KLRI : KOREA LEGISLATION RESEARCH INSTITUTE

Ⅰ. Research purpose and background 

▶ Need to conduct a survey on the current status of various provisions regarding penalty surcharges in administrative statutes or regulations 

○ It’s hard to find similar cases related to penalty surcharges even in comparison with other laws. In particular, a penalty surcharge imposed to replace the suspension of business can be viewed as a unique system. As of now, over 130 statutes provide for penalty surcharges. 

- Penalty surcharges have been part of local administrative penalty charges under the Act on the Collection of Local Administrative Penalty Charges, and in recent years, the Framework Act on Administration has introduced standards for imposing penalty surcharges (Article 28) and extensions of payment deadline for penalty surcharges and payment by installment (Article 29). 

○ Penalty surcharges, for which various systems have been introduced, are implemented and operated to replace the suspension of business and to recover unjust enrichment. Discussions over the rationality of imposing penalty surcharges are being expanded with penalty surcharges newly serving the disciplinary punishment purpose, in addition to their effects on economy. 

▶ Raising questions on the rationality of imposing penalty surcharges and need for improving the standards for imposing penalty surcharges

○In cases of penalty surcharges imposed to replace the suspension of business and to recover unjust enrichment, standards vary depending on which statute is being applied, and different grounds for imposing penalty surcharges make differences in penalty surcharges. Therefore, it is imperative to review the proportionality that corresponds to the grounds for imposing penalty surcharges. 

○With the enactment and enforcement of the Framework Act on Administration, the principal standards for operating the penalty surcharge system have been suggested. In addition, it is far more necessary to conduct a review on the system as to which standards are more reasonable to impose penalty surcharges, when taking into consideration the government-wide efforts to improve statutes, such as by announcing substantial legal improvements in relation to the penalty surcharge system to replace the suspension of business.  

▶ The current status of the penalty surcharge system, type classifications, and analysis of directions for improvement 

○Analyze the current status and conditions of introducing the penalty surcharge system in the current administrative laws, classify the types of the penalty surcharge systems, conduct research on the general legal principles regarding the type-based reasonable standards for applying penalty surcharges, and appropriate aggravation and mitigation, and suggest the appropriate basic systems. 

○ Establish the reasonable standards for penalty surcharges based on the standards for calculating and imposing penalty surcharges already introduced and operated in many individual laws as means of monetary sanctions. 

○ Suggest specific measures to increase the appropriateness and equity of imposing penalty surcharges, such as improved standards for determining the imposition of penalty surcharges, realistic upper limits of penalty surcharges, improvements in imposing aggravated penalty surcharges, improvements in systems by adopting payment in installments, etc. to raise the rate of collecting penalty surcharges, the adequate amount and grade of imposing penalty surcharges to replace the suspension of business per day, the adequate classifications of business types subject to imposition. 

 

Ⅱ. Main Contents

▶ Analysis of the current status and conditions of operating the penalty surcharge system

○Conducted Focus Group Interviews (FGIs) with experts on the appropriateness, equity, etc. of the penalty surcharge system, along with a survey on the current status of imposing penalty surcharges. Used FGIs with experts by sector including academic and industrial experts and persons in charge in order to review which direction to take to achieve improvements in the system so as to address problems and limitations in the penalty surcharge system that can be identified by assessing the number-based current status of imposing penalty surcharges.  

○ Conducted this research with surveys on the current status of imposing penalty surcharges that focused on the fair trade sector which had first introduced the penalty surcharge system through the Monopoly Regulation Act, etc. and on the food and safety sector that has sought improvements in the penalty surcharge system through the Food Sanitation Act, etc. since 2017

▶ Analysis of provisions regarding the imposition of penalty surcharges by type and review of legal issues 

○Suggest penalty surcharge ① appropriateness ② equity ③ proportionality, as a direction and framework to analyze the penalty surcharge system, and based on which the penalty surcharge imposition system is analyzed and the relevant individual statutes are compared and analyzed. 

○Analyze the penalty surcharge system through complete enumeration surveys of the statutes under the jurisdiction of the Fair Trade Commission which first introduced the penalty surcharge system, and of the statutes under the jurisdiction of the Ministry of Food and Drug Safety which has attempted to improve statutes regarding penalty surcharges since 2017.  

- Conduct in-depth framework-based analysis of 130 statutes that govern penalty surcharges that replace the suspension of business, which have become a critical legal issue, with respect to the reasonable standards for penalty surcharges, in particular.  

○Legal analysis of problems arising from the current system of imposing penalty surcharges, such as appropriateness in the standards for imposing penalty surcharges, equity of imposing penalty surcharges, the amount of penalty surcharges set at a realistic level, default of penalty surcharges, and additional payment on refund of penalty surcharges.

▶ Review of plans to improve the penalty surcharge system

○Suggest improvement plans regarding individual legal issues related to the standards for and systems of imposing penalty surcharges by conducting surveys on and carrying out legal analysis of the current status of the penalty surcharge system, including improved standards for determining the imposition of penalty surcharges, realistic upper limits of penalty surcharges, improvements in imposing aggravated penalty surcharges, improvements in systems by adopting payment in installments, etc. to raise the rate of collecting penalty surcharges, the adequate amount and grade of imposing penalty surcharges to replace the suspension of business per day, the adequate classifications of business types subject to imposition. 

○Suggest specifics to improve the appropriateness and equity of imposing penalty surcharges through an amended Special Act on Imported Food Safety Control in the food and safety sector, part of the efforts to achieve system improvements in individual statutes. 

 

Ⅲ. Expected Effects

▶ Provision of empirical substantiated data on the penalty surcharge system for individual statutes

○Attempted to analyze individual statutes pertaining to penalty provisions to study the legislative characteristics of individual statute provisions pertaining to penalty provisions. Used surveys targeting persons who had imposed penalty provisions (working-level personnel) which were conducted to identify how the penalty surcharge system had been operated in reality, in order to classify penalty surcharge provisions based on the analysis of statutes or regulations which included efforts to figure out problems associated with penalty surcharge provisions in individual statutes. And reviewed such legal nature and effects to eventually present empirical substantiated data regarding each penalty provision system in each statute.  

▶ Suggest how to improve the standards for imposing penalty surcharges through the analysis of the positive laws related to the penalty surcharge system 

○The improvement plan includes efforts to identify problems associated with the current system of imposing penalty surcharges such as the amount imposed, using appropriateness, equity and proportionality standards, and based on which it is believed that the current penalty surcharge bracket will be expanded to meet today’s needs, the amount of penalty surcharges imposed per day will be set at a more realistic level, and other similar improvements will be made.