CONTENTS
- 1. A Case Raising the Question of the Constitutionality of the Foreign Trade Act
- - The Purport of the Referral
- - Disadvantages in the Event of a Violation of the Situational Permission Provisions
- 2. The Constitutional Court's Determination Regarding the Constitutionality of the Foreign Trade Act
- - The Determination Regarding the Principle of Clarity Under the Foreign Trade Act
- 3. The Significance of the Decision Upholding the Constitutionality of the Foreign Trade Act
- - Daeryun's Strategy Regarding the Foreign Trade Act
1. A Case Raising the Question of the Constitutionality of the Foreign Trade Act
The following discusses the substance of this case, which raised the question of whether Article 19(3) of the Foreign Trade Act is unconstitutional.
The defendants in this case were indicted on charges of exporting aircraft parts to Russia by way of Kazakhstan, Türkiye, and other countries without obtaining “situational permission.”
They were the representatives of an export and import agency and an aircraft parts manufacturer, respectively, and were found to have shipped out goods that were subject to export restrictions under the prevailing international situation without permission.
The prosecution indicted them for violation of Article 19(3) of the former Foreign Trade Act and the Customs Act, and the court, finding that the legal clarity of the export permission system was at issue, referred the matter to the Constitutional Court for constitutional review of the statute.
The Purport of the Referral
The Seoul Central District Court argued that the former Foreign Trade Act did not clearly define the concepts of “strategic items, weapons of mass destruction, conventional weapons, and the like,” and that, for this reason, (i) the requirements for export permission were unclear and (ii) the persons subject to the law (companies) found it difficult to foresee whether their conduct was subject to punishment, thereby violating the principle of clarity under the principle of legality in criminal law and the principle prohibiting blanket delegation.
In particular, it pointed out that the expression “grounds that harm the changing international situation or national security” was excessively abstract, and that the part leaving such matters to be prescribed by notice of the Minister of Trade, Industry and Energy delegated fundamental legislative matters to the executive branch.
Disadvantages in the Event of a Violation of the Situational Permission Provisions
In the event of a violation of the situational permission provisions, the offender is, pursuant to Article 53(2), Item 4 of the Foreign Trade Act, subject to imprisonment with labor for not more than five years or a fine not exceeding an amount equal to three times the value of the goods exported, imported, transited, transshipped, or brokered.
In addition, Article 31 of the Foreign Trade Act provides that, in the case of export without permission, the export and import of all or part of the strategic items, and the like, may be restricted for a certain period within a range of up to three years.
2. The Constitutional Court's Determination Regarding the Constitutionality of the Foreign Trade Act
The Constitutional Court decided that Article 19(3), Item 13 of the former Foreign Trade Act is not in violation of the Constitution.
While acknowledging that the provision constitutes a delegation concerning a penal statute, the Court determined that it does not run counter to the principle prohibiting blanket delegation, citing the following circumstances.
· The Necessity of Delegation
Goods subject to export restrictions change continuously depending on the international situation, the level of technology, military circumstances, and the like, so it is difficult to specify each of them individually by statute.
Accordingly, the Court found that it is unavoidable to delegate to the Minister of Trade, Industry and Energy the discretion to flexibly designate the items subject to situational permission.
· Securing Foreseeability
Each item under Article 19(3) of the former Foreign Trade Act already prescribes 12 detailed grounds, such as “refusal to provide importer information” and “abnormal transaction conditions,” so the “cases in which situational permission is required” can be sufficiently foreseen.
Companies can confirm, by HSK code, whether goods are subject to situational permission through the Ministry of Trade, Industry and Energy's “Strategic Trade Information System (Yestrade).”
Accordingly, the Court determined that companies or individuals subject to the law are in a position to foresee whether their conduct is subject to permission.
· The Legitimacy of Delegation in Areas of Expertise
Because export controls relating to the international situation and technology are an area requiring highly specialized and policy-based judgment, the Court stated that it constitutes a reasonable legislative technique for the statute to set forth certain standards and to delegate the detailed criteria to the executive branch.
The Determination Regarding the Principle of Clarity Under the Foreign Trade Act
The Constitutional Court stated that “the provision subject to review can be assessed, through the principle prohibiting blanket delegation, by reference to the specificity and clarity of the part delegated to the notice,” and that there was no need to separately assess whether the principle of clarity had been violated.
In other words, it reaffirmed the position that, even where abstract expressions exist, so long as the foreseeability of the persons subject to the law is secured, the essence of the principle of legality in criminal law is not contravened.
3. The Significance of the Decision Upholding the Constitutionality of the Foreign Trade Act
The Constitutional Court pronounced, by the unanimous opinion of all participating Justices, a decision that Article 19(3), Item 13 of the former Foreign Trade Act is not in violation of the Constitution.
This decision is regarded as a decision recognizing that the legislative structure of the situational permission system under the Foreign Trade Act is constitutional.
First, it recognized the practical flexibility of the export control system and established a legal basis for responding promptly to changes in the international order.
Second, while applying the principle of legality in criminal law strictly, it gave concrete shape to the scope within which delegation to the executive branch is exceptionally permitted in “highly specialized areas.”
Third, citing the existence of systems through which exporting and importing companies can secure foreseeability in advance (such as the HSK linkage table and the self-classification system), it emphasized the clarity of corporate responsibility.
In the end, the Constitutional Court rendered a decision that presents a point of balance between the need for control to maintain national security and international peace and the freedom of economic activity, and it is expected to serve as a standard for judgment in similar cases involving export restrictions and the management of strategic items in the future.
Daeryun's Strategy Regarding the Foreign Trade Act
Daeryun Law Firm LLP provides the following assistance in cases relating to the Foreign Trade Act.
▶Response Centered on Advance Risk Assessment
In particular, for transactions involving sanctioned countries such as Russia, the Middle East, and Central Asia, a separate “circumvention export risk” assessment process is prepared to block risks.
▶Strengthening the Internal Control System and Self-Classification Capacity
▶Parallel Administrative and Criminal Response
▶Evidence Verification Based on Digital Forensics
To prevent the risk of violating the Foreign Trade Act, companies may wish to establish systems for advance classification, internal control, and specialized advice.
At Daeryun Law Firm LLP, attorneys handling international trade matters and customs matters, a customs specialist who holds a licensed customs broker qualification, a foreign attorney (United States) advising on U.S. law, and the Digital Forensics Center work together to diagnose in advance the legal risks that may arise throughout a company's export and import process, and to respond promptly when a dispute arises.
If you need legal assistance regarding the Foreign Trade Act, you are welcome to make a 🔗legal consultation reservation at any time.
