases are settled in the form of a compromise, a conciliation or even a mediation.23 As such, the new model stressed the role of a judge as a mediator in the pretrial conference, like in the Argument and Conciliation Meeting in Japan. That is one of the main reasons why the compulsory mediation by trial judges has prevailed in Korea as we have seen at Section 5. Nonetheless, the meaningful outcome of the new model reform is that it drastically changed the structure of the civil procedures and the awareness of the people concerned, and it also brought about more efficient processes, decreased the number of witnesses and the reduction of appeal rates. The downside of the new model is that it is somewhat against a directness doctrine and a public trial principle. Not all of the three judges in a panel hear the main argument in the pre-trial conference, but they must render an opinion together after a deliberation. The pre-trial conference, a closed procedure in most cases, is not necessarily recorded. Moreover, the time-consuming documentbased procedure by court officials hinders the parties from meeting judges in a proper amount of time. To deal with this problem, some courts introduced a Case Manage Division on February 15, 2006. The division, like a gatekeeper, classifies and manages all of the incoming cases of the court. The cases are divided into several categories: ruling, settlement, referral to ordinary divisions and pre-trial conferences for scheduling. The division, composed of judges and court officials, solely performs case management task at the whole court level, and, uniquely, can make a ruling about undisputed cases. The Case Manage Division system has a merit in that it eliminates the problematic document-based preparatory procedure, but the system completely disappeared in 2010 owing to the heavy workload of the Division.

23 Id. at 129.

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Transition of oral proceeding

The Civil Procedure Act was revised again in 2008 to resolve the problem of the new model. The revised Article 258(1) made it a rule to have the 1st hearing early, and declared that the pre-trial conference is an exceptional procedure held only when a judge decides that it is necessary. Since the second revision, a matter of primary concern has been oral arguments. Some people have criticized the practice of the new model as focusing on paper-based case management, and have insisted that attention should be diverted to real discussions at the hearing. Indeed, with the intensification of the pre-trial proceedings, the significance of the trial in terms of making oral arguments has diminished in practice. The arguments should have been made in a timely manner, and issues should have been clarified in the pre-trial phase. However, these are meant to be only preparatory works for the trial. Therefore, the arguments that have been made during the pre-trial conference should be stated again in front of the court, though in a simple manner, on the first hearing date.24 Yet, in many cases, parties just quote the briefs they submitted in advance, and a real debate during oral arguments is rarely seen. In fact, oral proceedings are the core process of the Korean civil procedure. Korean Civil Procedure Act Article 134(1) articulates that, “The parties shall conduct pleadings orally in the court in regard to the litigation.” Comparatively speaking, German law adopted the principle of oral proceedings in its code of civil procedures in 1877, and began advocating liberal oral arguments in courtrooms by seeking quick and fair trials. This movement was based on the belief that those in the legal profession should follow the needs arising from liberal political activism requiring the independence of the judiciary and opening court proceedings to the public. Following the changing trends of Germany, Japan also adopted the principle of oral proceedings, although it was criticized for not having realized the system until their recent reformation of the civil procedure.25 Oral proceeding can enhance transparency and fairness of the judiciary and provide an actual open court procedure to the public. It can facilitate communication between parties and judges, eventually leading to a harmonious settlement of the dispute and enhancing appropriate decision-making.26

24 Id. at 131. 25 Hyun Seok Kim, Why do We Pursue Oral Proceedings in Our Legal System?, 7 J. Korean L. 51, 54 (2007). 26 Id.

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To achieve this goal, the urgent task for the Korean court was switching from brief-invoking practices to real discussions of issues between judges and parties, which could revitalize oral proceedings. Essential components of oral proceedings are “Substantial argument about the merits of the case at issue on the hearing day,” “Achievements of interactive communication,” “Active procedural participation of parties themselves” and “Openness of the proceedings.”27 Forms of oral proceedings are classified into three types; the parties can make one-sided statements (reporting type); the parties can also communicate interactively (interactive type); and the parties can argue over the justifications of their contentions in front of the judge (argumentative type). Also, with regard to the leading person, oral proceedings can be classified into two types: the partydominant type and the judge-dominant type. The latter is for cases in which the parties are not well prepared or lack argument capability, and the former is for those in which the parties are willing or are required to take part in the proceeding vigorously. In practice, depending on case types and individual situations of parties, the above proceeding types can be used selectively and are interchangeable.28 However, encouraging communication between judges and parties in oral hearings provokes a subject prolific for controversy. The disclosure of the inner convictions of judges before a ruling while much, desired in some countries, is not desirable in Korea. In the traditional legal culture of Korea, judges never disclosed their thought on the merits of a case before the final ruling. Recently in the trial-judge mediations as well as hearings, certain judges sometimes tell the parties the probable outcome of the case, but it might also arouse one party’s doubt about the neutrality of the judge. Generally, revealing inner convictions presents not a subject understanding but an objective evaluation of judges to the parties. The conviction should be tentative and conveyed indirectly. Recent surveys29show that lawyers point out the insufficient disclosure of inner convictions and discrepancies between final outcomes and prior disclosures of inner convictions at the same time as problems of the civil trials of Korea. There are similar problems with regard to the elucidation of judges, especially for so-called “active elucidation.”

27 Id. at 64. 28 Id. at 65. 29 National Court Administration of Korea, Civil Trial Report (2013) (in Korean).

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Problem of active elucidation

Korean Civil Procedure Act Article 203 articulates that, “the court shall not render any judgment on matters which have not been claimed by the parties.” A controversial point is how much the judge can render guidance for the pleading. In connection with the role of the judge in the civil procedure, this has been a much-debated issue. Also, as a vehicle of communication in an oral hearing, a judge’s active request for elucidation has been emphasized. Korean Civil Procedure Act Article 136(1) provides that, “the presiding judge may, in order to clarify the litigated issues, ask the parties questions, and urge them to verify, on the factual or legal matters,” and Article 136(4) provides that “the court shall give the parties an opportunity to state their opinions on the legal matters, which are deemed to have been evidently overlooked by them.” It is evident from the words of the statute that the request for elucidation is not only the power of judges, but also the obligation of judges. What does this provision have to do with the neutrality and impartiality of the judge? It is not easy to draw a bright line between the active role of the judge mentioned above and the impartiality of the judge for both parties. In particular, it becomes even more complicated when the lawsuit is between an individual with no legal expert and a huge company with the support of a prestigious law firm. Given that the court is bound to the legal ground provided by the plaintiff, and that the court should render a judgment in favor of the firm even when the individual could have won the case only if he/she had chosen a pertinent cause of action or had submitted a certain piece of evidence, the court might be tempted to reach out to render some useful tips toward this individual. The Supreme Court proposes a guideline to the limit of this by using notions of passive and active elucidation as below. The passive elucidation, which is intended to clarify what has been alleged, is allowed. However, the active elucidation, which is intended to attract or suggest a new assertion, is prohibited. The exception to this would be the duty of the court to indicate a legal point which the party has evidently missed.30 The Korean Supreme Court held that: If there is a legal issue that has been evidently overlooked by negligence or misunderstanding of parties, or the parties’ assertion has an unclear, incomplete, contradictory part, the court shall actively give them an opportunity to state their opinions. In cases where the court rules on the ground that the parties have never expected, thus gives them surprising results, the court violates the duty of elucidation or indication and the ruling should be announced illegal,31 30 Kwon, supra note 2, at 130. 31 Supreme Court, 2001Da11055, Jan. 25, 2002 (S. Kor.).

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And regarding the duty of reopen a hearing, held that: In a case where the parties file a motion to reopen a hearing to introduce new claims or evidence, as a rule, the court has the discretion whether to reopen it, but when the movant has not had enough opportunity to introduce the claim or evidence without fault, and the issue to be claimed or proved is a key factor to sway the result, thus, it violates procedural justice not to give the movant an opportunity and rule against him or her, the court shall reopen a hearing and continue the process.32

However, the legal scope of active elucidation is still not clear in reality, notwithstanding many decisions of the Supreme Court. The Korean Supreme Court held that: The request for elucidation can be exercised in cases where the party’s assertion has an unclear, incomplete, contradictory part. The court can indicate the matter and give the party an opportunity to fix it, supplement it, or submit evidence in that case. Whereas, the courts are not allowed to make a suggestion or recommendation beyond the limitation of elucidation about a fact or defense/offense method that the party had never claimed. However, when the party claims a certain cause of action, omitting the part thereof without realizing it, the court should point it out and question the reason of the omission.33

Certainly, it is for the court to apply the law to the facts which come before it. With regard to this, whether or not the court is bound by the cause of action presented by the party has been fiercely debated among civil procedure legal scholars in Korea. For a single dispute, there can be multiple legal grounds on which claims could be based. The traditional approach is based on the so-called old claim theory that it is for the plaintiff to decide on which grounds his claim shall be based. Once the legal ground is fixed and submitted by the party, the court is bound to keep to that ground. Korean Supreme Court decisions are still strongly based on the traditional approach. There are criticisms against this because parties are not capable of legal classification or categorization of facts particularly when they are devoid of legal aids from legal experts. It is also deemed inefficient and time-consuming to allow other lawsuits on the same incident to take place just because they are based on another cause of action.34 Likewise, in Korean academia recently, some urge that the scope of elucidation needs to be wider to find real truth and reach a rightful outcome, and that the court should pay attention to the gap of knowledge, wealth, and experience between parties. They also insist that the court should help the weak party as far

32 Supreme Court, 2010Da20532, Oct. 28, 2010 (S. Kor.). 33 Supreme Court, 2002Da60207, Mar. 11, 2005 (S. Kor.). 34 Kwon, supra note 2, at 135.

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as the law allows in the process, for the purpose of achieving justice and persuading both parties eventually.35 As seen in the below table, in Korea, the ratio of pro se litigants is relatively high. This situation might make the argument more persuasive. Even though the view is not harmonized with the traditional concept of the impartiality of judges, we cannot deny that encouraging active involvement of the court is one of the current trends. I speculate that these trends in Korea are influenced by the reform of the German civil procedure. From the view of the cooperative litigation theory born in Germany, both judges and parties belong to the same community working to find the truth, maintaining law and order and securing legal stability, thus, it is judge’s own duty to gather evidence and investigate facts.36 These “global trends” clearly have their limits. Judges may act as a guardian of parties, but the adversarial system and right of party disposal is a red line that cannot be crossed. Neither judge-driven preparatory procedures nor intensified oral arguments invades the party’s substantial right for self-determination.

7

Observation

The current situation of civil procedure in Korea is rather confusing. By stressing the importance of oral hearing and making the preparatory procedure an exception, there may be a fertile area of misunderstanding where the whole civil procedure has turned back to the past dripping water model, but it is an obvious fact that among the several hearings now held in a case, there are new model-like preparatory meetings in substance. Furthermore, the ghost of the document-based preparatory procedure is still wandering. The combination of oral arguments and e-courtrooms with that preparatory procedure would put the court hearing process in danger of being a just for show process. The current state of Korean civil procedure seems like a test bed for various legal theories and it is losing direction. Since 2009, to find a way out of this situation, some courts have attempted to make a classification of cases. According to the traits of the case, different pre-set models of case management and examination of evidence are applied. It is similar to a multi-track system in English courts. The project appears to still be in progress. Although the above attempts to reform the civil procedure head towards various directions, they have something in common: the active role of the court. 35 Young Kim, Elucidation Right of Judges 84 (2010) (in Korean). 36 Id. at 42.

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At every stage, the most important factor to achieve the goal of reform is the active involvement of judges. In this regard, the Korean judges are asked to be managerial judges, like a CEO. They can track their cases from the beginning to the final disposal at the appellate court or even at the Supreme Court, and supervise the work of the court officials in the same division online with the help of the justice system. Their work process is 100 % computerized and can be monitored by members of the same division. The courtroom recording system can record all of the proceedings and store the digital files on the court server computer, which is available at any time to relevant people. It is not unusual in Korea that judges make a presentation him/ herself with PowerPoint in the courtroom. Versatility will be an essential virtue of Korean judges in the near future. Arguably, all of these changes have made the process faster, and oral hearings more dynamic. An analysis shows that the new model and the following reforms of the civil procedure in Korea have invited more cases to the court because of their enhanced efficiency. The development in case management and oral hearing so far will benefit parties, but the workload of judges has been sharply increasing. A scarcity of resources in the judiciary could be a big challenge for Korea in the near future and might block further progress.

8

Conclusion

The Korean court has tried to meet the challenge of a litigation explosion and people’s growing demands of the court by securing a new access route, providing various dispute resolution options and offering an active involvement of judges in a procedure as a whole. Although they are still in progress, we might say that these three attempts have been successful in a sense until now. While the change was invoked by a stimulation of the public at the beginning, in some part, it was made possible because the Korean judiciary has made timely movement by enacting necessary laws and securing the necessary budget in advance. The relatively high public trust level for the judiciary was also helpful for the establishment of the new systems in a short period of time. As I have so far explained, in Korea, for an enhanced legal service for the people, the court concentrates all of the available resources from various institutions, and leads the way for the redesign of the civil procedure. It could be one of the best options to substantially guarantee a right to a fair trial today. Yet there still remain some concerns and problems to resolve in order to have more progress, such as accordance with the independence and neutrality of the

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judiciary, and the guarantee of a party’s right to self-determination. Excessive concentration of judicial resources to courts may cause adverse effects on the relevant government agencies, industries and non-profit organizations. Nonetheless, the court always plays a central and essential role in civil dispute resolution all over the world. By using a choice and concentration strategy, the Korean court could handle various kinds of civil disputes properly. For example, the court sometimes distributes disputes to other institutions when it is appropriate, and since not all civil cases necessarily need oral arguments or pre-trial conferences, the court may establish a fast-track process for a specific type of case. Certain kinds of disputes need to be transferred to a Mediation Center at the early stage and, furthermore, in some areas, mandatory mediation before a lawsuit should be considered. The choice of broadening access, diversifying resolution measures and growing active involvement is surely the right direction for the court to take for the future development and public trust building for civil procedures. These developments all facilitate achieving the goal of the Korean Civil Procedure Act. Future tasks will be to streamline the process and reduce the overall cost of the system, including human resources, but the main direction for proceeding will not change, and the Korean court will always be at the center of that judicial innovation.

References Kim, H. S. (2007). Why do we pursue oral proceedings in our legal system?. Journal of Korean Law, 7, 51–80. Kim, Y. (2010). Elucidation right of judges. Seoul, Republic of Korea: Korean Academic Information Inc. (In Korean) Kwon, Y. (2007). Litigating in Korea: A general overview of Korean civil procedure. Journal of Korean Law, 7, 109–144. Mason, M., & Sherr, A. (2008). Evaluation of the Small Claims Online Dispute Resolution Pilot. London, England: Institute of Advanced Legal Studies. Son, K. C. (2004). A study on the introduction of the modern civil procedure systems in early modern Korea. Seoul, Republic of Korea: Seoul National University. (In Korean)

Rong-Geng Li

12

From an Inquisitorial to Adversarial System: The Recent Development in Criminal Justice of Taiwan

1

Introduction

Taiwan’s current Code of Criminal Procedure (the CPP) can be traced back to the draft of “the Code of Criminal and Civil Procedure” (1906, 32 Guang-Xu) and the draft of “the Code of Criminal Procedure” (1911, 2 Xuan-Tong) in Imperial China’s Qing Dynasty. After the end of the Qing Dynasty, the Republic of China (R.O.C.) was established in 1911. After twenty-four years, the R.O.C. Code of Criminal Procedure was enacted in 1935, which founded the basic structure of the current CCP and is the precursor thereof.1 The R.O.C. Code of Criminal Procedure of 1935 was amended in 1967 and was renamed “the Code of Criminal Procedure.” The legislature followed the fundamental concept of the inquisitorial system, amending the Code of Criminal Procedure of 1967. From 1968 to 1982, the CCP had never been amended. After 1997, Taiwan has started to change its criminal justice system and amended hundreds of provisions of the CCP. The legislature amended the CCP on a very frequent base. In addition, the code was tremendously and fundamentally amended. Those amendments consisted of many areas. Without any doubt, the abandonment of the inquisitorial system and adoption of the adversarial system is absolutely one of the most important changes. Therefore, right now, the criminal justice system is very different from what it was in 1935 or 1997. This article is going to address this significant and important shift in the criminal justice of the R.O.C. (Taiwan). The change of the CCP is not just mild amendments of provisions. It is an ultimate change of the philosophy and theory of the criminal procedure. I will explain the basic idea of the adversarial and inquisitorial system, and the differences between them (Part 2). Following that, courts’ duty to investigate crimes before and after the amendment of 2002 will be discussed (Part 3 and Part 4). This was definitely one of the most significant 1 Yuan-Sheng Huang, A Study of the Chinese Supreme Court’s Criminal Procedure Decisions During the Period of 1912–1914, 61 Chengchi L. Rev. 35, 47–48 (1999) (in Chinese).

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changes in the criminal justice of the R.O.C. Due to the adoption the adversarial system, the legislature widely changed the rules governing the examination of witnesses and expert witness, and the order of trial proceeding. Those changes will be analyzed (Part 5 and Part 6). One of the most unique features of the adversarial system is plea bargaining. This concept was introduced into the R.O.C. in 2004. I will explain and discuss the relevant provisions and issues with respect to the plea bargaining system of the CCP (Part 7). Defense lawyers play a significant role in the adversarial system. A suspect or defendant’s right to counsel is extremely important since the CCP adopts the adversarial system. The changes and improvement of the provisions with respect to the right to counsel will be given (Part 8). In the past, practice of the law usually ignored the sentencing proceeding and parties had little chance to express opinions and make arguments with respect to sentencing. The amendment of 2003 reformed this improper situation. Those relevant provisions will be addressed (Part 9). The CCP still has several systems with strong characteristics of the inquisitorial system, even though, by all counts, the legislature mainly adopted the adversarial system when amending the CCP. In the final part of this article, I will analyze the prosecution review proceeding and the application for the trial system (Part 10 and Part 11), which are more in line with the inquisitorial system, rather than the adversarial one.

2

The adversarial system and the inquisitorial system

In the regular model of the adversary system, parties present their cases to a decision-maker who is neutral, detached, and passive. In general, he does not intervene in the proceeding. Rules of evidence determine whether particular evidence is admitted and how to present it at trial. After learning the full presentations of both sides and applying the relevant legal rules, the decision-maker renders the judgment at the end of the trial. The key characteristic of the adversarial system is the passivity and high self-restraint from over interference in parties’ activities. The adversarial system relies on neutral and detached decisionmakers who do not get involved in evidence and information gathering and do not reach any conclusion until the end of the whole trial. The fairness of a trial is jeopardized and undermined if the decision-maker gives up this passive role, has bias against one or another party, or fails to evaluate all of the evidence.2 2 Valerie P. Hans, U.S. Jury Reform: The Active Jury and the Adversarial Ideal, 21 St. Louis U. Pub. L. Rev. 85, 87 (2002) (citing Stephan Landsman, The Adversary System: A Description and Defense 2–3 (1984)).

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In contrast, in a trial using the inquisitorial system, which is adopted in many European countries, decision-makers may (or even are obligated to) gather evidence, subpoena and question witnesses, order tests, and question defendants ex officio. In the inquisitorial system, it is believed that in criminal proceedings, courts have the ultimate burden to discover what the truth is, to punish perpetrators, and to acquit innocence. Decision-makers therefore have to play a more active role at trial. They have to probe into evidence and information with respect to the cases in order to clarify any suspicion, even if both parties have no argument. Additionally, decision-makers are not bound by the arguments of parties. They are allowed to come to a conclusion that is totally different from what parties argue at trial, and render a judgment accordingly.

3

The court’s duty to investigate before 2002

Before 2002, the CCP widely adopted the inquisitorial system because of historical factors. Judges had an obligation to gather evidence relating to the indicted crimes and investigate the facts3 even though the CCP provided that public prosecutors bear the burden to prove the accused facts.4 Those provisions resulted in the fact that courts, rather than public prosecutors, bore the primary and ultimate duty to gather evidence and decide material facts. In practice, public prosecutors used to make an accusation with insufficient evidence and asked the courts to continue the investigation of facts and collecting evidence ex officio according to Article 163, paragraph 1 (1967). Those provisions created an unpleasant situation: it was never easy to distinguish judges from public prosecutors. Both of them subpoenaed witnesses, questioned them, ordered testes, and gathered evidence. Not only public prosecutors but also judges performed the task to discover the facts and locate where the truth was. Consequently, judges were more like successive public prosecutors, rather than neutral and detached arbitrators. Courts, however, confirmed those provisions and made the practice even worse. The Supreme Court used to hold that courts must investigate all evidence relating to facts in order to discover the truth.5 Therefore, for a very long time, judges had to actively probe into criminal facts to prove that defendants were guilty, acting like public prosecutors at trial. Public prosecutors also expected 3 Paragraph 1 of Article 163 of the 1967 Code of Criminal Procedure provided that courts, for the purpose of fact-finding, shall gather evidence ex officio. 4 Code of Criminal Procedure, art. 161 (1967). This rule has not been significantly amended after 1967. 5 See Supreme Court, Criminal Division, 61 Tai-Shang No. 2477 (1972) (Taiwan) (overruled in 2001).

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judges to consecutively gather incriminating evidence for the indictment. Under the old provision and the inquisitorial system, a judge was expected to be a “Sherlock Holmes,” finding out what the truth was and who the perpetrator was. Many judges, therefore, also believed so. The provision and practice had at least several defects. First, evidence might have been lost and could not be obtained. The best timing to gather and secure evidence related to crimes is the beginning of an investigation. The later the authority starts to discover and tries to secure evidence, the greater the possibility that the evidence has been destroyed, altered or lost. For example, law enforcement has a very good chance to obtain a true deposition from a witness or search and seize an exhibit after the crime just happened and is found by the police. However, the evidence may have been destroyed or concealed and the witness may have been in collusion with defendants or other witnesses by the trial stage. It is certainly too late to investigate crimes at trial. Consequently, criminals cannot be convicted and get away from any punishment. This is extremely unacceptable for a rational society. To impose on courts the obligation to investigate crimes and gather evidence definitely compromises the entire criminal justice system. Second, the law enforcement, including the police and public prosecutors, may be neglectful in investigating crimes, questioning witnesses, and securing evidence, because either the police or public prosecutors know that courts will continue the investigation and find evidence to prove the guilt of the defendant no matter how insufficient the evidence they summit to the court is. Law enforcement will not conduct the investigation diligently if courts continue looking for evidence and to prove that the defendant is guilty. Third, courts’ investigation of crimes severely undermines their integrity and fairness. Under the inquisitorial system, courts are obligated to investigate crimes at trial. Courts are supposed to actively gather evidence relating to the indictment and to energetically prove whether the accused is guilty. However, according to the presumption of innocence, the burden of proof in on public prosecutors. They have to produce evidence of the crime and prove that the defendant is guilty beyond a reasonable doubt. Otherwise, the defendant shall be acquitted based on the presumption of innocence. Namely, on one hand, courts shall investigate crimes if there is no sufficient evidence to prove the defendant is guilty; on the other hand, courts shall acquit the defendant if there is no sufficient evidence to prove the defendant is guilty. This is definitely conflicting. Courts may easily lose their fairness and neutrality once they engage in fact-finding or investigation of crimes. As the result, the judgment cannot convince either one of the parties. Defendants especially cannot be convinced when they are convicted. In this way, courts are no longer detached arbitrators: they are essentially another form of public prosecutors.

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Fourth, both public prosecutors and the defense did not take trials seriously. Public prosecutors usually recited the written prosecution line by line, or just said, “the facts and charges are written in the written prosecution. Please render the judgment based on the law” in the opening argument. Furthermore, they usually said, “Please decide that the defendant is guilty in accordance with the law” in the closing argument.6 They did not actively participate in the trial activities because the courts still had an independent duty to discover material facts and investigate crimes. The public prosecutors would refuse if the courts required that public prosecutors provide them with more evidence. In fact, the public prosecutors who appeared in the courtrooms were not those who made the prosecutions. They took turns to attend different trials. Therefore, prosecutors attending trials would (even could) not actively perform. Courts’ independent duty to investigate crimes at trial also resulted in defense lawyers’ passive behaviors. Defense lawyers did not bear the primary obligation to examine evidence and witnesses. That mainly relied on the judges. Defense lawyers’ were only able to bring evidence or witnesses to the courtrooms and asked judges to question or examine them. They were allowed to question witnesses upon notifying the presiding judge only after the examination of the judges. The question of witnesses conducted by defense lawyers was supplementary and secondary. Lawyers would think that their question was not significant and might not be able be change judges’ belief because they had asked what they wanted to know, got the answers, and made their own decisions. The examination of evidence and questioning of witnesses by the defense were not indispensable and not consequently essential. In the closing argument, a defense lawyer would not spend much time because they knew that judges did not like long arguments,7 and there was almost no chance to influence their beliefs.

4

The court’s duty of investigation of crimes after 2002

In 2002, the legislature adopted the “improved adversarial system” and amended the CCP fundamentally and widely. Article 163, paragraph 1 was amended and courts no longer had the obligation to gather evidence. After 2002, Article 163, paragraph 1 was moved to paragraph 2 and amended to read, “the court may, for the purpose of discovering the truth, ex officio investigate evidence; in cases for the purpose of maintaining justice or discovering facts that are critical to the interest of the accused, the court shall ex officio investigate evidence.” Accord6 Jaw-Perng Wang, The Evolution and Revolution of Taiwan’s Criminal Justice, 3 Taiwan in Comp. Persp. 8, 9 (2011). 7 See id.

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ingly, courts are no longer obligated to investigate crimes at trial. Nevertheless, for the purpose of maintaining justice and protecting defendants, courts still shall ex officio gather evidence regarding the indicted crimes. How to understand the phrase “maintaining justice or discovering facts that are critical to the interest of the accused” becomes the main dispute of paragraph 2 of Article 163. At first, many public prosecutors and judges still assumed that the courts had to investigate crimes.8 There is no significant difference after the amendment of Article 163 then. For the purpose of correcting this situation, the Supreme Court made an eventful decision in the fourth criminal division conference in 2011. According to this decision, a public prosecutor cannot argue that the court is erroneous in not gathering evidence to prove the defendant’s guilt and violates paragraph 2 of Article 163 of the CCP if the public prosecutor does not meet the burden of proof. This decision clearly stated that public prosecutors bear the burden of proof, not the courts. Public prosecutors shall not just present an indictment against a defendant and ask the court to get sufficient evidence to prove that the defendant is guilty. In 100 Tai-Shang No. 452 (2011), the Supreme Court held that public prosecutors bear the burden of proof and courts make judgments as neutral and detached arbitrators, since the CCP has adopted the adversarial system. Courts are not obligated to gather evidence against defendants even though paragraph 2 of Article 163 of the CCP provides that courts shall conduct an investigation on certain conditions supplementally. Article 161 regarding to public prosecutors’ burden of proof is an evident provision. According to the improved adversarial system, it is lawful for a court to acquit the defendant if the prosecutor does not meet the burden of proof, there is no evidence against the defendant, the court does not think the defendant is guilty after questioning him, and does not further gather evidence against him.

8 See, e. g., Supreme Court, Criminal Division, 93 Tai-Shang No. 5970 (2004) (Taiwan) (the CCP has adopted an improved adversarial system, but courts are still obligated to gather evidence for the purpose of fact-finding, maintaining justice, and protecting defendants’ interests); Supreme Court, Criminal Division, 97 Tai-Shang No. 1013 (2008) (Taiwan) (for the purpose of fact-finding and maintaining justice, the CCP slightly adopted the inquisitorial system and required courts to ex officio investigate related evidence); Supreme Court, Criminal Division, 97 Tai-Shang No. 5306 (2008) (Taiwan) (paragraph 2 of Article 163 of the CCP provides: “The court may, for the purpose of discovering the truth, ex officio investigate evidence; in the case for the purpose of maintaining justice or discovering facts that are critical to the interest of the accused, the court shall ex officio investigate evidence,” though paragraph 1 of Article 161 of the CCP provides that public prosecutors bear the burden of proof. Therefore, courts shall investigate evidence for the purpose of fact-finding, maintaining justice, and protecting defendants’ interests, although the current CCP adopts the adversarial system).

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The Supreme Court, in 100 Tai-Shang No. 6259 (2011), took the position that according to paragraph 2 of Article 163 of the CCP, the courts shall only gather evidence for defendants. First, the Supreme Court pointed out that in the current criminal justice system, courts are fair, objective, neutral, and detached arbitrators, and public prosecutors bear the burden of proof, defendants are protected by the presumption of innocence, trials center around court activities, proceedings are led by parties, and courts only step in incidentally. Second, the Supreme Court visited the International Covenant on Civil and Political Rights and the Criminal Speedy Trial Act. In 2009, the R.O.C. signed the International Covenant on Civil and Political Rights and the Congress enacted the Act to Implement the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights. By then, the covenant had already become domestic law. According to the covenant, all accused shall be presumed innocent until proven guilty according to the law (art. 14, para. 2). Additionally, Article 6 of the Criminal Speedy Trial Act provides: “Where the evidence provided by the prosecutors is insufficient to prove that the accused is guilty, or the method of proof indicated fails to convince the court to a guilty verdict, the principle of the presumption of innocence shall apply.” In sum, the Supreme Court held that paragraph 2 of Article 163 of the CCP shall be limited to the evidence in favor of the defendants. Namely, courts are only obligated to gather evidence for, not against, defendants.9 Following those above judgments, the Supreme Court held the second criminal division conference in 2012. This conference permanently settled this dispute. This conference decided that according to the International Covenant on Civil and Political Rights, the Universal Declaration of Human Rights, and the Judicial Yuan Interpretations (hereinafter J.Y. Interpretations), the presumption of innocence is a universal value and a constitutional right. The understanding of paragraph 2 of Article 163 of the CCP shall be consistent with Article 161 of the CCP (public prosecutors bear the burden of proof), the Act to Implement the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights, and Articles 6, 8, and 9 of the Criminal Speedy Trial Act. Therefore, courts shall not follow public prosecutors and continue gathering evidence against defendants. The scope of the courts’ investigation shall be limited. In other words, courts are obligated to gather evidence for the defendants only, and shall not gather evidence against them. This understanding of paragraph 2 of Article 163 of the CCP is in line with the presumption of innocence and public prosecutors’ burden of proof.

9 See also Supreme Court, Criminal Division, 101 Tai-Shang No. 2966 (2012) (Taiwan); Supreme Court, Criminal Division, 101 Tai-Shang No. 6259 (2012) (Taiwan).

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The decision of the second criminal division conference in 2012 of the Supreme Court is extremely significant and meaningful. This decision was one move with several gains. First, public prosecutors would gather evidence much more diligently since courts have to no longer gather evidence against the defendants ex officio. Law enforcement will actively conduct the investigation and immediately secure necessary evidence. Thus, material evidence will not be lost and the truth will more easily be found. On one hand, innocents will not be wrongfully indicted; on the other hand, the perpetrators will be found and located more readily. This decision highly promotes the protection of people’s rights and the criminal investigation. In addition, this decision preserves and re-establishes the neutrality and fairness of the courts. In the past, courts had to ex officio investigate crimes and gather evidence at trial. As a result, public prosecutors might not believe the judgment if courts gathered exhibits and questioned witnesses for the defendants, and they might not believe the judgment either if courts searched and seized evidence against them. Regardless of whether courts gathered evidence against the defendants, the judgments made by the courts were not convincing at all. Either one of the parties would believe that the court was detached. Furthermore, courts’ judgments would not be acceptable for society when they were involved with one party or both parties, such as defense lawyers or public prosecutors. Right now, courts are able to be neutral and act as detached arbitrators between parties in order to make judgments fairly. Accordingly, the decision significantly established the fairness and neutrality of the courts and re-built people’s faith in them.

5

The examination of witness

Before 2003, according to the CCP, the questioning of witnesses mainly relied on judges. Parties could question witnesses only after judges had done so. Paragraph 1 of Article 166 of the CCP of 1967 provided that parties and defense lawyers may question or ask presiding judge to question the witness and expert witness after the presiding judge’s questioning of them. Questioning of witnesses and expert witnesses conducted by parties and defense lawyers was not essential. After 2003, the CCP was amended and the order of the questioning of witnesses and expert witness was totally different. According to the current provisions, parties and defense lawyers question witnesses first, and then judges proceed. The CCP provides that after a witness, or an expert witness, subpoenaed because of the motion of a party, an agent, a defense attorney, or an assistant, has been examined by the presiding judge for his identity, the party, agent, or defense attorney shall examine these persons (art. 166, para. 1). After the amendment,

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parties and defense lawyers began to play a significant and meaningful role at trials, rather than a dispensable one. Before 2003, there was no rule governing the questioning of witnesses and expert witnesses conducted by parties, because their questioning was never important. The questioning of witness and expert witnesses relied on the presiding judges. There should be complete and sound rules to guide parties and defense lawyers on how to conduct the question proceeding after the CCP has adopted an adversarial position. The CCP, then, provides that the examination of a witness or an expert witness shall be in the following order: (1) The party, agent, or defense attorney calling the witness or expert witness shall do the direct examination first; (2) Followed by the opposing party’s, his agent’s or defense attorney’s cross examination; (3) Then, the party, agent, or defense attorney calling the witness or expert witness shall do the redirect examination; (4) Finally, the opposing party, his agent or defense attorney shall make the re-cross examination (art. 166, para. 2). The CCP provides clear and detailed guidelines for governing direct examinations, cross examinations, redirect examinations, and re-cross examinations of witnesses. The American mode of examination of witnesses was adopted. Only after being examined by the parties and defense lawyers may the witness or expert witness be examined by the presiding judge (art. 166, para. 4). Namely, presiding judges’ questioning is no longer primary or major. Instead, it is only supplementary and secondary. The CCP also provides very comprehensive rules to regulate the proceedings of examination of witnesses and expert witnesses. For example, direct examination shall be made on facts to be proved and other relevant matters (art. 166–1, para. 1). Except for certain exceptions, leading questions are prohibited (art. 166– 1, para. 2).10 Cross-examination shall be limited to the matters or its related matters revealed in the direct examination. Leading questions are allowed in cross- examination (art. 166–2) because the questioned witness or expert witness is not a friendly one. The scope of the redirect examination shall be limited to the matters or its related matters revealed in the cross-examination. In addition, the rule of direct examination shall apply to redirect examinations (art. 166–4). Recross examinations shall be limited to the matters or its related matters revealed 10 Those exceptions include: (1) The personal identity, education, experience of the witness or expert witness, and matters necessary to his social relationships prior to getting into the substantive matter being examined; (2) The matter is clearly not in dispute; (3) For the purpose of refreshing the memory of the witness or expert witness in case the witness or expert witness has a vague memory; (4) The witness or expert witness appears to be hostile or antagonistic to the examiner; (5) Those matters which the witness or expert witness is trying to avoid answering; (6) The prior statement of the witness or expert witness, if it is inconsistent with his current statement; (7) Other special circumstances that will validate the necessity of a leading question.

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in redirect examinations. The rules governing cross-examinations shall apply to re-cross examinations (art. 166–5). For example, leading questions are allowed in re-cross examinations. Different from the old system in which the presiding judge questioned witnesses or expert witness before the parties, the presiding judge may question a witness or expert witness only after he has been questioned by the parties, agent, or the defense lawyer (art. 166–6, para. 2). During the examination of witness or expert witness, a party or defense lawyer may disagree with a question brought by the other party. There shall be proper rules to regulate whether particular questions are allowed, the objection and ruling thereof. The CCP provides certain methods which are prohibited (art. 166– 7), the objection of illegal or inappropriate examination (arts. 167–1 and 167–2), the residing judge’s ruling to objections (arts. 167–3 to 167–6). After the amendment of 2003, parties and defense lawyers dominated trials and questioned witnesses and expert witnesses actively and positively. Public prosecutors and defense lawyers have learned that their questioning plays an essential role at trial and may have great influence on the courts because judges have not formed any thoughts resulting from the witnesses or expert witnesses. Parties gain the opportunity to raise issues, bring proper questions, attack the credibility of the witness or the expert witness, or defend his own argument. The questioning of witnesses or expert witnesses conducted by public prosecutors and defense lawyers becomes meaningful and indispensable because both parties will do their best to build their own cases in the questioning proceedings. This change is very important not only for parties but also for judges. In the past, the questioning of witness and expert witnesses relied mainly on presiding judges. Parties would strongly doubt presiding judges’ objectiveness after the questioning proceedings, whether they really had bias against one party or not. After the amendment of 2003, judges’ questioning of witnesses or expert witnesses is no longer principal. They may only question witnesses after the parties, agents, and defense lawyers. Namely, the task of the questioning has been shifted from presiding judges to parties. The main job of presiding judges has become to act as referees to make fair rulings when parties have disputes and to never get involved with one party or the other. This fundamental and determinative change preserves the neutrality and the detachedness of judges. Additionally, the amendment of the CCP makes courts’ decisions more convincing and persuasive to the parties and to the whole society.

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249

The order of trial proceedings

Before 2003, the presiding judge might question the defendant with respect to the facts regarding the charged crime after the public prosecutor’s opening statement.11 Following the questioning was the questioning of witnesses and expert witnesses, and the presentation of exhibits.12 Namely, judges would learn the confession from the defendant before accessing other evidence. Those provisions were improper and might violate several important principles of criminal procedure. First, to grant a presiding judge the authority and obligation to question a defendant with respect to the facts about the charged crime might violate the defendant’s privilege against self-incrimination because he might feel obligated to answer the question from the judges who would decide whether he was guilty or not. Second, those provisions violated the presumption of innocence. To require the presiding judge to question the defendant regarding the facts about the charged crime was to assume that he committed the crime and therefore was guilty.13 Therefore, the presiding judge had to question the defendant with respect to the charged crime, rather than with respect to what his plea or argument was. Third, those provisions violated the requirement of fair court. Fair court is a very fundamental and essential requirement in all trial proceedings. People have the constitutional right to be tried by a fair court. However, those provisions violated this important principle. It was almost impossible for the judges to presume that the defendant was innocent if he made some statement against himself during the proceedings. The following question of witness and presentation of exhibits were merely symbolic and barely meaningful. There was no chance to change the judges’ belief. The 2003 amendment of the CCP changed the whole situation. The amendment shifted the questioning of defendants from the beginning of the examination of evidence to the end. Namely, following the opening statements of the public prosecutor, the presiding judge shall inform the defendant of the offenses charged, the right to remain silent, the right to counsel, and the right to request the investigation of evidence for him (art. 287). Then, public prosecutors, defendants, agents, and defense lawyers present witnesses, expert witness, and other evidence, and examine them (art. 288, para. 1). Only after all witnesses and expert witnesses have been questioned and all other evidence has been examined, can the presiding judge question the defendant (art. 288, para. 3). After all witnesses have been questioned and all evidence has been examined, the presiding judge shall request parties to debate on the law and facts (art. 289). Fol11 Code of Criminal Procedure, art. 287 (1967). 12 Code of Criminal Procedure, art. 288 (1967). 13 See Wang, supra note 6, at 10.

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lowing this stage is the defendant’s final statement and the announcement of concluding arguments (art. 290). This fundamental change in the sequence of the trial is significant and reformed the trial model in criminal procedures. First, to shift the questioning of the defendant to the back of the examination of the evidence preserves the detachedness of the courts, because the judges do not question a defendant with respect to alleged crimes before accessing all of the other evidence. This ensures that the judges still have the possibility to learn the facts from other evidence. In the old system, judges heard the statement from the defendant before questioning witnesses and expert witnesses, and before examining other evidence. Most judges did not change their belief because of that. In the current system, judges’ belief is yet convertible. This preserves the courts’ fairness and safeguards the presumption of innocence. Second, the amendment grants public prosecutors and defense lawyers more substantial and significant rights to litigation. In the old system, judges would access the defendant’s statement against himself at the very beginning of the trial. The following stage, in which witnesses and expert witnesses should be questioned and all other evidence should be examined, would be meaningless because the judges had learned the statement against the defendant from himself. It made absolutely no sense for the parties to take the examination of the evidence seriously. Public prosecutors would make little effort to examine evidence or question witnesses and expert witnesses if the defendant had made any statement against himself. For public prosecutors, it was unnecessary for them to do anything after the presiding judge questioned the defendant. In the same way, defense lawyers could do little to defend a defendant or make any strong argument for him in the following stage if he had already made any statement unfavorable to himself. The defense lawyers were so powerless in the stage of the examination of evidence.14 However, after the amendment of 2003, judges did not access any statement of the defendants before they learned all of the information from the witnesses, expert witnesses, exhibits, documents, and other evidence. Public prosecutors and defense lawyers would definitely seize the opportunity to make an influence on the judges’ belief. They knew that the examination is crucial and going to decide whether the defendant is guilty or not. Therefore, they took the examination of the evidence seriously. In other words, the new system grants public prosecutors and defense lawyers meaningful and essential rights to litigate and to bring forward their own arguments. This is absolutely a tremendous change in the practice of criminal justice.

14 See id. at 9.

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251

Plea bargaining

A key feature of the adversarial system is that parties have the right to make their own claims or pleas. In 2004, the CCP adopted plea bargaining in order to grant parties more rights to proceed in cases. Another purpose for adopting plea bargaining is to ease an increasing caseload. There were less cases that would need to be tried through complicated and long trial proceedings after the criminal justice system adopted plea bargaining.

7.1

The practice before 2004

There were many scholars opposing the adoption of plea bargaining when discussing whether such procedures should be introduced into the criminal justice system.15 However, in fact, before 2004, the practice carried out substantive plea bargaining even though there was no provision with respect to such a proceeding. According to Article 451–1, in the summary proceeding, where a defendant confesses in the investigation process on non-felonious cases, he may express his willingness to the prosecutor the scope of sentence he would undertake, and if the prosecutor consents, records shall be made, and the defendant’s statement shall be the basis for requesting the court to pronounce a sentence or a suspension of a sentence. This provision is not an explicit rule regarding plea bargaining but in practice, parties do bargain whether to plead guilty or not and the sentencing in the summary proceeding based on the provision. Thus, the practice of plea bargaining happened even before the legislature enacted related provisions.

7.2

Applicable offenses

Unlike other countries that adopt plea bargaining, such as the United States, not all cases can proceed through plea bargaining. Defendants can only plead guilty in non-serious cases. According to Article 455–2, the negotiation procedure is not applicable to an offense which is punishable by a sentence of capital punishment, life imprisonment, a sentence of more than three years, or is adjudicated by the 15 See, e.g, Yu-Hsiung Lin, Plea Bargaining, Trial, and the Rules of Evidence (I), 25 Taiwan Jurist 73, 77–85 (2004) (in Chinese) (arguing that the adoption of plea bargaining would compromise the defendants’ position at trial; the doctrine of direct, oral and open trial; right to trial by a judge; the presumption of innocence; the voluntariness of confession; privilege against self-incrimination; and the neutrality of the judge); Yun-Hua Yang, A Discussion on Plea Bargaining (I), 20 Taiwan Jurist 83 (2004) (in Chinese).

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court of appeal as the court of first instance. Namely, the application of the negotiation procedure is limited.

7.3

The applications

A public prosecutor may apply to negotiate with the defendant ex officio or upon the request by the defendant. The public prosecutor may negotiate with the defendant only after the application has been approved by the court (art. 455–2, para. 1). However, this does not mean that the court takes part in the negotiation.

7.4

Negotiable items

According to the CCP, a prosecutor may negotiate with the defendant about the following items: (1) the scope of the sentence; (2) the apology to the victim; (3) the payment of compensation to the victim; and (4) the payment by the defendant to the government treasury, designated public interest organizations, or local autonomous organizations (art. 455–2, para. 1). The prosecutor shall obtain the victim’s consent before negotiating with the defendant about items 2 or 3 because those involve the victim’s feelings, willingness, and cooperation. In addition, items 3 and 4 can be the cause of civil collection if the court renders a bargaining judgment pursuant to paragraph 1 of Article 455–2 (art. 455–4, para. 4).

7.5

The negotiation period and the warning

Within thirty days after the court approves the motion to the negotiation procedure made by the prosecutor, he and the defendant are allowed to negotiate about the statutory items listed above (art. 455–2, para. 3). The limitation of the bargaining period is in order to avoid unnecessary delays in the trial. In order to ensure the defendant does realize and become aware of the meaning of the negotiation procedure, the court shall question the defendant and inform him of the offense pleaded, the statutory sentence of it, and the right to be waived, including the right to be silent, the right to confront witnesses, the right to a trial, the right to ask for an investigation of favorable evidence, and the right to appeal except where otherwise allowed by law (art. 455–3, para. 2).

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Withdrawal and revoking

A defendant may withdraw the bargaining agreement at any moment of the period provided in paragraph 1 of Article 455–3. A defendant may do that without bringing forward any reason. A public prosecutor may revoke the request for plea bargaining where the defendant violates his agreement with the public prosecutor (art. 455–3, para. 2). In other words, public prosecutors may not revoke the request without any cause. Frankly, there are different rules governing public prosecutors and defendants. This distinction results from the different legal expertise possessed by both parties.

7.7

Circumstances not to render a bargaining judgment

The agreement between the prosecutor and the defendant does not absolutely bind the court. The CCP provides that the court may not render a bargaining judgment under certain circumstances. Those circumstances include that the agreement has been withdrawn or that the request has been revoked, the defendant’s consent to bargain is not voluntary, the agreement is obviously inappropriate or unfair, the offense is not negotiable, the facts decided by the court are different from those agreed in the bargaining agreement, the defendant commits other crimes which arose in the same act at trial with a heavier punishment, and punishment remitted or dismissal judgment shall be rendered.16 In those circumstances, the court shall hold a trial to decide whether the defendant is guilty and to render a proper judgment.

7.8

The procedure

The proceeding of the negotiation procedure is quite different from that of a normal trial’s procedure. First, in order to assist the defendant in bargaining, the court shall appoint a public defender or lawyer to be his defense attorney if he is 16 Article 455–4, paragraph 1 of the CCP provides: The court may not pronounce a bargaining judgment under the following circumstances: (1) Where the agreement is withdrawn or where requests for bargaining is revoked pursuant to Paragraph 2 of the preceding Article; (2) Where the bargain was not made out of the defendant’s free will; (3) Where the bargaining agreement is obviously inappropriate or unfair; (4) Where the defendant’s offense may not be subject to a bargaining judgment pursuant to paragraph 1 of Article 455–2; (5) Where facts established by the court are different from facts agreed to in the bargaining process; (6) Where a defendant commits other counts of offense which arose by the same act in trial with heavier punishments; (7) Where the court deems it proper to pronounce punishment remitted, exemption from prosecution, or that a case is dismissed.

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willing to undertake an imprisonment longer than 6 months not subject to a suspension of sentence and has no defense attorney (art. 455–5, para. 1). The purpose of this provision is to provide the defendant with sufficient ability and equal position to negotiate with the public prosecutor. The public defender or defense lawyer may express opinions with respect to the law and the facts during the negotiation procedure, but such opinions may not be in opposition to the defendant’s explicit opinions (art. 455–5, para. 2). Second, the court shall adjudicate the case without oral arguments in the bargaining procedure (art. 455–4, para. 2). Compared with the provisions governing other procedures, this is a very special procedural requirement. Additionally, due to the characteristics of the negotiation procedure, hearsay rules do not apply (art. 455–11, para. 2). Namely, the hearsay rules do not apply to the negotiation procedure since a case shall be adjudicated without oral arguments in the bargaining procedure. Furthermore, the application of the hearsay rules may seriously delay the proceeding of the bargaining procedure and fail the purpose of the establishment of such a procedure.

7.9

The admissibility of the defendant’s statement in other cases

In order to ensure that the defendant can freely negotiate with the public prosecutor, the CCP provides that the statements made by the defendant, his agent, or defense lawyer during the bargaining procedure may not be admitted as evidence against the defendant or co-offender in this or other cases if the court does not render a bargaining judgment (art. 455–7). This provision also preserves the fairness and due process of the trial with respect to other cases against the defendant or co-offenders.

7.10

Bargaining judgment

The court shall render a bargaining judgment within the scope of the bargaining agreement made between parties if the court accepts the agreement (art. 455–4, para. 2). Namely, the court may not render a severer or more lenient judgment than the agreement between the parties if the court decides to a bargaining judgment. Under the current provisions of the CCP, the only solution for the court to render a judgment different from the parties’ agreement is to dismiss the motion for a negotiation procedure and to hold a trial (art. 455–4, para. 1, item 3). The sentence pronounced by a court under the bargaining agreement is limited to a suspension of a sentence, limited imprisonment under two years, a detention, or a fine (art. 455–4, para. 3). In other words, a court may not render a

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judgment with a sentence which is not subject to suspension. The reason for this is that the criminal justice system does not completely adopt the adversarial system so the negotiation procedure only applies to non-serious offenses (art. 455–2, para. 1).

7.11

Appeal

A judgment made according to the bargaining agreement is not appealable unless otherwise provided by law (art. 455–10, para. 1) because the bargaining agreement is made by parties. Parties may only appeal a bargaining judgment based on the circumstances provided by items 1, 2, 4, 6, and 7 of paragraph 1 and paragraph 2 of Article 455–4. The court of second instance may only examine evidence and arguments with respect to the reasons listed by the appellant for appeal (art. 455–10, para. 2). The court of second instance shall set aside the original judgment and remand the case to the competent court of first instance for retrial following the procedure prior to the judgment (art. 455–10, para. 3). Namely, the court of second instance may not render a judgment even though the facts are so clear and without any disputes. The reason for this provision is that the negotiation procedure is undertaken without oral arguments. Therefore, in order to protect the defendant’s procedural rights, the cases shall be remanded, rather than tried, directly by the court of second instance.

8

The right to counsel

The suspect or defendant’s right to counsel is getting more and more important, since the CCP adopted the adversarial system. In the past, suspects or defendants did not have substantial and sufficient rights to counsel. After several amendments, the CCP provided suspects and defendants with sounder and a more complete right to counsel. Those amendments regarding the right to counsel protect suspects and defendants and maintain the fairness of the criminal justice.

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The right to retain a counsel

Before 1982, only defendants had the right to counsel.17 A suspect did not. He could retain a lawyer, though the lawyer was only able to be counseled and could not be present when the suspect was under interrogation by law enforcement. In addition, a counsel was allowed to communicate with the defendant held in detention only. Namely, a suspect was not allowed to communicate with his counsel even though the suspect was in detention.18 As a result, suspects had to face law enforcement alone, and none were able to protect the suspects’ procedural rights when they were under interrogation. Torture often took place and the police might employ all kinds of illegal methods to obtain a suspects’ confession. Absence of suspects’ rights to counsel resulted in not only human rights violations, but also countless wrongful convictions. In 1982, the legislature amended several provisions of the CCP and offered suspects more procedural rights to obtain legal assistance from defense lawyers. First, all defendants and suspects had the rights to retain a counsel at any time.19 A suspect’s counsel is entitled to be present when the suspect is interrogated by the police.20 Moreover, a counsel may communicate with the suspect held in detention.21 These amendments to the CCP were extremely significant. Because 17 See Code of Criminal Procedure, art. 27 (1935) (“An accused may at any time retain defense attorneys.”). 18 See Code of Criminal Procedure, art. 34 (1935) (“A defense attorney may interview and correspond with an accused under detention, provided that if facts exist sufficient to justify an apprehension that such defense attorney may destroy, fabricate, or alter evidence or form a conspiracy with a co-offender or witness, such interview or correspondence may be limited.”). 19 See Code of Criminal Procedure, art. 27, para. 1 (1982) (“An accused may at any time retain defense attorneys. The same rule shall apply to a suspect being interrogated by judicial police officers or judicial policemen.”). 20 Paragraphs. 2, 3, and 4 of Article 245 of the CCP provide: The defense attorney of an accused or suspect may be present and state his opinion when a public prosecutor, public prosecuting affairs official, judicial police officer, judicial policeman examines the accused or suspect, provided that if facts exist sufficient to justify an apprehension that such presence may jeopardize national security or destroy, fabricate, alter evidence or form a conspiracy with a co-offender or witness, or may be detrimental to the reputation of others, or that the behavior of the defense attorney is so inappropriate that it would interfere with the order of the investigation, such presence may be limited or prohibited (para. 2). The public prosecutor, public prosecuting affairs official, judicial police officer, judicial policeman, defense attorney, agent of the complainant, or any other person performing his duty under the law during the investigation shall not disclose whatsoever information was acquired through the performance of the duty during the investigation, unless otherwise permitted by the law, or if it is necessary for the protection of the public interest or a legitimate interest (para. 3). The time, date, and place of the examination of an accused or suspect during the investigation shall be notified to the defense attorney unless urgent circumstances exist (para. 4). 21 Article 34 of the CCP provides: A defense attorney may interview and correspond with a

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of those amendments, suspects are more properly protected. They may fully consult legal issues with their defense lawyers, understand what they are dealing with, and obtain advice from one who is experienced in the legal professional. In addition, a counsel in present may protect a suspect from improper intrusion of their constitutional rights. Those amendments are definitely a great improvement for defendants’ and suspects’ right to counsel.

8.2

Detainee’s right to freely and fully interview with counsel

Before 2009, jails were permitted (and asked) to monitor meetings between detainees and interviewers (the Detention Act of 2006, art. 23, para. 2). This rule applied to the meetings between detainees and their lawyers (the Detention Act of 2006, art. 23, para. 3). In addition, jails should provide public prosecutors or courts with any detainees’ conversations, actions, and mail which could be used for investigation or trial (the Detention Act of 2006, art. 28). Accordingly, jails had to monitor and record all conversations between detainees and their defense lawyers, and provide the recordings to the public prosecutors and to the courts. Those provisions were extremely unreasonable and intruded defendants’ and suspects’ right to counsel. Therefore, J.Y. Interpretation No. 654 held that Articles 23 and 28 of the Detention Act of 2006 were unconstitutional. This interpretation first reasoned that Article 16 of the Constitution provided that people have the right to litigate. This right includes that defendants have the full right to defend themselves under the due process of the law. Accordingly, defendants shall have the right to retain an entrusted counsel. In order to fulfill the function of the right to defend oneself, the right to counsel shall be effectively protected. Thus, the full and free communication between defendants and defense lawyers is critically important for defense lawyers to assist their defendants and shall be protected by the Constitution. Only when a defense lawyer is able to interview the detainee in detention without being monitored or surveilled, can the detainee obtain substantial and effective legal assistance from the lawyer. Therefore, J.Y. Interpretation No. 654 held that Article 23 of the Detention Act of 2006 which allowed (or asked) the jails to monitor or record all conversations between defense lawyers and detainees was unnecessary, violated the proportionality requirement provided by Article 23 of the Constitution, and was inconsistent with Article 16 of the Constitution providing people with the right to litigate. This interpretation also held that suspect or an accused under detention, provided that if facts exist sufficient to justify an apprehension that such defense attorney may destroy, fabricate, or alter evidence or form a conspiracy with a co-offender or witness, such interviews or correspondence may be limited.

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Article 23 of the Detention Act of 2006, which admitted recorded conversations between detainees and their defense lawyers was unconstitutional because that provision intruded upon the detainees’ rights to free and full communication with their counsels, invaded their rights to defend, violated the proportionality requirement provided by Article 23 of the Constitution, and was inconsistent with the right to litigate provided by Article 16 of the Constitution. Because of the J.Y. Interpretation No. 654, the Detention Act was amended in 2009. The new act provides that unless the law provides otherwise, jails may only visually monitor the interview of counsels and detainees, and are not allowed to hear the communications between them (paragraph 1 of Article 23–1 of the Detention Act). In addition, Article 28 was deleted. That interpretation and the consequent amendment of the Detention Act are meaningful and significant for suspects’ and defendants’ rights to counsel. According to the new act, detainees do not have to worry about being under surveillance by the jail, are able to fully consult with their defense lawyers, and to obtain effective legal assistance.

8.3

Arrested suspect’s right to interview with counsel

In 2010, several provisions of the CCP were amended in order to be in line with the J.Y. Interpretation No. 654. According to the CCP of 1982, a defense attorney may interview and correspond with a suspect, but interviews or correspondences are usually prohibited or limited by the police using accusations of evidence destruction or collusion as an excuse. As a result, suspects were usually interrogated without consulting their lawyers in advance and made involuntary or false statements or unwise decisions (art. 34). According to the new Article 34 of the CCP, a defense lawyer may interview and correspond with an arrested suspect, and such interviews and correspondence shall not be limited. An arrested suspect shall have the right to interview his attorney at least one time and no less than one hour. Such rights cannot be limited or prohibited. However, the public prosecutor may postpone it and assign another time and place if exigencies and proper reasons exist. The assignment shall not interfere with the suspect’s right to defense and the lawyer’s legitimate rights (CCP, art. 34, paras. 2 & 3). The suspect or defense lawyer may file a motion to revoke or change such an assignment of interview to the competent court if he disagrees with the ruling of the public prosecutor (CCP, art 416, para. 1). In addition, an obtained confession in violation of Article 34 may be excluded. After the amendment of those provisions, suspects have more complete rights to counsel when being interrogated by the police. With immediate consulting with his lawyer, the suspect is able to more fully realize what he is facing, what

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options and rights he has, what the best one is for him, and, most importantly, any necessary legal advice. With this knowledge, the suspect is more able to make voluntary and true statements and is able to make wise decisions. In addition, the interrogation is more proper and reasonable.

8.4

Detainees’ rights to interview with counsel

According to the CCP of 1982, a defense lawyer might interview and correspond with a detainee. However, if facts exist sufficient to justifying an apprehension that the defense attorney may destroy, fabricate, or alter evidence or collude with a co-offender or witness, such interviews or correspondence may be limited (art. 34). This provision has at least two defects. First, a defense lawyer’s interview with his client in detention could be limited as long as there was an “apprehension” that the defense attorney may destroy, fabricate, or alter evidence or collude with a co-offender or witness. This standard was too relaxed and made it too easy to limit the interview. Second, this article provided neither who was competent to make the ruling, nor how to make such a ruling. The legislature, in 2010, amended Articles 43 and 416 of the CCP, and added Article 34–1 to it to improve detainees’ rights to interview with their defense lawyers. First, a defense lawyer may interview or correspond with a detainee. Such interviews shall not be limited unless sufficient facts exist to support that the defense attorney may destroy, fabricate, or alter evidence or collude with a cooffender or witness (art. 34, para. 1). Compared to the old provision, the amended provision lifts the requirement to limit the interview between defense lawyers and detainees. In order to limit a detainee’s, the government must prove “sufficient facts” and not only “apprehension.” Suspects or defendants in detention are more protected and not arbitrarily prohibited from interviews with their counsels. Second, public prosecutors may not limit the interviews or correspondence ex officio even though they believe that sufficient facts exist to prove the destruction of evidence of collusion. According to Article 34–1 of the CCP, only with a court order (limitation warrant) issued by a judge can interviews or correspondence be limited (art. 34–1, paras. 1 to 4). In order to limit a detainee’s interview or correspond with his counsel, a public prosecutor has to obtain a court order in advance. A public prosecutor may make a necessary ruling if exigencies exist. However, he has to apply for a court order within twenty-four hours. The court must decide whether to issue the court order or not. The limitation ruled by a public prosecutor shall be ceased if the court rejects the application or if the public prosecutor fails to make such an application (art. 34–1, para. 5).

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The new provision is more reasonable. It protects detainees’ rights to counsel more properly. Article 34–1 provides a complete proceeding to regulate the limitation of the interviews and the correspondence between detainees and their counsels. More importantly, public prosecutors are not permitted to limit such interviews or correspondence because, compared with other suspects or defendants who are not in detention, the right to communicate with counsel is extremely critical for detainees. Therefore, only judges are able to make such a ruling, not public prosecutors who are usually too overzealous about criminal investigation and may arbitrarily invade suspects’ rights. Third, the new provisions provide the right to interlocutory appeal to those who do not agree with the rulings with respect to the court order limiting the interviews or correspondence between detainees and counsels. Namely, one may not file an interlocutory appeal against rulings regarding jurisdiction or litigation procedure, but as for the rulings with respect to limitation of the interviews or correspondence between detainees and counsels, the interlocutory appeals are permissible (art. 404, para. 1).

9

Sentencing

Like criminal procedures in other jurisdictions, sentencing proceedings are carried out after a defendant is found guilty. Nevertheless, both courts and legal education pay little attention to the sentencing proceedings. Courts usually mix sentencing proceedings and trial stages. That resulted in the amendment of the CCP in 2003. In 2003, the legislature added several provisions to the CCP with respect to the sentencing proceedings. First, Article 288, paragraph 4 provides that the presiding judge’s investigation of information regarding the sentencing shall be conducted after the questioning of the defendant. The theory of this provision is that judges deciding whether one is guilty or not should also decide the sentencing. Some information regarding sentencing may be accessed by the judges and can cause improper influence. The information, thus, should not been learned by judges before they learn the facts regarding whether the defendants are guilty or not. Second, Article 289, paragraph 3 also provides that after the argument of the law and the facts, the presiding judge shall provide the parties with opportunities to state their opinions regarding sentencing. Sentencing proceedings are as important as trial stages. They both significantly affect defendants’ rights. However, the practice usually mixes the two proceedings. This provision is enacted to separate trial and sentencing stages by requiring that the presiding judge shall

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provide the parties with the opportunity to state their opinions with respect to sentencing, after the debate of the law and facts. The need of separation of the sentencing proceedings and the trial stage was still ignored even though the preceding provisions were enacted. They have never been taken seriously in practice. Most criminal courts either mix sentencing proceedings with trial ones, like what they did before, or just carry out sentencing proceedings formalistically. The consequence of this is improper and unreasonable. First, judges may access information that they should not access in the sentencing stage. At the same time, they may also learn at trial information that they should not. The decision of whether a defendant is guilty or not and the sentencing of the defendant may be influenced by unnecessary and inappropriate factors. Second, the sentencing may be very different even though the facts of the cases are similar, since judges may refer to what they should not consider. This is very apparently in violation of the equality requirement, and not in line with the philosophy of punishment. This kind of situation also undermines the effects of habitation. As for the defendants, they may never have a clue with respect to their punishment. The Supreme Court made a significant decision in 2011 in order to improve sentencing proceedings. In 100 Tai-Shang No. 2261 (2011), the Supreme Court emphasized that according to Article 288, paragraph 4, judges shall inquire into the sentencing data only after the trial stages, in order to separate the former from the latter and avoid judges being improperly effected by irrelevant evidence. The Supreme Court, then, held that the High Court was in error for inquiring into irrelevant evidence, such as the defendant’s character evidence and the indictment of the defendant’s prior case, at the trial stage. In addition, the High Court was in error for ignoring other relevant evidence and examining the defendant’s criminal records only when deciding his sentencing. Finally, the Supreme Court also held that the parties should have had the opportunities to state their opinions with respect to the sentencing because the public prosecutor had asked for the death penalty. However, the High Court was in error to not do so. In this case, the Supreme Court clearly explained the significance of sentencing proceedings and how they should be carried out. First, judges shall separate trial stages from sentencing proceedings. Those proceedings have different functions and purposes, so they shall not be mixed. In addition, judges shall not examine the information related to sentencing when deciding whether the defendant is guilty or not. Judges shall either not access irrelevant information or evidence when deciding the defendant’s sentencing. Finally, the Supreme Court held that parties shall have the opportunity to state opinions about the sentencing, especially in death penalty cases. This holding successfully corrected the habitual ignorance of the importance of sentencing proceedings. According to this decision, lower courts might pay

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more attention to sentencing proceedings and the importance of the separation of sentencing proceedings and the trial stage. As a result, judges who carry out sentencing proceedings might not be influenced by irrelevant and unfair information. Meanwhile, judges are not affected by improper evidence when deciding whether the defendant is guilty or not. Defendants might have a more reasonable trial, and the trial will be more proper and fair.

10

The prosecution review proceeding

It is fair and accurate to say that the main stream of the current judicial reform is the adoption of the adversarial system. However, The CCP still reserves several elements of the inquisitorial system. The prosecution review proceeding is one of them. Prosecution review proceedings were enacted in 2002. The purpose of this provision was to promote the burden of proof born by public prosecutors, preventing them from arbitrary prosecution, and to protect defendants’ rights. The CCP provides that the court shall notify the public prosecutor to determine, within a specified time period, if, prior to the first trial date, it appears to the court that the method of proof indicated by the public prosecutor is obviously insufficient to establish the possibility that the defendant is guilty (art. 161, para. 2). This provision is controversial. According to the presumption of innocence, a public prosecutor bears the burden of proof to prove that the defendant is guilty. The court shall render a judgment of not guilty if the public prosecutor cannot prove that the defendant committed the accused offense. However, according to this provision, a court cannot not render such a judgment if the public prosecutor cannot sufficiently prove that the defendant is guilty. The court, instead, shall notify the public prosecutor to find cause. In other words, a public prosecutor has a second chance to fulfill his obligation to prove the defendant’s guilt. Namely, public prosecutors have a chance to take a makeup examination. In contrast, a defendant is not granted such a chance if he fails to prove his innocence at trial. The CCP does not require a court to notify the defendant to make it up if it appears to the court that the public prosecutor has proven that the defendant committed the accused offense. In sum, this provision is in violation of the presumption of innocence and the burden of proof born by public prosecutors.22 The standard to determine whether the method of proof indicated by the public prosecutor is obviously insufficient to establish the possibility that the defendant is guilty is a very controversial topic. Some scholars argue that the 22 Cf. Yun-Hua Yang, Discussion on the Prosecution Review Proceeding, 36 Taiwan L.J. 111, 112– 14 (2002) (in Chinese).

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prima facie standard employed by the United States’ legal system should apply here,23 while some scholars argue that the standard of paragraph 2 of Article 161 should be equal to the standard employed in Article 251.24 According to the Precautionary Matters on Handling Criminal Cases pronounced by the Judicial Yuan, to decide whether the method of proof indicated by the public prosecutor is obviously sufficient, the court shall examine the accusation made by the public prosecutor, all materials and evidence, and determine, from a formal perspective, whether there is any possibility of proving the defendant’s guilt.25 Under the rule applied to the courts, it seems that the practice adopts a very low and lax standard to apply paragraph 2 of Article 161. The court may dismiss the prosecution via a ruling if the public prosecutor fails to present additional evidence within a specified time period (art. 161, para. 2). Once the ruling on dismissing the prosecution becomes final, no prosecution can be made for the same case, unless one of the circumstances specified in the items of Article 260 exists (art. 161, para. 3). A public prosecutor may still make an accusation even thought the CCP prohibits him from doing so. Therefore, the CCP provides that a dismissal judgment shall be rendered if an accusation has been brought against the defendant in violation of the provision of paragraph 3 of Article 161 (art. 161, para. 4).

11

Application for trial

In the adversarial system, a public prosecutor has the discretion to decide whether or not to bring an accusation against a defendant. Namely, complainants or victims cannot object to a public prosecutor’s decision if he decides not to indict the case. Courts also have little authority or room to review public prosecutors’ decisions with respect to whether to make an accusation against a particular case or not. However, in the inquisitorial system, a public prosecutor is not ( just) a party of litigation. Therefore, a complainant or a victim is entitled to raise an objection if he disagrees with the public prosecutor’s decision. In addition, a court has the authority to review his decision and correct it. The CCP has a reconsideration system for complainants to raise an objection against a public prosecutor’s ruling. In 2002, under the influence of the Germany legal system, the 23 See, e. g., Jaw-Perng Wang, The Prosecution Review Proceeding: A Comparison with Similar Systems in the United States, 88 Taiwan L. Rev. 51, 60–61 (2002) (in Chinese). 24 See, e. g., Yun-Tsai Chen, A Study on the Prosecution Review Proceeding, 88 Taiwan L. Rev. 26, 31 (2002) (in Chinese); Li–Ching Chang, Comment on the New Deferred Prosecution System, 89 Taiwan L. Rev. 114 (2002) (in Chinese); Yu-Hsiung Lin, An Overview of the 2002 Amendment to the Code of Criminal Procedure, 33 Taiwan L.J. 225, 228 (2002) (in Chinese). 25 Article 95 of the Precautionary Matters on Handling Criminal Cases.

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CCP adopted the “application for trial” system. Under those provisions, a complainant may apply to a competent court for trial if he makes an application for reconsideration of the public prosecutor’s ruling, and if the chief public prosecutor finds it groundless. Under the CCP, a complainant may, within ten days after receipt of a written ruling of dismissal, retain an attorney to make an application in writing, to a competent court of first instance, for trial (art. 258–1, para.1). In order to make a meaningful and substantial application, the attorney retained by a complainant should be able to access relevant files. Thus, the CCP provides that an attorney retained by the complainant to make the application may examine the file of the investigation and the evidence, and may make hand writing copy or photos. However, the examination of files and evidence may be restricted or prohibited if the subject matter being examined involves other cases that shall not be disclosed or that shall be kept secret (art. 258–1, para. 2).

12

Conclusion

Before 2002, under the CCP, a court had the duty to investigate crimes after a public prosecutor made an accusation against a defendant. As to the sufficiency of a criminal investigation and the fairness of the courts, this duty was extremely improper and unreasonable. The legislature therefore amended paragraph 1 of Article 163, releasing the courts from the obligation to collect evidence regarding accused offenses. Following this amendment, the decision of the second criminal division conference of 2012 of the Supreme Court indicated that according to paragraph 1 of Article 163, courts are only obligated to gather evidence for defendants. Namely, courts shall not gather evidence against the defendant. Before 2003, witnesses and expert witnesses were mainly questioned by judges. Parties might be questioned, but the questioning was merely supplementary and meaningless. In addition, there were no essential rules regulating parties’ questioning of witnesses and expert witness. The legislature made a tremendous amendment to the CCP in 2003, improving the situation greatly. Right now, the CCP provides very detailed and complicated rules with respect to parties’ examination of witnesses and expert witnesses. Furthermore, the questioning of them relies on the parties. Presiding judges’ questioning is merely secondary. In the past, a presiding judge questioned the defendant with respect to the facts regarding the charged crime right after the public prosecutor’s opening statement. Then, witnesses, expert witnesses, and exhibits would be examined. This ordering of a trial might compromise the detachedness of judges because they would learn statements against a defendant from the defendant himself. After 2003, the CCP changed the order of trial proceedings. A defendant is now

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questioned only after all other witnesses, expert witnesses, and other evidence have been examined. This important change will be explained. Plea bargaining is a very unique system in the adversarial system. In practice, public prosecutors and defendants already bargain sentencing in summary proceedings. In 2004, the CCP formally adopted this method. However, the negotiation proceeding applies to non-serious offenses, which is very different from plea bargaining in the United States. With the adoption of the adversarial system, the legislature also amended the CCP to provide suspects and defendants with better protections by granting them more right to counsel. After 1982, all suspects and defendants have the right to retain a counsel at any time. After 2009, a suspect or defendant has the right to communicate with his defense lawyer without being under surveillance, even though he is detained. After 2010, an arrested suspect has the right to interview with his defense lawyer at least one time and for no less than one hour. This right shall not be limited. Additionally, only a judge may limit the interview between a detainee and his defense lawyer. Sentencing proceedings were usually ignored and overlooked. In 2003, the legislature amended relevant provisions to improve the situation. The Supreme Court also made several decisions, indicating that courts shall separate the sentencing proceeding from the trial proceeding. Moreover, parties shall have the opportunity to express opinions with respect to sentencing. The CCP still has some provisions with strong characteristics of the previous inquisitorial system. In 2002, prosecution review proceedings were introduced into the CCP. Accordingly, a court shall notify the public prosecutor to find cause if the court finds that the method of proof indicated by the public prosecutor is obviously insufficient to establish the possibility that the defendant is guilty. However, this system may be in violation of the presumption of innocence and the burden of proof born by public prosecutors. Furthermore, under the influence of the German legal system, a complainant may apply to a competent court for trial if he makes an application for reconsideration of the public prosecutor’s ruling, and the chief public prosecutor finds it to be groundless. The criminal justice system of the R.O.C. (Taiwan) has widely adopted many factors of the adversarial system. That, without a doubt, fundamentally changes the basic structure of the CCP and the rationale thereof. Nevertheless, a legal system cannot be directly transplanted from one country to another without any adjustment. Our country cannot be exempted from this rule. The task before us is to take a very close look at the practice of the adversarial system with respect to those new provisions made after recent amendments, and to make further necessary and proper revisions. Then we may provide people with better and more complete protections against arbitrary government while investigating crimes.

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References Chang, L.-C. (2002). Comment on the new deferred prosecution system. Taiwan Law Review, 89, 114–125. (In Chinese) Chen, Y.-T. (2002). A study on the prosecution review proceeding. Taiwan Law Review, 88, 26–50. (In Chinese) Hans, V. P. (2002). U.S. jury reform: The active jury and the adversarial ideal. Saint Louis University Public Law Review, 21, 85–97. Huang, Y.-S. (1999). A study of the Chinese Supreme Court’s criminal procedure decisions during the period of 1912–1914. Chengchi Law Review, 61, 35–86. (In Chinese) Lin, Y.-H. (2002). An overview of the 2002 amendment to the Code of Criminal Procedure. Taiwan Law Journal, 33, 225–239. (In Chinese) Lin, Y.-H. (2004). Plea bargaining, trial, and the rules of evidence (I). Taiwan Jurist, 25, 73– 85. (In Chinese) Wang, J.-P. (2002). The prosecution review proceeding: A comparison with similar systems in the United States. Taiwan Law Review, 88, 51–68. (In Chinese) Wang, J.-P. (2011). The evolution and revolution of Taiwan’s criminal justice. Taiwan in Comparative Perspective, 3, 8–29. Yang, Y.-H. (2002). Discussion on the prosecution review proceeding. Taiwan Law Journal, 36, 111–128. (In Chinese) Yang, Y.-H. (2004). A discussion on plea bargaining (I). Taiwan Jurist, 20, 83–90. (In Chinese)

Kuk Cho

13

The Exclusion of Illegally Obtained Confessions, Electronic Communications and Physical Evidences in Korea*

1

Introduction

The 1987 Constitution of Korea,1 which was a product of the nationwide June Struggle of 1987 that collapsed the iron fist regime and opened a new era of political democracy, explicitly stipulates the principle of due process in criminal procedures and provides very detailed Bill of Rights provisions regarding criminal procedural rights. This “constitutionalization of criminal procedure” has brought significant changes in the theory and practice of the Korean criminal procedure. Exclusionary rules are in the middle of this “revolution.” The Korean Supreme Court and the Korean Constitutional Court, which were newly established by the 1987 Constitution, have been active in order to control the illegal misconduct of law enforcement authorities which prevailed under the authoritarian regime, excluding illegally obtained statements, electronic communications and physical evidences. Following the landmark judicial decisions, the National Assembly also incorporated exclusion rules in legislation. Firstly, this paper starts by reviewing the terrible situation under the authoritarian regime of Korea and the legal change after democratization. Secondly, focusing on the landmark judicial decisions and legislations including the Criminal Procedure Code2 (hereinafter “CPC”) and the Communication Privacy Protection Act (hereinafter “CPPA”) 3, it examines three categories of exclusions: the exclusion of incriminating statements obtained in the process of illegal arrest or interrogation, communications by illegal wiretapping and physical evidences * Korean names in this article are given in the Korean name order, with the family name first. The names of the Korean authors who have published in English are given as they are in their publications. 1 See Constitution, arts. 12, 13, 27 & 28 (S. Kor.). 2 See Criminal Procedure Code, Act No. 341, Sept. 23, 1954, amended by Act. No. 11572, Dec. 18, 2012 (S. Kor.). 3 See The Communication Privacy Protection Act, Act No. 4650, Dec. 27, 1993, amended by Act. No. 12229, Jan. 14, 2014 (S. Kor.).

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obtained by illegal search-and-seizure. Third, it analyzes the remaining issues regarding the aforementioned exclusionary rules.

2

Almost no exclusion under the authoritarian regime

2.1

Brief history: dark age of criminal procedural rights

During the period of the authoritarian regime starting from the rule of Rhee Syngman following liberation from the Japanese Occupation in 1945, democracy in South Korea was nominal. The following criticism of an American journalist in 1966 was valid during the whole period of the authoritarian regime: “Red roses don’t bloom beautifully in the garbage can like South Korea.”4 From the standpoint of human rights, the period of authoritarian regime was no more than a “Dark Age,” when the procedural rights of criminal suspects and defendants were nothing but meaningless rhetoric. Although the value of due process was written in textbook, it was overwhelmed by that of crime control in practice. The Rhee Syngman government (1948–1960) did not purge pro-Japanese police officers who served the Japanese rule but guaranteed their position and even promoted them to maintain its authoritarian rule.5 As “loyal dogs” for the government,6 they used all kinds of illegal methods, which were applied to antiJapanese liberation fighters, in order to suppress political dissidents as well as non-political criminal suspects. They also fabricated many cases. For instance, opposition congressmen, who were arrested for the suspicion of “pro-North fraction” by the military police in 1949, were severely tortured.7 Under the situation where even congressmen were illegally treated, it was inevitable that members of the general public were much easier victims of brutal police misconduct.8 Kim Byoung Ro, Chief Justice of the Supreme Court, consistently criticized the authoritarian rule of the Rhee government in vain.9 During the rule of Park Chung Hee (1961–1979), who was a leader of the 1961 military coup, illegal police misconduct was systematically devised by the government. The Prosecutors’ Office and the Judiciary were considered as the 4 Sun Young Yun, What the ’88 Summer Olympics in South Korea Left, 14 ELI Student Voices 7, 8 (2010) (citing Carl T. Rowan, Red roses don’t bloom beautifully in the garbage can like South Korea, Dec. 14, 1966). 5 Gabje Cho, Specialists of Torture and Fabrication 11–12 (1987) (in Korean). 6 Id. at 11. 7 Gregory Henderson, Korea: The Politics of the Vortex 167–68 (1968). 8 See Won Soon Park, 2 Documentary of the Barbaric Days 273–98 (2006) (in Korean). 9 Rhee Syngman was expelled by the April Revolution of 1960, which was driven by the public mass who became furious for the fraudulent presidential election of 1960 followed by cruel suppression on opponent demonstrators.

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“Offices of the Judge Advocate General,”10 and they gave up deterring police misconduct. The Yushin regime, which bestowed Park a status of a de facto permanent President by the 1972 Constitution and suffocated the freedom of expression, was brazen in that it omitted the crucial Article to exclude involuntary confessions from the Constitution. Since the Yushin regime had proclaimed martial law, a great number of students, intellectuals, and opposing congressmen were arrested and tortured.11 For instance, Lee Jae Oh, a congressman and former Minister of Special Affairs from 2010 to 2011, who was a leader of the democratization movement at that time, was a victim of cruel torture. One of the most high-profile cases under Park’s rule was that of the “People’s Revolution Party Rebuilding Committee” (inmin hyeokmyeong dang jaekeon wiwonhwei) (“PRP”).12 As the anti-Yushin movement was getting stronger in 1974, the Korean Central Intelligence Agency (hereinafter KCIA) arrested and tortured alleged PRP members because they had allegedly pursued a communist revolution with connections to North Korea. Eight members were immediately executed just one day after their conviction was confirmed by the Supreme Court in 1975. For this reason, this case has often been called “judicial murder.”13 Kim Ji Ha, who is a representative Korean poet, punished for his involvement with the PRP, said: The torture given to me was to deprive me of sleeping. . . . My eyes became uncontrollably hot. . . . When my eyes were open, a phantom of my father without eyes appeared. . . . They deprived me of sleeping for one week. In the condition that sleeping was allowed, I came to consent with their accusation that I was a “communist infiltrating the Catholics.”14

In non-political criminal cases as well, procedural rights were meaningless. Leaving out a great number of torture cases against adults, let me briefly introduce some alarming cases of tortured minors: A seventeen-year-old larceny suspect was beaten and forced to drink soapy water in 1964,15 a twelve-year old boy who was arrested for the suspicion of pick pocketing was beaten unconscious in 1969,16 a sixteen-year-old larceny suspect was forced to drink water through his 10 In Sup Han, Beyond the Authoritarian Criminal Law 28 (2000) (in Korean). 11 Park, supra note 8, at 330–44. 12 See Kuk Cho, Transitional Justice in Korea: Legally Coping With Past Wrongs After Democratization, 16 Pac. Rim L. & Pol’y J. 579, 592–93 (2007). 13 Catholic Human Rights Committee, Judicial Murder: The Massacre of April 1975, 164–65 (2001) (in Korean). 14 Moon Myung Huh, Kim Ji Ha and His Age, Dong-A Ilbo, July 23, 2013, available at http:// news.donga.com/3/all/20130723/56603101/1. 15 See Park, supra note 8, at 399. 16 Id. at 416.

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nose in 1970,17 and a twelve-year-old larceny suspect was beaten and forced to drink dirty water in 1975.18 The situation under the rule of Chun Doo Hwan (1980–1988), who was the leader of the 1980 military coup, was similar. Despite Article 11(6) of the 1980 Constitution to exclude involuntary confessions, it had a limited effect on police officers. During the 1980s there were several highly profiled cases.19 Those who violated the National Security Law were brutally tortured and accused of being “proenemy leftists.” For instance, former Presidential Secretary Lee Tae Bok in 2002 and late Kim Geun Tae, former Minister of Health and Welfare from 2004 to 2005, who were then the leaders of the democratization movement,20 and Kim Moon Soo, former Governor of the Gyeonggi Province from 2006 to 2014, who was then a leader of the labor movement, were brutally tortured when arrested for a violation of the National Security Law in the first half of the 1980s. All of them were victims of all kinds of torture including torture by electricity or water. In the popularly called “Burim case,” college students in the city of Busan who organized a book club were arrested for a violation of the National Security Law in 1980, and were severely tortured.21 In 1986, Professor Kwon In Sook, then a labor movement activist, was sexually abused by a policeman when arrested, and in 1987 Park Jong Chul, a Seoul National University student, was suffocated in a bathtub by police after being illegally arrested for information about a student activist movement. Besides political dissidents, ordinary people also had to go through the cruel investigation process. Let me introduce two of the most publicized cases. In 1981, Kim Si Hoon, a construction worker, was brutally tortured by the police and confessed to murder after being arrested. The real killer was arrested after Mr. Kim was given a fifteen-year imprisonment by the Kwangjoo High Court. After release, however, he became completely dejected.22 The Koh Sook Jong case of 1981 was also notorious. Confessing to murder, she was severely tortured by the police and made a false confession. Although she was found not guilty in a trial

17 Id. at 421. 18 Id. at 427. 19 See Kuk Cho, Unfinished “Criminal Procedure Revolution” of Post-Democratization South Korea, 30 Denv. J. Int’l L. & Pol’y 3, 378–79 (2002). 20 The case of Kim Geun Tae was cinematized as the “Namyoung-dong 1985” in 2012, attracting significant social attention. “Namyoung-dong” is the address of the Counter-Communist Branch of the Police where Kim was tortured. 21 This case was filmed as a movie whose title is “Byunhoin” in 2013, attracting more than ten million audiences. “Byunhoin” means attorney, indicating late President Roh Moo Hyun in particular who then played a crucial role as a defense attorney in the case. 22 See Park, supra note 8, at 224–29.

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and given monetary compensation, the psychological and physical effects were immense.23

2.2

Almost no judicial control under the meaningless Constitution

It is easily confirmed that during the period of the authoritarian regime, the Constitution was akin to the “Emperor’s new clothes.” The Constitutions under the authoritarian regime stipulated several provisions regarding procedural rights such as the right not to be tortured and the privilege against selfincrimination,24 the right to counsel,25 and the rule to exclude involuntary confessions.26 The exclusion of confessions when “confessions whose voluntariness is doubtful for they are made under torture, battery, threat, deceit, after prolonged custody or by any other method,” which was first introduced in 1954,27 was maintained under the authoritarian rule except in the 1972 Constitution. However, these provisions were titular. Illegal police practices including torture, illegal arrest and detention to obtain confession, were widespread in the criminal process. Beating, threatening, and torture by water or electricity were routinely applied to not only political dissidents but also ordinary criminal suspects. Hwang Ji Woo, who is a representative Korean poet and who was punished for his anti-government activities by the Chun government, described his experience of torture as “surgical operation without anesthesia.”28 He stated that: Extreme torture is the existence of never-ending pains, making death a hope. The professional mind of the torture technicians is to give pain but not death as eternal rest. . . . As rest lies outside a medical record document, truth generally lies outside interrogation dossiers.29 23 See Cho, supra note 5, at 241–69; Park, supra note 8, at 229–31. 24 1962 Constitution, art. 10(2) (Dec. 26, 1962) (S. Kor.); 1969 Constitution, art. 10(2) (Oct. 21, 1969) (S. Kor.); 1972 Constitution, art. 10(2) (Dec. 27, 1972) (S. Kor.); 1980 Constitution, art. 11(2) (Oct. 27, 1980) (S. Kor.). 25 1948 Constitution, art. 9 ( July 17, 1948) (S. Kor.); 1952 Constitution, art. 9 ( July 7, 1952) (S. Kor.); 1954 Constitution, art. 9 (Nov. 29, 1954) (S. Kor.); 1960 Constitution, art. 9 ( June 15, 1960) (S. Kor.); 1962 Constitution, supra note 24, art. 10(4); 1969 Constitution, supra note 24, art. 10(4); 1972 Constitution, supra note 24, art. 10(4); 1980 Constitution, supra note 24, art. 11(4). 26 1962 Constitution, supra note 24, art. 10(6); 1969 Constitution, supra note 24, art. 10(6); 1980 Constitution, supra note 24, art. 11(6). 27 See Criminal Procedure Act, Act No. 341, Sept. 23, 1954, amended by Act. No. 11572, Dec. 18, 2012, art. 309 (S. Kor.) 28 Ji Woo Hwang, Dong-A Ilbo, Oct. 11, 1990. 29 Id. (emphasis added).

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The Latin phrase, “Confession est regina probationum,” which means “Confession is the queen of evidence,” prevailed in the criminal process. Law enforcement authorities obtained confession from suspects by any means and at any cost, eviscerating the confession rule. Prosecutors gave up controlling police misconduct and even abetted the police. The judiciary did not take defendants’ claims of being abused by the police seriously. Critical appeals from both academics and defense attorneys didn’t receive any substantial reaction in the criminal justice system. Although there were a few Supreme Court cases that excluded illegally obtained confessions,30 the Court did not listen carefully to the victims’ outcries in most cases. It held: The argument [of the defense attorney] is that the statements’ in the prosecutor-made interrogation dossiers are involuntary for they are made after prolonged custody, under torture, inducement, and coercion. Reviewing the records, however, there is no data that the statements are involuntary and unreliable.31

Heavily relying on the records in the interrogation dossiers, the Court easily discarded defendants’ allegations of police abuse. As a result, the evidentiary power of the prosecutor-made interrogation dossiers become almost invincible. The Court also turned its face away from the reality of police misconducts. “It is especially rare that there exist such situations that make statements involuntary . . . the voluntariness of statements are presumed.”32 This decision actually freed prosecutors of the burden of proof and pulled down the principle of in dubio pro reo as well as the confession rule. Besides, under the authoritarian regime, the Supreme Court consistently declined to exclude physical evidence obtained by illegal search-and-seizure procedures, providing the following rationale: “Even though the procedure of seizure was illegal, the value as evidence does not change because the procedure did not affect the quality and shape of the substance itself.”33 As a result, search-and-seizure proceeded with almost no restriction and the constitutional principle of warrant became meaningless.

30 See, e. g., Supreme Court, 81Do2160, Oct. 13, 1981 (S. Kor.); Supreme Court, 84Do36, Mar. 13, 1984 (S. Kor.); Supreme Court, 93Do1843, Sept. 28, 1993 (S. Kor.). 31 Supreme Court, 80Do2579, Dec. 23, 1980 (S. Kor.) (emphasis added). 32 Supreme Court, 82Do3248, Mar. 3, 1983 (S. Kor.) (emphasis added). 33 See Supreme Court, 68Do932, Sept. 17, 1968 (S. Kor.); Supreme Court, 87Do705, June 23, 1987 (S. Kor.).

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Vitalization and codification of exclusionary rules after democratization

3.1

“Constitutionalization of criminal procedure” after the 1987 Constitution34

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The 1987 Constitution established a blueprint for the “constitutionalization of criminal procedure” in Korea. It has required that criminal procedure be under the control of the Constitution and has provided a detailed Bill of Rights to guarantee the procedural rights of criminal suspects and defendants. First, Article 12(1) and (3) of the Constitution have explicitly incorporated the principle of due process in criminal procedures. This is influenced by Amendments 5 and 14 of the United States Constitution.35 According to the Constitutional Court, the principle is “to guarantee not only the legality of the procedure but also the legitimateness of the procedure.”36 The Court made sure that the principle of due process was a core value to penetrate and control all stages of criminal procedure, stating: The principle of due process requires that both the formal procedure described by the law and the substantial content of the law be reasonable and just. . . . In particular, it declares that the whole criminal procedure should be controlled from the standpoint of guaranteeing the constitutional basic rights.37

Second, the Bill of Rights in the 1987 Constitution provides very detailed provisions regarding criminal procedural rights, including strict requirements for obtaining judicial warrants for compulsory measures,38 the right not to be tortured,39 privilege against self-incrimination,40 right to counsel,41 right to be informed of the reason of arrest or detention,42 right to request judicial hearing for arrest or detention,43 exclusionary rule of illegally obtained confession,44 protection against double jeopardy,45 right to a fair trial,46 right to a speedy and 34 This part is an update of Cho, supra note 19, at 379–80. 35 Dong Woon Shin, Criminal Procedure Law 7 (5th ed. 2014) (in Korean). 36 See Constitutional Court, 92Hun-Ka8, Dec. 24, 1992, (4 KCCR, 853) (S. Kor.); Constitutional Court, 90Hun-Ba35, July 29, 1993, (5–2 KCCR, 14–35) (S. Kor.). 37 Constitutional Court, 94Hun-Ba1, Dec. 26, 1996, (8–2 KCCR, 808) (S. Kor.). 38 Constitution, arts. 12(3) & 16 (S. Kor.). 39 Id. art. 12(2). 40 Id. 41 Id. art. 12(4). 42 Id. art. 12(5). 43 Id. art. 12(6). 44 Id. art. 12(7). 45 Id. art. 13(1). 46 Id. art. 27(1).

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open trial,47 presumption of innocence,48 and right to compensation for when the suspect and defendant is found to be innocent.49 These rights incorporated in the Constitution reflect the Korean people’s desire to guarantee their human rights, which had been nominal under authoritarian regime. Mass media, the human rights movement, and academics strongly emphasized the importance of procedural rights. Since then, the Korean criminal justice system has been reconstructed. During the reconstruction process, the courts have played a crucial role. Since the 1990s, the Korean Supreme Court and the Korean Constitutional Court have made a series of legislative decisions excluding illegally obtained statements of criminal suspects and defendants during interrogation even when an explicit legal provision was not available. The Legislature has also contributed to the reconstruction. In 1993 the CPPA was legislated to exclude communications obtained by illegal wiretapping. In 1995 the National Assembly ratified the U.N. Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment. In 2007, the CPC was revised to stipulate a general provision of the exclusion of illegally obtained evidence. In brief, since the 1987 Constitution requested that criminal procedure law play as a “concretely applied Constitution,”50 Korean criminal procedure law has gradually transformed from a “legalist criminal procedure law” to a “constitutional criminal procedure law.”51

3.2

Adoption of Miranda and Massiah

3.2.1 Judicial activism to bolster rights to silence and counsel since the 1990s52 In a series of landmark decisions in the 1990s, the Korean Supreme Court has strengthened the rights to silence and counsel. The first step was its 1992 decision in the popularly called “New 21st Century Faction” case, named after the title of the criminal organization the defendant belonged to. In the decision, the prosecutor did not inform the defendant of the right to silence before videotaping the interrogation.53 The Court excluded the defendant’s confession by stating: 47 48 49 50 51 52

Id. art. 27(3). Id. art. 27(4). Id. art. 28. Jong Dae Bae et al., New Criminal Procedure Law 5 (2d ed. 2009) (in Korean). Shin, supra note 35, at 5. This part is an update of Kuk Cho, The Reformed Criminal Procedure of Post-democratization South Korea, in Litigation in Korea 58, 69–71 & 80–82 (Kuk Cho ed., 2010); Cho, supra note 19, at 383–84. 53 See Supreme Court, 92Do682, June 23, 1992 (S. Kor.). This case is popularly called the “New

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The right to silence is based on the privilege against self-incrimination. . . . The statements elicited without informing of the right to silence in interrogation are illegally obtained evidence, and so should be excluded, even if they are disclosed voluntarily.54

In 2001, the Court also held that the statements of suspects caught in the act should be excluded without informing them of their right to silence.55 In these decisions, the Supreme Court recognized that the right to silence is the most crucial legal instrument to protect a suspect, particularly when the suspect is under interrogation without his/her counsel. The Court evidently rejected the traditional “voluntary test” to exclude confessions. It is certain that the Court adopted the rationale of the U.S. Miranda rule56 to exclude the statement and recognized Article 9(2) of the U.N. International Covenant on Civil and Political Rights.57 Notably, neither the Constitution nor the CPC had an explicit provision about the exclusion at that time, although both the Constitution and CPC stipulates the right to be informed of the reason for arrest or detention.58 Second, in two National Security Act violation cases in the 1990s,59 the Supreme Court also made landmark decisions, which may be called the Korean version of the U.S. Massiah rule.60 For instance, in the decision of September 25, 1990, the defendants requested to meet with their attorney when they were detained, but the National Security Agency officers rejected their request. Then, the defendants were referred to and interrogated by the prosecutor. The Court held that the defendants’ self-incriminating statements were illegally obtained for violating their right to counsel, and, thus, were excluded, holding as follows: Article 12(4) of the Constitution provides people with the right to assistance from counsel when arrested or detained, accordingly, Articles 30 and 34 of the Criminal Procedure Code prescribe the right of suspects or defendants to appoint counsel and communicate with counsel when they are in custody. The right to counsel like this

54 55 56 57

58 59 60

21st Century Faction” case, named after the title of the criminal organization the defendant belonged to. Id. (emphasis added). See Supreme Court, 2001Do229, Mar. 9, 2001 (S. Kor.). See Miranda v. Arizona, 384 U.S. 436 (1966). The Article provides that “Anyone who is arrested shall be informed, at the time of arrest, of the reasons for his arrest and shall be promptly informed of any charges against him.” International Covenant on Civil and Political Rights, art. 9(2), Dec. 16, 1966, 999 U.N.T.S. 171. ICCPR was adopted and opened for signature, ratification and accession by General Assembly resolution 2200 A (XXI) of 16 December 1966, and entered into force at 23 March 1976, in accordance with Article 4. Constitution, art. 12(5) (S. Kor.); Criminal Procedure Code, Act No. 341, Sept. 23, 1954, amended by Act. No. 11572, Dec. 18, 2012, art. 200(2) (S. Kor.). See Supreme Court, 90Do1285, Aug. 24, 1990 (S. Kor.) (this case is popularly called the “Legislator Seo Kyung Won Case”); Supreme Court, 90Do1586, Sept. 25, 1990 (S. Kor.) (this case is popularly called the “Artist Hong Seong Dam Case”). See Massiah v. U.S., 377 U.S. 201 (1964).

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constitutes the nucleus of the constitutionally guaranteed right to assistance from counsel. . . . The limitation of the right to meet and communicate with counsel violates the constitutionally guaranteed basic right, so the illegally obtained confession of the suspect should be excluded, and the exclusion means a substantial and complete exclusion.61

Both the Constitution and CPC provide the right to counsel.62 In these two cases, the Court provided Article 309 of CPC as grounds to exclude the defendant’s confession. The Article provides for the exclusion when “confessions whose voluntariness is doubtful for they are made under torture, battery, threat, deceit, after prolonged custody or by any other method.”63 It is assumed that the Court considered the violation of the right to counsel as falling under “any other method.” The Constitutional Court has also repeatedly confirmed that the right to counsel in criminal process is an “absolute right” of the defendant, so it cannot be limited “by any reason including national security, public order or public welfare.”64 A leading case as an example of this was the decision of January 28, 1992, where the Court reviewed the appeal of a National Security Act violation defendant. While he had a meeting with his counsel, the National Security Agency officers took a picture of the meeting and took a record of the meeting. The Court held that these acts were unconstitutional,65 stating: Counsels should figure out the situation of detained suspects or defendants and seek for proper countermeasures, explain the meaning of the suspected and accused facts to them, hear their opinions, and discuss measures, provide counsel’s opinion about the method, degree, time, content of statements of the suspects or defendants and give guidance to them, teach the importance of the right to silence or the right not to make a signature and how to exercise it, make the suspects or defendants recognize that they may be free of falsified crimes by exercising the right, inform them of the possibility of coercion, deceit, inducement, torture by the law enforcement authorities and teach them how to deal with them, recommend them not to make false confessions, frequently check improper investigation such as inducement, threat, benefit, or violence, and encourage, bestow courage to, console, advise the suspects or defendants when finding their anxiety, despair, worry, or bluff.

61 Supreme Court, 90Do1586, Sept. 25, 1990 (S. Kor.); Criminal Procedure Code, supra note 58, arts. 30, 34. 62 Constitution, art. 12(4) (S. Kor.). 63 See Criminal Procedure Code, Act No. 341, Sept. 23, 1954, amended by Act. No. 11572, Dec. 18, 2012, art. 309 (S. Kor.) (emphasis added). 64 See Constitutional Court, 91Hun-Ma111, Jan. 28, 1992, (4 KCCR, 51) (S. Kor.); Constitutional Court, 92Hun-Ma144, July 21, 1995, (7–2 KCCR, 94) (S. Kor.); Constitutional Court, 2000HunMa138, Sept. 23, 2004, (16–2(A) KCCR, 543) (S. Kor.). 65 Constitutional Court, 91Hun-Ma111, Jan. 28, 1992, (4 KCCR, 51) (S. Kor.).

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Here it may be confirmed that the Supreme Court and the Constitutional Court accepted Article 14(3) of the International Covenant on Civil and Political Rights.66 Third, in the decision of November 11, 2003, in a National Security Act violation case of Professor Song Doo Yul, an allegedly pro-North Korean-German dissident who was arrested and detained when he visited Seoul, the Supreme Court made another ground-breaking decision to recognize the right to have counsel during interrogation as a constitutional right of suspects.67 Neither the Constitution nor the CPC had an explicit provision for the right to have a lawyer present during interrogation at that time, although both provide the right to counsel in general.68 Over this lack of a positive provision, law enforcement authorities did not allow defense counsel, retained by suspects, to attend interrogation sessions. However, the Supreme Court held: Although the CPC has not provided a positive provision for the right to request the participation of a counsel during interrogation, . . . it should be interpreted that the right may be recognized by analogical interpretation of Article 34 of the CPC which allows for the right to meet and communicate with counsel, and law enforcement authorities may not reject the request.69

The Supreme Court also provided narrow exceptions not to permit counsel’s participation in interrogation, that is, the participation may be restricted when it is “objectively clear when there is reason for probable cause” that the counsel would “obstruct interrogation” or “leak the secret of investigation.”70 It also stated: There are no provisions to restrict detained persons’ meeting and communication with their counsel in current laws. Therefore, detained persons should be guaranteed and allowed to meet and communicate with their counsel anytime during the interrogation by law enforcement authorities.71

66 The Article provides that “In the determination of any criminal charge against him, everyone shall be entitled to … be tried in his presence, and to defend himself in person or through legal assistance of his own choosing; to be informed, if he does not have legal assistance, of this right; and to have legal assistance assigned to him, in any case where the interests of justice so require, and without payment by him in any such case if he does not have sufficient means to pay for it.” International Covenant on Civil and Political Rights, art. 14(3), Dec. 16, 1966, 999 U.N.T.S. 171. 67 See Supreme Court, 2003Mo402, Nov. 11, 2003 (S. Kor.). 68 Constitution, art. 12(4) (S. Kor.). 69 See Supreme Court, 2003Mo402, Nov. 11, 2003 (S. Kor.) 70 Id. (emphasis added). 71 Id.

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Here the Constitutional Court showed its legal philosophy based on Article 5 of the Declaration of the Rights of Man and the Citizen of 1789, providing that “Nothing may be prevented which is not forbidden by law.” Reviewing the infringement of a non-detained suspect because of its singular right to counsel in a Public Office Election Act violation case,72 the 6-to-3 opinion of the Constitutional Court on September 23, 2004 confirmed that the right to have counsel present during interrogation is a constitutional right of the suspect and approved the exceptions to the right provided by the Supreme Court in Professor Song Doo Yul’s case. The Court also made it clear that a procedural right stipulated in the Constitution has a binding effect without a specific provision in a lower law.73 Miranda and Massiah are often considered to be politically liberal rules both in and out of Korea. Although they are adopted by judges in Korea before the Legislature takes an initiative, the majority of Korean judges may not be regarded as politically liberal. They are rather conservative. Experiencing the long-time authoritarian rule, however, they assume themselves to be controllers of the misconduct of law enforcement authorities and an initiator and guardian of due process values. This would be one of the reasons for the judicial activism that junior judges who spent their youth under authoritarian rule began to raise their voice in the judiciary. It is assumed that in all of the aforementioned decisions the Supreme Court did not have a big burden to exclude the defendants’ statements, for they could be convicted upon untainted evidence. 3.2.2 Reallocation of the burden to prove the voluntariness of confessions In 1998, the Supreme Court changed its previous opinion (1983) that the voluntariness of statements is presumed.74 The Court held: The reason why it is necessary to exclude involuntary confessions is not only because confessions obtained in situations where false statements are induced or forced do not accord to substantive truth and cause misjudgment, but also because irrespective of the truthfulness of the confessions, illegal or improper pressure violating basic human rights of the suspects to obtain confession should be deterred in advance. Therefore, when the voluntariness of the confession is in dispute, . . . prosecutors should get rid of the doubts regarding the voluntariness.75

In 2008, the Supreme Court reconfirmed this opinion, stating:

72 73 74 75

See Constitutional Court, 2000Hun-Ma138, Sept. 23, 2004, (16–2(A) KCCR, 543) (S. Kor.). Id. See Supreme Court, 82Do3248, Mar. 3, 1983 (S. Kor.) (emphasis added). Supreme Court, 97Do3234, Apr. 10, 1998 (S. Kor.).

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When the voluntariness of the suspect’s confession recorded in prosecutors’ dossiers is in dispute, . . . prosecutors should get rid of the doubts regarding the voluntariness. If prosecutors cannot, the dossier should not be used as evidence to prove guilt. This rule also applies to situations where the suspect or his/her counsel reverses positions after admitting voluntariness.76

The Court made it clear that the voluntary statements are not presumed and prosecutors bear the burden to prove that confessions weren’t forced. It is expected that this change will cause more exclusion of involuntary confessions.

3.2.3 The 2007 revision of the Criminal Procedure Code and following issues The 2007 revision of the CPC codifies all the aforementioned decisions. Before the revision, the right to counsel for arrested or detained suspects and defendants was already stipulated in the CPC.77 The 2007 revision newly provides the right to have a counsel participate in interrogation.78 Article 243–2(3) of the CPC provides: Counsels participating in interrogation may express their opinion after interrogation by law enforcement authorities ends. Even during interrogation, however, they may present objections to improper interrogation methods and present opinions with approval of prosecutors or police officers.79

It is certain that counsel’s presence prevents illegal interrogation. However, this is not enough. Except when improper interrogation occurs or with interrogators’ approval, counsels may not interfere with the interrogation but simply sit with suspects. In most cases, as a result, when law enforcement authorities are interrogating, counsels may not give advice to suspects about whether or not to answer or what to say. They may give advice to suspects before interrogation begins or check the interrogation dossiers after interrogation ends. Suspects may not seek counsels’ advice when interrogators cast questions that suspects and counsels did not expect, and so did not prepare for. In this context, the right to counsel is still limited. Article 242–2(3) of the CPC provides that the right to have a counsel participate in interrogation may be restricted when there is “justifiable cause.”80 “Justifiable cause” will be interpreted following the exceptions previously pro76 Supreme Court, 2008Do1200, July 10, 2008 (S. Kor.). 77 See Criminal Procedure Code, Act No. 341, Sept. 23, 1954, amended by Act. No. 11572, Dec. 18, 2012, arts. 89, 209 & 213–2 (S. Kor.). 78 Id. art. 243–2(1). 79 Id. art. 242–2(3) (emphasis added). 80 Id. art. 243–2(1).

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vided by the Supreme Court in the Professor Song Doo Yul case,81 which means probable cause that the counsel would “obstruct interrogation” or “leak the secret of the investigation.”82 However, the Working Rules for Prosecutors’ Cases,83 which is made by the Ministry of Justice, extends exceptions to the right to have counsel participate in interrogation. First, Article 9–2(3) of the Working Rules provides that even when the right has been exercised, interrogation may begin if counsel does not appear or cannot appear “in appropriate time.”84 It remains how to define “appropriate time” and there is a possibility that law enforcement authorities weaken the newly introduced right by use of Article 9–2(3). Second, Article 9–2(4) of the Working Rules provides the following situations as examples of “obstructing interrogation” or “leaking the secret of the investigation”: (1) a counsel improperly intervenes or makes insulting language or behaviors, (2) a counsel makes an answer instead of a suspect or induces a suspect to make a specific answer or reverse his/her previous answer, (3) a counsel makes an objection improperly against Article 243–2, (4) a counsel films, records or writes down the interrogation. Concerning the prohibition of (4), the Rules allows a counsel to make “brief writings for refreshing their memory” in order to provide legal advice for the suspect.85 Like Article 9–2(3), Article 9–2(4) also includes uncertain and vague terms such as “improper intervention,” “improper objection” and “insulting language or behaviors.” It intends to weaken the right to have counsel participate in interrogation by the prohibitions of (2) and (3) in particular.86 Articles 9–2(3) and 9–2(4) of the Working Rules have not been challenged in either the Supreme Court or the Constitutional Court. However, in the decision of September 12, 2008,87 the Supreme Court showed its determination to help the newly introduced right to be firmly established in the criminal process. In this case, a police officer ordered a counsel to get out of the interrogation room, refusing the request of the counsel who insisted on sitting with a suspect. The Supreme Court held that the officer violated the right of counsel to participate in interrogation.

81 See Supreme Court, 82Do3248, Mar. 3, 1983 (S. Kor.). 82 See Supreme Court, 2003Mo402, Nov. 11, 2003 (S. Kor.). 83 See The Working Rules for Prosecutors’ Cases, Ministry Decree, No. 766, Mar. 15, 2012 (S. Kor.). 84 Id. art. 9–2(3). 85 Id. art. 9–2(4). 86 Bae et al., supra note 50, at 109; Shin, supra note 35, at 257. 87 See Supreme Court, 2008Do794, Sept. 12, 2008 (S. Kor.).

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On the other hand, the 2007 revision provided the full version of Miranda rule.88 According to Article 244–3(1) of the CPC, prior to interrogation, investigative authorities should inform a suspect that (1) a suspect can choose not to make any statements or refuse to respond to specific questions; (2) no disadvantage shall be given to a suspect even if he or she chooses not to make a statement; (3) anything a suspect says after waiving the right to silence may be used as incriminatory evidence against the suspect in court; (4) a suspect has a right to counsel including a “right to have the counsel participate in interrogation.” The suspect’s answer should be recorded either by his/her handwriting on the document or with his/her written approval of the document made by the investigative authorities.89 After the 2007 revision of the CPC was made, the Ministry of Justice argued in its commentary of the revision that the requirements of the Miranda warnings do not apply when a suspect is “investigated” but when a suspect is “interrogated.”90 This interpretation presented Article 200 of the CPC as its rationale, which provides, “Prosecutors or police officers may request suspects to appear and hear their statements when necessary for investigation.”91 According to the Ministry of Justice, “hearing statements” according to Article 200 is free from the requirements of Article 244–3(1). Professor Shin Dong Woon criticizes this interpretation: This opinion overlooks the 2007 revision of the CPC stipulated in Article 244–3(1) to substantially strengthen the right to silence. . . . Although there exists some linguistic difference between “hearing statements” and “interrogation,” it cannot work as grounds to weaken the suspect’s right to defense. There is no difference between “hearing statements” and “interrogation” in that the law enforcement authorities obtain statements from suspects.92

In the decision of November 10, 2011,93 the Supreme Court held that the Miranda warnings in Article 244–3(1) apply when the status of a suspect is recognized and “the status of a suspect is recognized when the law enforcement authorities begin to recognize the criminal suspicion of the object of the investigation and initiate investigation.” This means that the Miranda warnings should be given to a person who has been given the status of a suspect in either “hearing statements” or “interrogation.”

88 See Criminal Procedure Code, Act No. 341, Sept. 23, 1954, amended by Act. No. 11572, Dec. 18, 2012, art. 244–3(1) (S. Kor.). 89 Id. art. 244–3(2). 90 Ministry of Justice, Revised Criminal Procedure Code 126 (2007). 91 See Criminal Procedure Code, supra note 88, art. 200. 92 Shin, supra note 35, at 248. 93 See Supreme Court, 2011Do8125, Nov. 10, 2011 (S. Kor.).

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3.3

The exclusion in the Communication Privacy Protection Act of 1993 and its limitation

In the first year of the Kim Young Sam government known as the “Civilian Government,” the CPPA was legislated. Under the authoritarian regime, there was not a law to regulate wiretapping by the law enforcement authorities, so wiretapping was freely used without any restriction. President Kim Young Sam, who once was a political leader of the democratization movement was put under illegal surveillance under the authoritarian regime, and was active to make the CPPA.94 Article 3 of the CPPA provides that, “Without a grounds from the CPPA, CPC and the Military Court Act, anyone may not inspect letters, wiretap electronic communications, or record or eavesdrop on conversations between others” and Article 14(1) provides that, “Anyone may neither record undisclosed conversations between others nor eavesdrop on them by using electronic devices or mechanical means.” In particular, Article 4 of the CPPA provides that, “the content of the letter obtained by illegal inspection and that of the electronic communications obtained by illegal wiretapping shall not be used in a trial or a sanction discipline process.”95 It is noteworthy that the exclusionary rule of Article 4 is very strong in that the evidence obtained by violating the CPPA shall not be used not only in a criminal trial but also in a civil trial or administrative sanction process. In two National Security Law cases in 1999, the Supreme Court excluded the defendant’s communication obtained by illegal wiretapping. The Court held that the telephone communications of the defendant whose name was not in the permission warrant issued by the court should not be used in a trial even though his telephone number was in the warrant,96 and that the recording of communications should not be used in a trial because the warrant only permitted wiretapping of electronic communications and inspection of letters.97 In another

94 The background of this Act is an ironic political incident, which is popularly called a “Puffer Restaurant Case.” Just before the presidential election, high-ranking public officials had a secret meeting for the illegal intervention of the election in a puffer restaurant in Pusan. They worked for the ruling Democratic Liberal Party’s candidate, Kim Young Sam. The members of the Unification National Party led by Chung Joo Young, former CEO of the Hyundai Group, wiretapped the conversation in the restaurant to publicize it. Although Kim Young Sam was at a disadvantage for this incident, he reversed the situation by arguing he was a victim of illegal wiretapping. 95 See The Communication Privacy Protection Act, Act No. 4650, Dec. 27, 1993, amended by Act. No. 12229, Jan. 14, 2014, art. 4 (S. Kor.) (emphasis added). 96 See Supreme Court, 99Do2318, Sept. 3, 1999 (S. Kor.). 97 See Supreme Court, 99Do2317, Sept. 3, 1999 (S. Kor.).

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National Security Law case in 2002,98 the Court held that the telephone communications obtained by the permission warrant may be used to investigate and prosecute only the crimes that the warrant indicates. Despite these positive changes, judges tend to issue warrants without strict scrutiny. According to the data submitted by the Daegu District Court to the National Congress in 2004, the judges of the Court approved all the requests for the “measure of communication restriction” in 2002.99 Besides, the CPPA itself has two major exceptions for the warrant requirement for “measure of communication restriction”: “exigent measure of communication restriction”100 and “measure of communication restriction for national security.”101 The “exigent measure of communication restriction” is allowed to check “conspiracy to threaten national security, the plan or the execution of serious crimes such as the crimes that are likely to cause death or severe bodily injury or organized crimes.”102 It allows the law enforcement authority thirty-six hours free from judicial review.103 As a result, if the law enforcement authorities repeat the “exigent measure” for the period of less than thirty-six hours, the measure may be extended to be limitless with judicial control. The “measure of communication restriction for national security” is allowed for any crimes when the chief of national intelligent agencies expects “substantial danger to the guarantee of national security” and requests the measure.104 It is permitted by the President of Korea, free of the review of either the Judiciary or of the Legislature.

3.4

Adoption of Mapp

3.4.1 Judicial and legislative adoption of discretionary exclusionary rule in search-and-seizure in 2007105 Although the Supreme Court adopted Miranda and Massiah, the Supreme Court had consistently declined to exclude physical evidence obtained by illegal searchand-seizure procedures since 1968 until recently.106 The Court clearly rejected the U.S. Fourth Amendment Mapp exclusionary rule.107 98 See Supreme Court, 2000Do5461, Oct. 22, 2002 (S. Kor.). 99 Maeil Shinmun, Oct. 5, 2014. 100 See The Communication Privacy Protection Act, Act No. 4650, Dec. 27, 1993, amended by Act. No. 12229, Jan. 14, 2014, art. 8 (S. Kor.). 101 Id. art. 7. 102 Id. art. 8(1). 103 Id. art. 8(2). 104 Id. art. 7(1). 105 This part is an update of Cho, supra note 52, at 80–82.

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Academics and defense attorneys argued that unless illegally obtained evidence is excluded, the constitutional requirement for the search-and-seizure warrant is left without any teeth. There are no other effective remedies for illegal police misconduct in Korea. Criminal or civil liability and internal discipline have not proven effective in deterring police misconduct in Korea. Just before the 2007 revision of the CPC, which stipulated Article 308–2 of the CPC providing that “evidence obtained not through due process shall not be admissible,”108 in November 15, 2007 the Supreme Court made an epoch-making decision to exclude illegally obtained physical evidence.109 In this case Governor Kim Tae Hwan of Jeju Province was investigated for a violation of the Public Office Election Act. Law enforcement officers entered Kim Tae-Hwan’s office to obtain evidence with a warrant, which limited the scope of search-and-seizure to the “items stored in the room” used by Kim Dae Hee, a special policy aide of Kim Tae Hwan. Law enforcement officers ran into Han Seok Dae, a secretary of Kim Tae Hwan, who carried confidential documents to the room, and seized the documents. The documents included criminal proof. Following the Supreme Court’s precedents, lower courts rejected the defense counsel’s argument that the documents should be excluded. However, the Supreme Court quashed the lower court’s decision, stating: The most effective and certain countermeasure to deter and control the search-andseizure by law enforcement authorities that does not abide by procedural provisions is to prohibit not only illegally obtained evidence but also its derivative evidence from being used for conviction.110

It is sure that the Supreme Court adopted the rationale of the U.S. Mapp rule. However, the Court did not adopt a mandatory exclusionary rule but a discretionary one. The majority opinion held that the illegally obtained evidence should not be “uniformly” excluded but could be excluded considering “all the circumstances regarding the procedural breaches in the evidence collecting process by the investigative authorities.”111 Then, the majority opinion provided a standard for inclusion: “whether the procedural breaches by the investigative authorities violate substantial contents of due process.”112 Criticizing that this standard is too vague and strict, the 106 See Supreme Court, 68Do932, Sept. 17, 1968 (S. Kor.); Supreme Court, 87Du705, June 23, 1987 (S. Kor.); Supreme Court, 93Do3318, Feb. 8, 1994 (S. Kor.). 107 See Mapp v. Ohio, 367 U.S. 643 (1961). 108 See Criminal Procedure Code, Act No. 341, Sept. 23, 1954, amended by Act. No. 11572, Dec. 18, 2012, art. 308–2 (S. Kor.). 109 See Supreme Court, 2007Do3061, Nov. 15, 2007 (S. Kor.). 110 Id. 111 Id. 112 Id.

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concurring opinion provided a different standard: “whether the evidence collecting process ignores the spirit and meaning of the warrant principle, so the illegality of the process is so significant that the evidence should be excluded.”113 Literal phrases of both the majority opinion and the concurring opinion are abstract. The real difference is that the majority opinion emphasizes the principle of exclusion, while the concurring opinion criticizes the strictness of the majority opinion. It is also noteworthy that different from the concurring opinion, the majority opinion explicitly states that secondary evidence derived from first evidence obtained illegally should be excluded, considering “all the circumstances regarding the collecting process of the derivative evidence including dilution or severance of the causation between the first illegal evidence and the derivative evidence.”114 Here the majority opinion adopts the U.S. principle of “the fruit of the poisonous tree.”115 The political background of this turning of the Supreme Court after a long time rejecting the Mapp rule since 1968 was that the 2004 Presidential Committee on Judicial Reform (sabeopchedo kaehyeok chujin wiweonhoe) submitted a bill for the revision of the CPC including the exclusionary rule after a period of heated discussions and debates, and the National Assembly was expected to pass the bill soon. The Supreme Court made a decision on November 15, 2007 and the National Assembly passed the bill on December 21, 2007. It is assumed that the Court did not want to lose the initiative for adopting the rule and it also intended to prepare a standard for the exclusion. 3.4.2 Relevant rulings The Supreme Court decision of March 12, 2009, which was a follow-up decision of the landmark decision of November 15, 2007, is also important.116 The Court rejected the appeal of the prosecutors in the case of Governor Kim Tae Hwan, providing some important rules. First, the Court held that the phrases in a warrant should be not be interpreted analogically in a disadvantageous way to the targeted persons, but should be strictly interpreted from the viewpoint of the Constitution and the CPC so that “items stored in the targeted place” should not be interpreted as “items present in the targeted place.” This ruling was to exclude the confidential documents carried by Han Seok Dae.

113 114 115 116

Id. Concurring opinion by Justices Yang Seung Tae, Kim Neung Hwan & Ahn Dae Hee. Id. Silverthrone Lumber v. U.S., 251 U.S. 385 (1920); Nardone v. U.S., 308 U.S. 338 (1939). See Supreme Court, 2008Do763, Mar. 12, 2009 (S. Kor.).

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Second, the Court held that in principle a warrant should be presented to all the persons respectively whose names are on the warrant; so a warrant should also be presented to the person who carries the targeted items, even if it is presented to a supervisor in charge of the targeted place. Third, the Court provided a very significant ruling regarding the burden of proof: For the court to recognize that despite the procedural violation made by law enforcement authorities the illegally obtained evidence may be exceptionally used to prove the guilt of the defendant, the prosecutor should prove that there exists concrete and special circumstances for such exceptions to apply.117

This ruling is a follow-up decision to the 1998 and 2008 decisions that the voluntariness of statements is not presumed and prosecutors bear the burden to prove it.118 In 2013 the Supreme Court made two decisions not to exclude secondary evidence derived from first evidence obtained illegally. In a March 14 decision,119 the Court held that the secondary result of a urine test with a court warrant is admissible although the first result of the urine test obtained by illegal arrest without a warrant is not admissible. In a March 28 decision, the Court also held that the defendant’s confession, duly obtained in a court, is admissible although police illegally obtained the personal information of the defendant without a warrant and the contents of the first confession obtained in the illegal detention.120 After the adoption of Mapp, there remained a question of whether or not the illegally obtained evidence may be used with defendants or their counsel. In 2009 and 2010 the Supreme Court made it clear that the evidence should be excluded even if the defendants or their counsel had given consent to its inclusion.121 The Court prevented law enforcement authorities from avoiding the exclusionary rule by getting consent.

117 Id. 118 See Supreme Court, 82Do3248, Mar. 3, 1983 (S. Kor.); Supreme Court, 97Du3234, Apr. 10, 1998 (S. Kor.); Supreme Court, 2008Do1200, July 10, 2008 (S. Kor.). 119 See Supreme Court, 2012Do13611, Mar. 14, 2013 (S. Kor.). 120 See Supreme Court, 2012Do13607, Mar. 28, 2013 (S. Kor.). 121 See Supreme Court, 2009Do11401, Dec. 24, 2009 (S. Kor.); Supreme Court, 2009Do10092, Jan. 28, 2010 (S. Kor.).

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New structure of the exclusionary rules

Now the Korean criminal justice system has three codified exclusionary rules: Article 309 of the CPC to exclude incriminating statements obtained by illegal interrogation, Article 4 of the CPPA to exclude communications by illegal wiretapping, and Article 308–2 of the CPC to exclude evidence obtained not through due process. Article 308–2 of the CPC, which provides that “evidence obtained not through due process shall not be admissible,”122 is a general provision for all exclusionary rules as well as a special provision for the exclusion of physical evidence by illegal search-and-seizure, which had no positive legal provision for exclusion. Whether to “violate substantial contents of due process”123 will depend on judicial discretion. Article 308–2 as a general rule is generally used to exclude illegally taken photos or videotapes, evidence obtained by illegal entrapment, blood samples obtained without a warrant and statements obtained by illegal “voluntary accompaniment” and so forth. In 1999 the Supreme Court provided the standards for the legality of videotaping; “Warrantless videotaping is not illegal if it is done by generally permitted proper methods when crimes are on-going or just after a crime is committed, and it is urgently necessary to maintain evidence.”124 In 2007 the Court also provided that the legality of entrapment should be decided by total estimation of the nature and response of targeted crimes, the role of the inducer, the process and method of inducement, the criminal career of the defendant and the legality of inducement itself.125 In 2007 the Court excluded the blood sample of a defendant obtained without a warrant.126 In this case, a police officer made a doctor take the blood of the defendant who lost consciousness after causing a car accident while drunk driving. In 2013 the Court also excluded the blood samples of the defendants that were arrested illegally.127 In this case, in the case of a car accident police officers arrested the defendant without informing him of the reason for his arrest and right to counsel, which is required by Article 200–5 of the CPC. Although the defendant rejected the request of the police officers to comply by doing a breathalyzer test, they told him that if not, he would be detained. Then the 122 Criminal Procedure Code, Act No. 341, Sept. 23, 1954, amended by Act. No. 11572, Dec. 18, 2012, art. 308–2 (S. Kor.). 123 See Supreme Court, 2007Do3061, Nov. 15, 2007 (S. Kor.). 124 Supreme Court, 99Do2317, Sept. 3, 1999 (S. Kor.). 125 See Supreme Court, 2006Do2339, July 12, 2007 (S. Kor.). 126 See Supreme Court, 2009Do2109, Apr. 28, 2011 (S. Kor.). 127 See Supreme Court, 2009Do2094, Mar. 14, 2013 (S. Kor.).

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defendant complied with the test, which showed the criminalizing figure. The blood sample that was taken from him in the hospital also proves it. In 2011 the Supreme Court excluded the defendants’ statements obtained by illegal “voluntary accompaniment,” stating that “voluntary accompaniment” can be allowed only when police officers have informed defendants the right not to accompany or it is objectively and clearly recognized that defendants could have broken away from the accompaniment freely at any time.128 Article 308–2 will also influence the application of Article 309 of the CPC. Even after the Korean version in decisions of Miranda and Massiah,129 the traditional “voluntary test” to exclude confessions was not completely replaced. Article 308– 2 clearly states that illegality, not voluntariness, is the standard to exclude confessions. It means that if confessions are obtained by illegal interrogation methods, they are presumed to be involuntary. Considering that Article 309 provides “confessions whose voluntariness is doubtful” shall be excluded, the “doubtfulness” is confirmed only when the investigative method during interrogation is found to be illegal.

4

New issues of the exclusionary rules

4.1

Changed and unchanged

Twenty years after the establishment of the 1987 Constitution to the 2007 revision of the Criminal Procedure Code, Korean criminal procedure has either strengthened or introduced new exclusionary rules to deter police misconduct. Although the legal surroundings of the Korean criminal justice system were totally changed, the old consciousness and illegal practice of the law enforcement authorities did not rapidly fade away. It would be naive to expect that police misconduct suddenly disappeared after the exclusionary rules were adopted in the criminal justice system. President Roh Tae Woo (1988–1993), who was a leader in the 1980 military coup with Chun Doo-Hwan but who was elected as President by a direct election based on the 1987 Constitution, promised to prohibit torture and guarantee human rights in the criminal process. During the period of the Roh government, as reviewed, a series of groundbreaking decisions were made by the Supreme Court. President Kim Young Sam (1993–1998), who once was a leader of the democratization movement, merged his Unified Democratic Party with the ruling Democratic Justice Party led by Chun Doo-Hwan and Roh Tae Woo under 128 See Supreme Court, 2009Do6717, June 30, 2011 (S. Kor.). 129 See supra text accompanying notes 53-71.

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the authoritarian regime in 1990. President Kim Young Sam also criticized the criminal process, saying that torture and mistreatment by law enforcement authorities recurred, and emphasized that procedural rights of suspects should be guaranteed. The CPPA was legislated by President Kim’s initiative. The number of the reports of torture decreased since this political democratization. However, it has been repeatedly reported that National Security Law violators were mistreated in the National Security Planning Agency. For instance, Yoo Won Ho, who visited North Korea – accompanying a leading reunification movement activist named Reverend Moon Ik Hwan – without the government’s permission in 1989, and Legislator Seo Kyung Won and his staff Bang Yang Kyoon, who visited North Korea without the government’s permission in 1988, were severely hit and deprived of sleep during interrogation.130 Reunification activists such as Jamintong (Self-reliance, Democracy, Reunification) and leftist activists such as Sanomaeng (Socialist Workers’ League) were also harshly treated by the National Security Planning Agency in 1990.131 However, the National Security Planning Agency’s investigating officers were not investigated at all. The mistreatment of non-political suspects still went on during the period of the Roh and Kim governments. The most highly profiled case happened in the Pusan North Police Station in 1993. Two suspects were arrested under the suspicion of killing an eight-year-old girl. The eyes of the suspects were covered by a towel, their mouth were gagged, and they were handcuffed and beaten by fist and by bat in the police station. Thanks to the efforts of a local newspaper and human rights lawyers led by Moon Jae In, who was an opposition candidate in the 2013 presidential election, the truth was revealed and the police officers were convicted.132 In an interview with a magazine in 1994, Choe Hyung Woo, Minister of Internal Affairs under the Kim Young Sam government known as the “Civilian Government,” surprisingly said that those who are arrested for their leftist thought may be deprive of sleeping by the National Security Planning Agency.133 His remark was an explicit argument that sleep deprivation was not considered illegal. While torture by electricity or water seemed to disappear after political democratization, lower level torture such as beating and sleep deprivation was widely used in both political and non-political cases. President Kim Dae Jung (1998–2003), a representative victim of authoritarian rule sentenced to death under the Chun Doo Hwan rule, was very active in guaranteeing human rights in criminal procedures. President Roh Moo Hyun 130 131 132 133

See Park, supra note 8, at 275–78. Id. at 275–78, 285–294. Id. at 383–85. Id. at 342.

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(2003–2008) was a leading human rights lawyer before becoming a politician. Since established in 2001, the National Human Rights Commission has actively worked to investigate the misconduct of law enforcement authorities. In 2003, the Ministry of Justice made the Rule for the Protection of Human Rights in Investigations. However, illegal misconduct has lingered within the law enforcement agencies. Although the police have proudly considered themselves as a “stick for the people,” they have often played as a “stick to brandish towards people.” Let me introduce a few shocking cases. In 2000, it was reported that a suspect for selling drugs was taken to a mountain and put into a pit and threatened with being buried alive by police officers. In an interrogation room he was given the “wing-breaking” torture,134 which was widely used during authoritarian rule.135 Probably the most serious misconduct in the history of the Prosecutors’ Office occurred in 2002. A suspect of the murder of a gang boss died after being beaten by law enforcement officers in the Seoul Prosecutors’ Office. The National Human Rights Commission found that suspects, including the deceased, were deprived of sleep, were beaten and were forced to drink water. They were also forced to do “Wonsan bombing,”136 which was commonly used during authoritarian rule. The officers and Hong Kyung Ryung, who as a prosecutor directed them to torture suspects, was convicted, and the Minister of Justice, Attorney General and Head of the Seoul Prosecutors’ Office resigned.137 “A prosecutor has become a monster to catch an organized criminal.”138 In 2010, the National Human Rights Commission filed a charge against police officers after investigating their severe torture of suspects in the Seoul Yangcheon Police Station, and they were convicted.139 Their mouth were stuffed by paper tissues or towels, and suspects suffered from the “wingbreaking” torture,140 which was widely used during authoritarian rule. These shocking incidents revealed that illegal interrogation practices have surreptitiously survived although substantially decreased in contemporary Korean society.

134 By the “wing-breaking,” the two arms of suspects are moved to their back and handcuffed, then lifted. 135 Chosun Ilbo, May 16, 2000; Hankyoreh, May 16, 2000. 136 By the “Wonsan bombing,” the two arms of suspects are moved to their back and their head is located on the floor, then suspects shore up their body by their head and toes. Wonsan is a city of North Korea. 137 Chang Won Pyo, Enemies of Justice 278–84 (2014) (in Korean). 138 Id. at 278. 139 Ki Soo Lee, The Theory and Reality of False Confessions 192–93 (2012) (in Korean). 140 By the “wing-breaking,” the two arms of suspects are moved to their back and handcuffed, then lifted.

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Application of exceptions to the exclusion: rule with weak teeth?

After the 2007 Supreme Court’s decision and the 2007 revision of the CPC, the Supreme Court dealt with the exceptions to the search-and-seizure exclusionary rule and the “fruit of the poisonous tree” doctrine. The decision of March 12, 2009 is important.141 In this case, an arrested robbery defendant made an incriminatory statement regarding victims in a police car without being given the warning of the right to silence. Based on this statement, the police officer seized the victim’s materials, including her bag in the defendant’s residence. Later, being given the warning of the right to silence, the defendant voluntarily confessed his crime. The defendant admitted to his crime in a trial. In a trial, the prosecutor argued that exceptions to the exclusionary rule are applicable. However, the Seoul Seobu District Court rejected it.142 First, the Court excluded the defendant’s statement in a police car for it was obtained without the Miranda warning. Second, the Court rejected the prosecutor’s argument of “inevitable discovery exception”143 that without the defendant’ statement the seized materials could have been obtained based on the defendant’s consent or by emergent search-and-seizure in Article 217(1) of the CPC. The Court also rejected the prosecutor’s argument of a “good faith exception”144 that the police officer had good faith that he could legally search and seize the defendant’s residence by Article 217(1) of the CPC, for the defendant was under emergent arrest. The Court held that it is hard to find the defendant’s consent when the requirements for Article 217(1) are not fulfilled either. Third, the Court excluded the victim’s materials for they were tainted evidence derived from the illegally obtained statements. Deciding that the “taint” in the derivative evidence was not “purged,” so “the purged taint exception”145 was not applicable, the Court held the defendant guilty based on his admission in a trial.

141 See Supreme Court, 2008Do11437, Mar. 12, 2009 (S. Kor.). 142 See Seobu District Court, 2008Kohap71, July 10, 2008 (S. Kor.). 143 This exception originates from Nix. v. Williams, 467 U.S. 431 (1984). The Court held that evidence obtained through the illegal police conduct might be admissible if it would “inevitably” have been discovered by other independent lawful means. 144 This exception originates from U.S. v. Leon, 468 U.S. 897 (1984). The Court held that evidence need not be excluded when police had obtained the evidence through objective good faith reliance on “a search warrant issued by a detached and neutral magistrate but ultimately found to be unsupported by probable cause.” Id. at 913. 145 His exception originates from Won Sun v. U.S., 367 U.S. 643 (1961). The Court stated that the applicability of the “fruit of the poisonous tree” doctrine is determined by “whether, granting establishment of the primary illegality, the evidence to which instant objection is made has been come at by exploitation of that illegality or instead by means sufficiently distinguishable to be purged of the primary taint.”

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However, this decision was overthrown by the Seoul High Court’s decision, deciding the victim’s materials as derivative evidence should not be excluded.146 Confirming the High Court’s decision, the Supreme Court provided more specific standards than in its 2007 decision to decide whether to exclude “tainted fruits.” It requested comprehensive evaluation of all the circumstances regarding the collection of the first tainted evidence: the purpose of process-related provisions, the content, degree, reason of process violation, the possibility of avoiding the violation, the nature and violated degree of rights or legal interests that process-related provisions intend to protect, the causation between process violation and evidence collection, the willfulness or negligence of law enforcement officers, and all situations that additionally happened when collecting the derivative evidence.147

Then, the Supreme Court found “dilution or severance of the causation between the first illegal evidence and the derivative evidence”148 in this case. The Supreme Court believed that the failure to give the Miranda warnings was a “mistake, not intentional”149 and focused on the fact that in the subsequent interrogation the warning was given, and the defendant made confessions again with the aid of his counsel.150 The author stands by the Seoul High Court. First, it is very lenient to estimate that the failure of warning is simply a “mistake.” Considering the Miranda warnings were well informed among the police community after the 1992 Supreme Court decision, it is reasonable to doubt either “mistake” or “good faith” of the police officer and to conclude that the failure to give the Miranda warnings was deliberate or reckless at least. It is assumed that the Supreme Court might refer to the U.S. Supreme Court’s decision of Oregon v. Elstad,151which held that the second confession obtained after giving proper Miranda warnings was not tainted fruit on the grounds that it was derived from the first confession obtained without Miranda warnings. The main rationale was that the violation of the Miranda warnings was not a violation of the Constitution itself.152 However, in Korea, it is a direct and grave violation of both the Constitution and the CPC for a police officer not to warn a suspect of their rights.

146 147 148 149 150 151 152

See Seoul High Court, 2008No1954, Nov. 20, 2008 (S. Kor.). Supreme Court, 2008Do11437, Mar. 12, 2009 (S. Kor.). Id. Id. Id. Oregon v. Elstad, 470 U.S. 298 (1985). The U.S. Supreme Court in Michigan v. Tucker held that the Miranda requirements were not right against compulsory self-incrimination but merely “prophylactic rules” to protect that right; thus disregard of the Miranda rules did not constitute a core violation of the Fifth Amendment. Michigan v. Tucker, 417 U.S. 433 (1974) (emphasis added).

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Second, it is very naïve to find “dilution or severance of the causation” in this case. Unless the victim’s materials are excluded in this case, law enforcement authorities are likely to first elicit incriminatory statements from a suspect without giving the warning, and then give the warning later. This will weaken the right to silence substantially. In this sense, the Supreme Court decision of March 12, 2009 foreshadows that the search-and-seizure exclusionary rule will not have strong teeth in practice, and that the Supreme Court will follow the conservative U.S. Burger-Rehnquist Court rather than the liberal Warren Court.

4.3

Should interrogation stop when the right to silence or counsel is invoked by suspects? – “duty to submit to questioning”?

Although the Korean Supreme Court established the Korean versions of Miranda and Massiah, there remains unclear parts of these decisions, that is, whether or not a custodial interrogation may be reinitiated once the suspect has invoked his right to remain silent or to have an attorney present at the interrogation. In practice, Korean law enforcement authorities do not stop questioning even after the suspects have invoked their right. This practice has not been challenged in a trial yet. Korean law enforcement authorities act as if a “duty to submit to questioning” is imposed on suspects. Such a duty does not exist in the CPC at all, while it is stipulated in Article 198(1) of the Japanese Criminal Procedure Code. This Japanese Article provides that “except in cases where the suspect is under arrest or in detention, the suspect may refuse to appear or, having appeared, may leave at any time.” To read Article 198(1) literally, the suspect’s right to refuse to appear for questioning and to leave apply only to those not under arrest or in detention. In actual practice, therefore, if suspects under arrest or in detention invoke their rights to silence, they are not allowed to leave the interrogation room; rather, they must be present and listen to questioning. The majority of Japanese academics have criticized that the “duty to submit to questioning” substantially forces suspects to answer despite the constitutional guarantee of the right to silence. Japanese law enforcement authorities have strongly adhered to the literal interpretation and the Japanese Supreme Court has not made a decision on this issue.153 This is in salient contrast to Miranda, which makes it clear that suspects have an absolute right to silence and that all questioning must cease immediately when 153 See Kuk Cho, Japanese “Prosecutorial Justice” and Its Limited Exclusionary Rule, 12 Colum J. Asian L. 1, 57–58 (1998).

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a suspect invokes his right to remain silent or right to counsel.154 The subsequent U.S. Supreme Court decisions of Miranda and Massiah also held that interrogation should stop once suspects have invoked their right to silence or counsel. For instance, the Court in Edward v. Arizona held: An accused, such as a petitioner, having expressed his desire to deal with the police only through counsel, is not subject to further interrogation until counsel has been made available to him, unless the accused himself initiates further communication, exchanges, or conversations with the police. . . . [W]hen an accused has invoked his right to have counsel present during custodial interrogation, a valid waiver of that right cannot be established by showing only that he responded to further police initiated custodial interrogation even if he has been advised of his rights.155

In Minnick v. Mississippi,156 the Court also held that once a suspect had invoked the Fifth Amendment right to counsel, police could not reinitiate interrogation unless counsel was present at the reinitiation, even if the suspect had consulted with counsel. Recently in Montejo v. Louisiana,157 the Court modified its previous stern position by overruling Michigan v. Jackson.158 Montejo was charged with firstdegree murder and appointed court-ordered counsel, which he neither expressly requested nor denied. Later that day, while in prison, police read Montejo his Miranda rights and he voluntarily accompanied the police to the site where the murder weapon was located. While in the police car without counsel present, he wrote an inculpatory letter of apology to the victim’s widow. At trial, the letter of apology was admitted over the defense’s objections, and Montejo was convicted of first-degree murder and sentenced to death. The Supreme Court rejected the defense’s claim that the letter should have been suppressed since Montejo stood mute at his hearing while the judge ordered the appointment of counsel. In Berghuis v. Thompkins,159 it also established that the mere act of remaining silent is not sufficient to imply that the suspect has invoked his or her right to silence; only when a suspect unambiguously invoked his Miranda right to counsel should police cease questioning. Although these two cases certainly weakened Miranda and Massiah, it has not changed that police are forbidden to initiate interrogation of a criminal defendant once he has clearly invoked his right to counsel. 154 155 156 157 158

Miranda v. Arizona, 384 U.S. 436, 444–45 (1966). Edward v. Arizona, 451 U.S. 477, 477, 484 (1981) (emphasis added). Minnick v. Mississippi, 498 U.S. 146 (1990). Montejo v. Louisiana, 556 U.S. 778 (2009). “[I]f police initiate interrogation after a defendant’s assertion, at an arraignment or similar proceeding, of his right to counsel, any waiver of the defendant’s right to counsel for that police initiated interrogation is invalid.” Michigan v. Jackson, 475 U.S. 625, 636 (1986). 159 Berghuis v. Thompkins, 560 U.S. 370 (2010).

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In this context, the Korean versions of Miranda and Massiah do not have as strong a bite as the U.S. originals. As reviewed below,160 state attorneys for the indigent are not available during police interrogation before prosecution. To most suspects, therefore, right to silence is the only weapon to confront law enforcement authorities. Because of the Korean law enforcement authorities’ practices, however, suspects who have invoked their right to silence have to endure repeated questioning by the police during the period of their arrest or detention, and suspects who have invoked their right to silence also have to until their counsel arrives. In this situation, there is a high possibility for suspects to waive their rights to silence or counsel.

4.4

Institutional limit of the right to have a counsel participate in interrogation

As reviewed,161 the “right to have a counsel participate in interrogation” was codified in the CPC in 2007. However, only in one percent of cases among all criminal cases do counsels participate.162 Private lawyers are not willing to participate in interrogation, for their participation does not get additional charges in most cases. State-appointed attorneys for the indigent are available only to defendants after prosecution. During police interrogation before prosecution the right to have a counsel participate in interrogation can be enjoyed only by a small number of propertied suspects. The U.S. public defender system is not available in Korea. Although each regional Bar Association provides a duty solicitor for the indigent suspect, its coverage is very limited. It is also very rare for a duty solicitor to participate in interrogation. As a result, most poor suspects have to go through interrogation alone and the gap between the rich and the poor in the enjoyment of the right to counsel gets bigger. It is a new task for the Korean criminal justice to reduce or remove this gap, depending on the public’s recognition of the importance of the right to counsel and the budget for a new system for the indigent.

160 See Berghuis v. Thompkins, 560 U.S. 370 (2010). 161 See supra text accompanying notes 77-82. 162 See Beopryul Shinmoon, Law Times (Dec. 7, 2012, 8:59 AM), http://www.lawtimes.co.kr/ LawNews/News/NewsContents.aspx?serial=69887&kind=AE.

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Consent of one of the parties of electronic communication

Since the CPPA was legislated, the question has remained whether or not the consent by one of the parties of electronic communication can justify its interception. This question is raised in the two settings below; (1) law enforcement authorities secretly record their electronic communication with others without a warrant; (2) private persons secretly record their electronic communication with others. Dealing with the second type of setting, the Supreme Court held that such interceptions are not illegal. In the decision of October 8, 2002, with an intent to file a charge for legal breach of the owner of a rival beauty parlor, the defendant instructed a person to call his rival and record their conversation. The Court held that the secret recording of telephone communication by one party of the communication is not illegal.163 This decision was based on the concept that either party of electronic communication takes the risk that the other party may secretly record the communication. This 2002 decision has been criticized, saying that secret recordings of electronic communications only by the consent of one party of the communication violates the non-consenting party’s right to control his/her words, so it is illegal;164 prohibited wiretapping is defined as obtainment of electronic communication without consent of a party, and a “party” here includes all parties of the communication.165 The Supreme Court has not held that this decision is also applicable to the first type of setting. If so, law enforcement authorities may freely obtain electronic communication of suspects without judicial control. In the Decision of October 14, 2010, the Court held that secret recording of mobile phone communication by police informant, who was imprisoned at that time and given the phone by the police, is illegal.166

4.6

Evidences illegally obtained by a private person

Traditionally exclusionary rules were to deter the misconduct of law enforcement authorities,167 including Article 308–2 of the CPC to exclude evidence obtained not through due process and Article 309 of the CPC to exclude statements ob163 164 165 166 167

See Supreme Court, 2002Do123, Oct. 8, 2002 (S. Kor.). Bae et al., supra note 50, at 99. Shin, supra note 35, at 457. See Supreme Court, 2010Do9016, Oct. 14, 2010 (S. Kor.). The U.S. Supreme Court has also taken the same position since Burdeau v. McDowell, 256 U. S. 465 (1921).

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tained by illegal interrogation. Certainly, if private persons illegally collect evidence by cooperating with law enforcement authorities, their acts are regarded as law enforcement authorities’ acts.168 As reviewed,169 however, the CPPA prohibits anyone, including private persons as well as law enforcement officers, from committing illegal inspection of letters, wiretapping electronic communications, and recording or eavesdropping on conversations between others. So evidence obtained by a private person who violates the CPPA shall be excluded. This shows that communication privacy is much more protected than basic rights in criminal procedures in Korea. Recently there were a number of cases where a private person without cooperating with law enforcement authorities illegally collected evidence to use in litigation or to threaten people. This person will be punished by law. The issue here is whether the evidence may be used in a trial. In the decision of September 30, 1997 the Supreme Court dealt first with this controversial issue.170 In this case, the defendant was accused of adultery by her husband.171 Nude photographs of the defendant, which her adulterer took with her consent, were seized by the police and submitted to the court. Her adulterer hid his intent to use the photos to blackmail her when taking them. The Seoul District Court held that the photos should be excluded, for they violated the “core part of the right of personality of the defendant,”172 stating: If photos of a person are taken against the person’s will or while the person does not know that the photos are used for criminal activities, even taken by a private person and not by state authorities, they violate the person’s right of personality or likeness seriously, and so should be excluded. It is a new violation of the person’s fundamental right for state authorities to use the photos taken by a private person for an unjust purpose as evidence.173

This is the first judicial case in Korea excluding evidence improperly obtained by a private person. It is assumed that the Seoul District Court borrowed the concept of the “core part of the right of personality” from the German Federal Constitutional Court decision of 1973,174 which excluded a conversation of tax fraud secretly recorded by private persons about the defendant.175 168 Skinner v. Railway Labor Exec. Ass’n, 489 U.S. 602, 614 (1989). 169 See Supreme Court, 2001Do229, Mar. 9, 2001 (S. Kor.); Miranda v. Arizona, 384 U.S. 436 (1966). 170 See Supreme Court, 97Do1230, Sept. 30, 1997 (S. Kor.). 171 Adultery is criminalized in Korea. See Kuk Cho, Crime of Adultery in Korea: Inadequate Means for Maintaining Morality and Protecting Women, 2 J. Korean L. 81 (2002). 172 See Seoul District Court, 96Ga-Hap5541, Apr. 9, 1997 (S. Kor.). 173 Id. 174 Bundesverfassungsgericht [BverfG] [Federal Constitutional Court] Jan. 31, 1973, 34 BVerfGE 238 (Ger.).

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However, the Supreme Court quashed the District Court’s decision.176 The Supreme Court held: All evidence related to the private areas of people should not always be prohibited to submit. Balancing between the public interests of effective prosecution and truth finding in the criminal process and the interests of individuals’ private lives, the Court decides whether to permit the submission. The Court can avoid the violation of human dignity of the people by choosing a proper method of evidence investigation. It is easily confirmed that the photos in this case were taken with the defendant’s consent, so the existence of the photos do not violate the defendant’s right of personality or likeness. Even supposing that the adulterer had the intent to blackmail the defendant, the photos may not be regarded as having been taken involuntarily. . . . Even if the submission of the photos may infringe the secrets of the defendant’s private life; it is a limitation of the basic right that the defendant should endure.177

In the decision of November 28, 2013,178 the Supreme Court reviewed the same issue. In this case, the defendant who was a public official of the City of Milyang, developed an election campaign for the Mayor of Milyang, which is a violation of the Public Election Law. Another official obtained the defendant’s emails illegally by removing the protection system for emails, which were submitted to prosecutors. The Court held that the emails may be used to convict the defendant, pointing out that the defendant’s crime is very serious, his emails have public elements, and the defendant consented to use them as evidence in a trial.179 In these two cases, taking the balancing test, the Supreme Court did not completely block the chance in theory for excluding evidence improperly obtained by a private person. However, the Court is not expected to be eager to exclude such evidence. When a due process violation by a private person is taken much more seriously, the German Court’s approach will be adopted in Korea.

175 In this case, the defendant was accused of tax fraud by making other persons’ real property price on contract lower than the actual price for tax purposes and of receiving the difference in cash from the owners. The owners secretly tape-recorded conversations between the defendant and themselves relating to the tax fraud, and subsequently submitted the tape to the police on their own initiative. See Kuk Cho, “Procedural Weakness” of German Criminal Justice and Its Unique Exclusionary Rules Based on the Right of Personality, 15 Temp. Int’l & Comp. L. J. 1, 24–25 (2001). 176 See Supreme Court, 97Do1230, Sept. 30, 1997 (S. Kor.). 177 Id. 178 See Supreme Court, 2010Do12244, Nov. 28, 2013 (S. Kor.). 179 Id.

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Conclusion

Under authoritarian rule, Miranda, Massiah and Mapp were totally alienated from the Korean criminal procedure. Very few academics and lawyers knew their meaning. Wiretapping was seriously abused without any restriction. Since democratization, exclusionary rules have been received one after another in Korea from across the Pacific, although they are often criticized as truth impairing and pro-criminal in their home country.180 The Korean judiciary and legislature that experienced the dark age of procedural rights under a long authoritarian rule chose to adopt the exclusionary rules as a useful tool to deter police misconduct, which has persistently lingered even after political democratization. The institutional surroundings of the newly established rules are still advantageous to law enforcement authorities. However, it is certain that the rules cannot be explicitly rejected by the law enforcement authorities. Now the police are officially requested to adjust themselves to these laws. Although the exclusionary rules alone cannot enhance the guarantee of an individual’s procedural rights, they provide legal grounds for individual suspects to challenge police misconduct. The groundbreaking legal reform after democratization does not automatically lead to a change in the behavior of law enforcement authorities. Even after the reform, law enforcement authorities tacitly praise “Confession est regina probationum” and emphasize the superiority of crime control over due process, seeking for a detour to avoid the exclusionary rules. They made administrative rules to limit the reach of judicial decisions and the 2007 revision of the CPC. They argue that the exceptions to the exclusionary rules should apply to their conduct. In this context, a new tension between crime control and due process in new legal circumstances has just begun.

References Amar, A. R. (1996). Foreword: Sixth Amendment First Principles. Georgetown Law Journal, 84, 641–712. Amar, A. R., & Lettow, R. B. (1995). Fifth Amendment First Principles: The self-incrimination clause. Michigan Law Review, 93, 857–928. Bae, J. D. et al. (2009). New criminal procedure law (2nd ed.). (In Korean) 180 See Off. of Legal Pol’y & Dep’t of Justice, Report to the Attorney General on the Law of Pretrial Interrogation, 22 U. Mich. J. L. Reform 437, 535–36 & 618 (1989); Akhil Reed Amar, Foreword: Sixth Amendment First Principles, 84 Geo. L. J. 641, 644 (1996). See generally Akhil Reed Amar & Renée B. Lettow, Fifth Amendment First Principles: The Self-Incrimination Clause, 93 Mich. L. Rev. 857 (1995); Joseph D. Grano, Confessions, Truth, and the Law (1993).

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Catholic Human Rights Committee (2001). Judicial murder: The Massacre of April 1975. Seoul, Korea: Author. (In Korean) Cho, G. (1987). Specialists of torture and fabrication. (In Korean) Cho, K. (1998). Japanese “prosecutorial justice” and its limited exclusionary rule. Columbia Journal of Asian Law, 12, 1–74. Cho, K. (2001). “Procedural weakness” of German criminal justice and its unique exclusionary rules based on the right of personality. Temple International and Comparative Law Journal, 15, 1–30. Cho, K. (2002). Crime of adultery in Korea: Inadequate means for maintaining morality and protecting women. Journal of Korean Law, 2, 81–99. Cho, K. (2002). Unfinished “criminal procedure revolution” of post-democratization South Korea. Denver Journal of International Law and Policy, 30, 377–394. Cho, K. (2007). Transitional justice in Korea: Legally coping with past wrongs after democratization. Pacific Rim Law & Policy Journal, 16, 579–611. Cho, K. (2010). The reformed criminal procedure of post-democratization South Korea. In K. Cho (Ed.) Litigation in Korea (pp. 58–86). Northampton, MA: Edward Elgar. Grano, J. D. (1993). Confessions, truth, and the law. Ann Arbor, MI: University of Michigan Press. Han, I. S. (2000). Beyond the authoritarian criminal law. (In Korean) Henderson, G. (1968). Korea: The politics of the vortex. Cambridge, MA: Harvard University Press. Lee, K. S. (2012). The theory and reality of false confessions. (In Korean) Ministry of Justice (2007). Revised Criminal Procedure Code. Seoul, Korea: Author. (In Korean) Office of Legal Policy & Department of Justice (1989). Report to the Attorney General on the law of pretrial interrogation. University of Michigan Journal of Law Reform, 22, 437– 572. Park, W. S. (2006). Documentary of the barbaric days (Vol. 2). (In Korean) Pyo, C. W. (2014). Enemies of justice. (In Korean) Shin, D. W. (2014). Criminal procedure law (5th ed.). (In Korean)

Contributors

Kang-Jin Baik was a judge at the Seoul High Court. He is currently a Judge of Extraordinary Chambers in the Courts of Cambodia. His research interests focus mainly on civil procedure law, intellectual property, and corporate law. Wen-Chen Chang is Professor at National Taiwan University College of Law. She focuses her teaching and research on comparative constitutional law, international human rights law, international environmental law, public law, law and policy, and law and society. Kuk Cho is Professor of Law, Seoul National University School of Law. His teaching and research focus mainly on criminal law as well as criminal procedure law. He has served as a Commissioner of the National Human Rights Commission of Korea from 2007 to 2011. Jong-ik Chon is Associate Professor at Seoul National University School of Law. His primary areas of research include constitutional law, constitutional litigation, and constitutional history. Seong-wook Heo is Associate Professor at Seoul National University School of Law, where he teaches administrative law, environmental law, and law and economics. He had served as a judge of Seoul Central District Court. Rong-Geng Li is Associate Professor at National Taipei University College of Law. His primary areas of research include criminal law and criminal procedure law. Hyeok-Joon Rho is Professor at Seoul National University School of Law. His academic research focuses mainly on commercial law.

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Ching-Ping Shao is Professor at National Taiwan University College of Law. His teaching and research interests focus on international business transactions, corporate law, securities regulations, and transnational commercial law. Kuan-Ling Shen is Professor at National Taiwan University College of Law. She focuses her research on civil procedural law, non-contentious civil law, arbitration law, family procedure law, and bankruptcy law. Chung-jau Wu is Associate Professor at National Taiwan University College of Law. Having served as a judge at district court, his research and teaching interests focus on civil law, civil procedure law, and legal theory. Jiunn-rong Yeh is University Chair Professor at National Taiwan University College of Law. He previously served as a Minister in the Taiwanese Government and Vice-Dean of his College. He also teaches in many overseas universities. His teaching and research focuses are primarily on comparative constitutional law, environmental law, and administrative law. Jinsu Yune is Professor at Seoul National University School of Law, where he teaches civil law. He was former Director of Seoul National University Law Research Institute.