Supreme Court Remands and Dismisses Lawsuit by Dongyang Express and Jungang Express Against Gyeongsangnam-do Over 'Intercity Bus Route Change Order' Cancellation

Supreme Court, Seocho-dong, Seoul.

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] Companies operating express buses between Seoul and Masan contested the validity of a decision by the Governor of Gyeongsangnam-do to change the direct intercity bus routes to pass through Masan, but the Supreme Court did not accept their challenge.

Since the local government had already lost a similar lawsuit earlier and the decision was made after fully considering the circumstances of the plaintiff companies, and because the transportation convenience gained by Masan residents outweighs the inconvenience caused by the slightly increased travel distance and time for existing intercity bus users, the court held that this could not be seen as an abuse or excess of discretion.

The Supreme Court's Second Division (Presiding Justice Lee Dong-won) announced on the 12th that it overturned the lower court's partial ruling in favor of the plaintiffs in the appeal case filed by Dongyang Express Co., Ltd. and Joongang Express Co., Ltd. against the Governor of Gyeongsangnam-do, seeking cancellation of the order to improve and change the passenger car transportation business plan, and remanded the case to the Busan High Court.

The court stated, "The lower court's judgment contained errors in the legal principles regarding abuse or excess of discretion that affected the ruling," as the reason for the reversal and remand.

The plaintiffs, operators of express intercity buses, were running the 'Seoul-Masan' route 59 times and 5 times daily, respectively.

However, on March 28, 2019, the Governor of Gyeongsangnam-do issued an order to Kyungjeon Passenger Car Co., Ltd. and Cheonil Passenger Car Co., Ltd., which operate intercity bus routes between Seoul and Changwon 4 to 5 times daily, to change their routes to pass through the southern area of Masan, prompting the lawsuit.

In court, the plaintiff companies argued primarily that the Governor's order was invalid due to exercising authority not delegated by the Passenger Car Transport Act, constituting a serious and clear defect. Alternatively, they claimed the order was illegal because it was issued without consultation with the Minister of Land, Infrastructure and Transport and constituted an abuse or excess of discretion, thus should be canceled.

The first trial court rejected all of the plaintiffs' claims.

In contrast, the second trial court accepted the plaintiffs' alternative claim that the Governor's order was illegal due to abuse or excess of discretion and ruled to cancel the order changing the intercity bus routes.

Although the order improved transportation convenience for residents in the southern Masan area, the plaintiffs' profits from operating the 'Seoul-Masan' express buses decreased, and the transportation inconvenience for existing intercity bus users increased. The court held that the lower court failed to properly weigh the private interests infringed against the public interest.

However, the Supreme Court's judgment differed.

The court first cited previous Supreme Court rulings, stating, "If an administrative agency does not conduct any balancing of interests when performing administrative acts, or omits matters that should be included in the consideration, or conducts balancing but lacks legitimacy or objectivity, such administrative acts can be deemed an abuse or excess of discretion and thus illegal." It also noted, "The burden of proof lies with the party challenging the validity of the administrative act."

It continued, "The lower court judged that the order in this case involved no balancing of interests or lacked legitimacy and objectivity in balancing, constituting an abuse or excess of discretion and illegality, but this judgment cannot be accepted for the following reasons."

The court referred to the fact that the Governor of Gyeongsangnam-do had previously issued an improvement order in March 2016 to change the route of another intercity bus company to pass through southern Masan, which led to a lawsuit by the plaintiff companies and resulted in the cancellation of one of three routes.

Then, the court stated, "Considering these circumstances, it appears that after the previous lawsuit concluded, the defendant considered the plaintiffs' current operations and the impact of the improvement order on their profits when issuing the order in this case. It is difficult to conclude that the defendant did not consider the operational status and profit impact on existing operators, including the plaintiffs, merely because the defendant did not solicit opinions from the plaintiffs or review alternatives as claimed by the plaintiffs before issuing the order."

The court also noted, "Although the prior order (issued in 2016) established a new intercity bus route between Masan Southern Intercity Bus Terminal and Seoul, the frequency was only three times a day. Records show that there were continuous complaints requesting an increase in the number of buses operating from Masan Southern Intercity Bus Terminal to Seoul. This suggests that the prior order alone was insufficient to meet the transportation demand in southern Masan. Considering the defendant's consideration of urban development status within the jurisdiction, it is difficult to say that the defendant did not consider the transportation demand in southern Masan when issuing the order in this case."

Furthermore, the court added, "Although the order may cause some inconvenience to existing route users of the participating intercity bus operators, such as increased travel distance and time, this inconvenience is tolerable compared to the increased transportation convenience for residents of southern Masan. Moreover, these issues could be easily anticipated and considered even without a detailed prior investigation."

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