Court Rules Ministry of Justice's Directive Banning "Dual Agency" Notarization Illegal and Invalid

[Asia Economy Reporter Kim Hyung-min] A court ruling has declared that the Ministry of Justice's administrative guideline banning so-called 'dual representation,' where a loan company representative drafts notarized documents on behalf of a debtor, is illegal and void.

According to the legal community on the 16th, the Seoul High Court Administrative Division 10 (Presiding Judges Lee Won-hyung, Han So-young, Sung Eon-ju) overturned the lower court's ruling that dismissed the appeal by law firm A and its affiliated lawyers against the Ministry of Justice Minister's imposition of fines, and ruled in favor of the plaintiffs.

The court stated, "For the Minister of Justice to issue an administrative guideline as an official order, there must be a clear legal delegation in the law, but no such basis can be found in the Notary Act," adding, "Even if the necessity is recognized, it is illegal and impermissible for the supervisory agency to impose obligations that conflict with the Notary Act through administrative rules or official orders without explicit legal delegation."

Law firm A filed an administrative lawsuit after being fined 3 million won for the corporation and 2 to 3 million won each for the representative and affiliated lawyers in October 2017 for violating the Ministry of Justice's 'Execution Document Preparation Administrative Guideline.'

Notarization is a system that publicly and clearly certifies facts or contracts and other legal acts occurring between parties, which helps prevent legal disputes.

However, there have been continuous criticisms that loan companies' employees or brokers, during the notarization process for compulsory execution, apply for the preparation of hundreds of execution documents to a single notary on behalf of debtors without properly confirming the debtors' intentions.

To improve such poor notarization practices, the Ministry of Justice introduced the administrative guideline in October 2013.

Article 4 of the guideline prohibits loan company employees or loan brokers from representing debtors or being involved in appointing debtor representatives when preparing execution documents based on loan contracts.

The first-instance court ruled in favor of the Ministry of Justice, finding no issues with the content of the administrative guideline.

This content was produced with the assistance of AI translation services.