K&P Law Firm recently advised a company that it could receive substantial financial support from a local government. The main basis for this advice was the principle of protection of legitimate expectations under administrative law.
The case involved a situation where the company started a business believing in the local government's promise of support, but the local government did not provide the promised funds.
K&P Law Firm reviewed the requirements for protection of legitimate expectations and concluded that the case met all the requirements.
Definition of the Principle of Protection of Legitimate Expectations
The principle of protection of legitimate expectations is a fundamental principle of administrative law which states that the legitimate expectations of an individual who relied on the views expressed or practices followed by an administrative agency should be protected. In other words, if an individual takes certain actions relying on the public representations or administrative practices of an administrative agency, and then suffers infringement of their interests as a result of the agency's subsequent contrary disposition, the individual's legitimate expectations should be protected if they outweigh the public interest.
This principle, derived from the rule of law principle, is intended to protect the trust of the people and ensure legal stability, and is in line with the principles of good faith and estoppel.
Requirements for the Principle of Protection of Legitimate Expectations
According to Supreme Court precedents, the following requirements must generally be met for the principle of protection of legitimate expectations to apply under administrative law:
1. The administrative agency must have made a public representation to the individual that is subject to trust.
2. The individual must not be at fault for believing that the agency's representation was legitimate.
3. The individual must have taken certain actions corresponding to their reliance on the representation.
4. The agency's disposition contrary to the representation must have resulted in infringement of the interests of the individual who relied on the representation.
5. The administrative disposition based on the representation must not risk significantly harming the public interest or the legitimate interests of third parties.
In other words, the principle of protection of legitimate expectations can only apply if all five requirements are met: public representation by the agency, legitimate trust by the individual, action based on trust, infringement of legitimate expectations, and absence of harm to the public interest.
Requirement 1: Public Representation
According to Supreme Court precedents, the first requirement for applying the principle of protection of legitimate expectations, "public representation", has the following characteristics:
1. The subject of public representation
- In principle, it should be an administrative agency, but it does not necessarily have to be constrained by the formal division of authority within the administrative organization.
- It should be judged substantively in light of the status and duties of the person in charge within the organization, the specific circumstances that led to the behavior, and the possibility of trust by the other party.
2. The method of public representation
- It can take various forms such as laws, administrative rules, dispositions, commitments, administrative guidance, etc.
- It can be explicit or implicit (passive behavior).
- It does not need to take any specific form.
3. The content of public representation
- It should be something that can be subject to trust.
- It should be specific, not abstract or general in content.
- It should not be ambiguous, unclear or conditional.
The Supreme Court has recognized public representations in various cases such as announcements, notices, notifications, and replies by administrative agencies. On the other hand, it has held that simple civil service guides, abstract opinions, and behaviors of persons in charge that are not based on laws and procedures are difficult to view as public representations.
Also, while administrative plans are difficult to recognize as public representations in principle, there is room for applying the principle of protection of legitimate expectations in specific and individual cases.
Thus, public representation is judged based on substance rather than the form of administrative organization, but it must have specificity and clarity to be an object of trust, according to the stance of precedents.
Some representative cases where the Supreme Court recognized public representations are as follows:
Supreme Court Decision 96Nu18380 Decided September 12, 1997
In a case where a public official stated that construction was possible under relevant laws in relation to a land shape change permit for constructing a religious meeting hall on land within an urban planning zone, the Supreme Court ruled that there was a public representation that the land shape change would be possible.
Supreme Court Decision 2008Du6127 Decided October 9, 2008
In a case where the city's urban planning department head and others promised that land incorporated into the project site after notice of approval of an urban planning facility project implementation plan could be repurchased after project completion, the Supreme Court ruled that the promise to repurchase the land constituted a public representation by the administrative agency.
Supreme Court Decision 95Nu13746 Decided January 23, 1996
In a case where the Minister of Health and Social Affairs announced tax exemptions for national and local taxes for establishing a hospital in a medically vulnerable area, and the Minister of Home Affairs and others confirmed this, the Supreme Court ruled that the tax exemption opinion constituted a public representation by the relevant tax authorities.
As shown in the above decisions, the Supreme Court tends to recognize public representations when the explicit or implicit behavior of an administrative agency is expressed externally and has a degree of specificity that can be trusted.
Requirement 2: No Fault in Trusting the Agency's Representation
The second requirement for applying the principle of protection of legitimate expectations under administrative law, "the individual must not be at fault for believing that the agency's representation was legitimate", means that the individual must have had a legitimate reason to trust the agency's representation and must not have any reason to be held responsible for that trust.
The Supreme Court has ruled on the issue of fault as follows (Supreme Court Decision 2001Du1512 Decided November 8, 2002):
"The fault referred to here means that the defect in the agency's representation was caused by the other party or related persons' concealment of facts or other fraudulent acts such as false application, or even in the absence of such fraudulent acts, they knew or failed to know of the defect due to gross negligence."
In other words, fault is recognized for an individual in the following cases:
1. When the agency's representation was elicited through fraudulent means such as concealment of facts, deception, or false application by the other party.
2. When the individual knew or failed to know due to gross negligence that the agency's representation was defective, even in the absence of fraudulent acts.
On the other hand, if the individual had a legitimate reason to trust the agency and acted based on that trust, it can be viewed that there was no fault. This requirement is intended to harmonize the people's active request for protection of trust and the fairness of the administration, and has the meaning of requiring the individual's legitimate trust as a precondition for protection of trust.
Requirement 3: Action Corresponding to Trust
The third requirement for applying the principle of protection of legitimate expectations, "the individual must have taken certain actions corresponding to their reliance on the representation", means that the individual who trusted the agency's representation must have taken specific actions based on that trust.
This indicates that it is not enough to simply have a representation by the agency, but an external action corresponding to trust in that representation must accompany it for a legitimate expectation to be recognized.
An individual meets this requirement when they take the following actions in reliance on the agency's representation:
1. Economic actions such as property investment, transaction, etc.
2. Actions to acquire a certain qualification, license, registration or legal status.
3. Actions according to a specific plan such as preparation for business, establishment of a business plan, etc.
4. Other external actions based on the agency's representation.
The reason an external action based on trust is required in this way is because the principle of protection of legitimate expectations is not intended to protect an individual's mere expectation or hope, but to protect the specific legitimate expectation induced by the agency's representation.
However, a reasonable causal relationship must be recognized between such act of trust and damage, and the degree must be such that there is an inseparable relationship between the act and the occurrence of damage.
Requirement 4: Infringement of Interest
The fourth requirement for applying the principle of protection of legitimate expectations is that "the agency's disposition contrary to the representation must have resulted in infringement of the interests of the individual who relied on the representation."
This means that the agency's disposition contrary to the representation must have actually resulted in infringement of the individual's legitimate expectation. In other words, it is not enough for the agency to simply express a different view from before, but the individual must have suffered specific disadvantages as a result for the principle of protection of legitimate expectations to apply.
The infringement of legitimate expectation here typically takes the following forms:
1. Economic loss: Loss of investment cost, decrease in business profit, etc.
2. Loss of legal status: Revocation of license, qualification, registration, restriction of rights and interests, etc.
3. Infringement of plan or business: Suspension of business plan, termination of contract, etc.
Such infringement of legitimate expectation must have a direct causal relationship with the agency's new disposition and must be a loss that would not have occurred if the individual had not trusted the representation.
Also, this requirement is intended to ensure the "effectiveness" of the principle of protection of legitimate expectations, showing that protection of trust can only be an issue when the agency's change of view causes not just a mere violation of expectation but a substantial disadvantage to the individual.
If the individual's existing legitimate expectation is maintained despite the agency's new disposition, this requirement can be viewed as not met.
Requirement 5: No Risk of Significantly Harming Public Interest or Legitimate Interest of Third Parties
The last requirement for applying the principle of protection of legitimate expectations is that "the administrative disposition based on the representation must not risk significantly harming the public interest or the legitimate interests of third parties."
This requires balancing the protection of the individual's legitimate expectation with the protection of the public interest and the interests of others, meaning that even if the individual's legitimate expectation is recognized, protection of trust may be limited if the administrative disposition based on it excessively infringes on the public interest or the interests of third parties.
Here, "public interest" refers to the interests of the state and society as a whole, such as achieving administrative purposes, complying with laws, maintaining order, etc., while "legitimate interests of third parties" refers to the rights and interests of other people who are affected by the disposition.
Precedents have held that in specific cases, protection of trust may be limited when the public interest and the interests of third parties that are infringed by the disposition based on protection of trust are "significant". The meaning of "significant" here is that it is not enough to simply have some infringement of the public interest, etc., but a serious and clear infringement that overwhelms the individual's legitimate expectation must be expected.
This requirement of balancing of interests makes it clear that the principle of protection of legitimate expectations cannot be applied absolutely and unlimitedly without consideration of the public interest. This is because while protection of trust is important, it is not desirable for it to impair a greater public interest or infringe on the legitimate rights of other people.
Therefore, in specific cases, the court comprehensively compares and balances the nature and degree of the legitimate expectation, the nature and degree of the public interest and the interests of third parties, etc., and recognizes protection of trust only when the need to protect the legitimate expectation exceeds the possibility of infringing on the public interest, etc.
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