법무법인(유한) 율촌 | Yulchon LLC

As extensively reported in the media, Yulchon's mobility team recently represented Socar Inc. ("Socar") and Value Creators & Company ("VCNC") as well as their respective representative directors (collectively "Defendants"), obtaining a judgment of acquittal on charges that their TADA Service ("TADA") allegedly violated the Passenger Transport Service Act ("PTSA").

TADA is a ride-sharing mobile application which launched in October 2018. Having quickly become the up and coming ride-sharing business in South Korea, Socar operates TADA through its subsidiary company, VCNC, which rents the TADA vans from Socar. TADA offers a unique service that distinguishes TADA from conventional taxi service in that passengers are not refused based on destination or distance of travel, vans are spotlessly clean, and free Wi-Fi and mobile chargers are provided. Within just two months of its launch, TADA's instant popularity was evidenced by 200,000 downloads of its mobile application. TADA now has more than 1.7 million members that have subscribed to the service. South Korea's PTSA restricts ride-sharing services to licensed taxis only. Private cars may not be used to provide a for-profit service. However, TADA qualifies as a 'car rental business,' falling under a narrow exception of the PTSA. Under this exception, TADA may provide a driver-included car rental service to deliver cars and drivers upon request via the app, as long as the service is provided using 11-passenger vehicles.

Threatened that TADA might encroach on their 'passenger transportation market,' the Korean taxi business community accused Socar and VCNC of purportedly operating an "unlicensed, illegal call-taxi business" disguised as a legitimate car rental business. The Korean Public Prosecutor's Office initiated investigations based on these accusations and indicted the Defendants for allegedly violating the PTSA.

At trial, the main issue was whether the mobile platform that made TADA possible is essentially a means to facilitate a short-term 'van rental with driver' service that would be allowed under the PTSA, or is an illegal circumvention of the law, which otherwise requires all taxi services to obtain a specific license from the government. The prosecution asserted that TADA was an illegal passenger transportation service in disguise. In defense, Yulchon argued that TADA qualifies as a driver-included car rental business - and not a passenger transportation business - basing its argument on a thorough analysis of the PTSA, including its amendment progress and legislative intent. Yulchon emphasized that TADA was launched after lengthy discussions with the relevant governmental authorities, including careful considerations of the possible legal implications around the technological phenomenon TADA makes possible, whereby individuals can now enter into real-time car rental agreements through a mobile application. Lastly, Yulchon stressed that relevant provisions of the PTSA should not be interpreted to encompass TADA's service within the meaning of "passenger transportation," reiterating the importance of the nulla poena sine lege principle that is embedded in our law, i.e., that there can be no punishment for conduct not prohibited by the law.

Seoul Central District Court agreed with Yulchon, stating "It is correct to find that TADA users electronically enter into car rental agreements with Socar. By summoning a car, a TADA user is requesting delivery of the rented TADA car under a short-term car rental agreement. This arrangement cannot be held to be a passenger transportation arrangement. To find that 'a car rental business' unlawful passenger transportation activities' extend beyond activities of unlicensed carpool call-taxis to include activities of driver-included car rental businesses, such as TADA, would run contrary to the principle of nulla poena sine lege." Based on this reasoning, Seoul Central District Court entered a judgment of acquittal in favor of TADA. The prosecution appealed and this case is now pending in the Seoul High Court.

This case has received much public attention and has been regarded as a legal building block for the future of mobility, innovation and related industries. Yulchon's Mobility Team is at the forefront of these developments.

Launched in 2017, Yulchon's Mobility Team works to address emerging needs in the rapidly advancing mobility technology industry against the backdrop of Korea's still-developing legal framework in this area. In order to advance the legislative process for Korea's mobility industry, Yulchon's Mobility Team initiated our 'Mobility Forum,' the first systematic effort by a law firm to build a knowledge-sharing platform. The 'Mobility Forum' consists of key players, including stakeholders from major mobility companies, regulatory authorities, lawmakers and research institutes, and led by Yulchon's skilled lawyers. Drawing on knowledge and experience developed through its extensive work in this area as well as understanding gained through the 'Mobility Forum,' Yulchon's Mobility Team was able to claim victory for its clients in the TADA case.