Tada wins initial legal battle as Seoul court rules it is legit

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Tada wins initial legal battle as Seoul court rules it is legit

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Socar CEO Lee Jae-woong leaves the Seoul Central District Court in Seocho District, southern Seoul, after Tada was ruled not guilty of violating domestic transportation laws on Wednesday. Lee and Park Jae-wook, CEO of VCNC, which operates the van-hailing service, were both cleared of charges. [NEWS1]

The Seoul Central District Court acquitted van-hailing service Tada of operating illegal taxi services on Wednesday, calling it a legitimate rent-a-van business.

This was the judiciary’s first verdict on Tada’s legality, which has been questioned since the service’s launch in October 2018.

Last week, prosecutors called for the CEO of Tada’s operator VCNC, Park Jae-wook, to be sent to jail for a year, along with Lee Jae-woong, CEO of Socar, parent of VCNC.

Prosecutors and the local taxi industry accused Tada of offering taxi services, which is only allowed for licensed taxis under domestic law. Tada says it is a rental vehicle business based on an exception in the law that allows rented passenger vans to be offered with drivers.

The Wednesday ruling was a decisive win for Tada.

“It is reasonable to say that the relation between Tada and its users is based on a short-term rental contract,” the court ruled.

Prosecutors tried to dismiss Tada’s “rent-a-van” argument by saying it is a taxi service if users treat it as such. The taxi industry argued that the exception in the law was intended to serve tourists, not the general public.

The court said the prosecutors’ argument was an “excessive inference” of the law.

“Interpreting the extent of penalty based on a law created for traditional, offline transportation services goes against the legal principle of ‘no penalty without a law,’” said the judge.

Even if Tada’s service was illegal, it added, it was difficult to rule the two company heads guilty of intentionally breaching the law. Before its official launch, Tada’s operators had its legality confirmed by law firms and went through discussions with Ministry of Land, Infrastructure and Transport officials, who did not raise issues.

Korea’s four largest taxi associations released a joint statement Wednesday afternoon saying they had “no choice but to elevate the level of protest even higher.

“The ruling eliminates consideration of how Tada is operated in reality, its resemblance to taxis and how its illegal operation is destroying the order of Korea’s passenger transportation [industry] - it is sophistry that indulges capitalists and major law firms,” the statement said.

The court’s ruling could prove a pivotal event in the evolution of IT mobility services in Korea. They have had a difficult time in Korea beginning with UberX shutting down operations in 2015 after the Transport Ministry declared it illegal. IT giant Kakao also launched a beta service of a mobile carpool platform in 2018 but ultimately walked away from the business.

Behind these failed attempts were Korea’s taxi industry - a strong lobbying force, an aggressive protester, and for lawmakers, a voting power that can’t be ignored.

In a statement, Tada expressed thanks to the court for having “chosen a path for the future.”

“Tada will now move faster, as the challenger, to create a new economy, a new model and new rules,” said Socar CEO Lee Jae-woong in a Facebook post on Wednesday.

However, prosecutors will likely appeal the court’s ruling. There’s also a transport law revision bill pending at the National Assembly that would immediately make the service illegal if passed. Submitted in December, the bill proposes to close the loophole on rented vans.

“Resolving conflict is the role of legislatures, not the judiciary,” said liberal Democratic Party lawmaker Rep. Park Hong-keun, who proposed the amendment plan.

“Being a new industry does not end anyone’s duty to stay within legal boundaries,” he said. “Even if innovation comes from outside the traditional system, it should be incorporated into it once it grows to a certain size and starts influencing the market and other services.”

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]
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