Supreme Court: "Vehicle Possession Rights Recognized Even If Contracted with Jiip Car Owner for Long-Term Rental"

Supreme Court in Seocho-dong, Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Kim Daehyun] The Supreme Court has ruled that users who have signed long-term rental contracts with vehicle owners (jiipcha-ju) rather than rental car companies must also be recognized as having vehicle possession rights.

On the 6th, the Supreme Court's 2nd Division (Presiding Justice Cheon Daeyeop) announced that it overturned the lower court's ruling in favor of plaintiff A rental car company in an appeal case filed against vehicle lessee Mr. B, and remanded the case to the Jeonju District Court.

Previously, Mr. C, the branch manager of company A, signed a 'long-term rental' contract with Mr. B in 2016 for a jiip vehicle, which was registered under the company's name but actually owned by himself, for 43 million KRW over three years. However, Mr. C failed to properly pay the jiip fees for this vehicle to company A, and company A filed a lawsuit against Mr. B demanding the return of the vehicle, claiming that "the jiip contract with Mr. C has been terminated."

The first and second trials ruled in favor of the plaintiff. The first trial court stated, "Externally, the jiip vehicle is owned by the jiip company, and internally, the operation management rights of the jiip vehicle belong to the jiip vehicle owner," and added, "It is difficult to consider that Mr. C acquired actual ownership of the vehicle before fully paying the installment." The second trial also ruled that "Mr. B must return the unjust enrichment from the time he started possession of the vehicle without proper authority until the vehicle operation was suspended at company A's request."

However, the Supreme Court ordered a retrial and reconsideration of the case, stating that Mr. C's lease contract with Mr. B falls within the scope of ordinary business delegated by company A.

The court stated, "It is not confirmed in the records whether company A notified Mr. B before the vehicle operation suspension order that Mr. C's rights to the vehicle were extinguished due to the termination of the jiip contract, so it is difficult to conclude that Mr. B's right to 'continued possession' was extinguished," and added, "The lower court erred in its legal interpretation regarding Mr. B's possession rights to the vehicle in this case."

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