Why the Serious Accidents Punishment Act Is Unconstitutional

A few days ago, the Changwon District Prosecutors’ Office indicted the head of an air conditioner parts manufacturer for violating the Serious Accidents Punishment Act, marking the first case in which the Act, in force since January of this year, has been applied. The same prosecutors’ office indicted the head of an automobile parts manufacturer for violating the Occupational Safety and Health Act.

Both men are accused of failing to properly install local exhaust ventilation systems at their workplaces, causing workers to suffer toxic hepatitis. In the latter case, however, prosecutors determined that the company had established the “occupational safety and health management system” required by the Serious Accidents Punishment Act, and therefore declined to prosecute under that Act.

The violations are similar in substance, but if even one death were to occur, a violation of the Serious Accidents Punishment Act could result in imprisonment for at least 1 year and up to 30 years, whereas a violation of the Occupational Safety and Health Act carries a maximum sentence of only 7 years.

Yet from the time the Serious Accidents Punishment Act was enacted in January last year, legal problems including possible unconstitutionality were raised not only by the business community but also by the Ministry of Justice, the National Court Administration, and experts. Nevertheless, it was enacted in a hasty manner without sufficient deliberation.

Even looking only at the provisions of the Act relevant to the above cases, it merely states that the responsible management personnel (or employer) must take measures concerning the establishment and implementation of an “occupational safety and health management system,” including the personnel and budget necessary to prevent accidents. It leaves the specific content of those measures to the Enforcement Decree, which in turn merely provides that a “necessary” budget must be prepared and executed and that “necessary” follow-up measures must be taken after inspections.

In other words, even though it is unclear exactly what steps a company manager must take and how, once the Serious Accidents Punishment Act applies, the responsible management personnel are subjected to severe criminal punishment as described above.

Punishment Without Specific Rules on Managers’ Required Measures

The Occupational Safety and Health Act originally contains a dual punishment provision under which both the violator who breaches industrial safety or health obligations (mainly middle managers) and the company are punished. But the Serious Accidents Punishment Act also imposes managerial oversight duties on responsible management personnel and criminally punishes violations of those duties, effectively creating a triple punishment provision.

Even so, instead of defining the specific scope of managerial oversight duties, it delegates the matter broadly to subordinate legislation, thereby making the content of the criminal provision unclear. This directly violates the constitutional principles of clarity under the principle of legality in criminal law and the prohibition on excessive delegation, both of which exist to protect the people’s human rights.

Moreover, compared with violators of the Occupational Safety and Health Act, who directly breach industrial safety and health obligations, violators of the Serious Accidents Punishment Act, who breach managerial oversight duties, often may not even have been able to foresee the occurrence of harm. Even so, punishing only responsible management personnel excessively under the Serious Accidents Punishment Act, regardless of whether the harm was foreseeable, also violates the constitutional principles of proportionality in punishment and equality.

The Occupational Safety and Health Act and the Serious Accidents Punishment Act impose certain duties on companies and on middle managers or responsible management personnel to take measures to prevent industrial accidents, and they punish intentional crimes of omission—failures to act despite knowing of a duty to take such measures.

In practice, however, once a breach of the duty to act is found, the offense is simply deemed established, so the law is effectively operated like a negligence offense. But in modern society, companies are organized and specialized, and industrial accidents arising in the course of business often result from a combination of the carelessness of not only the company’s responsible management personnel but also middle managers, lower-level managers, and workers themselves.

Nevertheless, the Serious Accidents Punishment Act imposes disproportionately severe punishment on responsible management personnel solely on the basis of the result—the occurrence of a death or serious injury. This in effect allows result-based liability for a negligence offense, and therefore also violates the constitutional principles of personal culpability and the prohibition of excessive restriction.

If criminal liability is to be imposed for industrial accidents arising from a company’s organizational and specialized structure, then, as in the United Kingdom’s 2007 Corporate Manslaughter Act, recognizing the criminal liability of the corporation and punishing the company itself, while imposing security measures such as probation, would accord with the principle of personal culpability and would be more effective in preventing accidents.

In this way, the Serious Accidents Punishment Act is not only a uniquely bad law with no precedent in the world, but also unconstitutional because it violates the Constitution, which protects fundamental values such as the human rights of our people. Even now, this mistake should be corrected without delay.

In a country like Korea, which has few underground natural resources, sustained economic growth is essential as the foundation for expanding welfare, and to sustain such growth we must become a country where it is easy to do business. To achieve that, we must remove irrational business risks and secure flexibility in the labor market.

But the path taken by the National Assembly over the past five years seems to have moved in the opposite direction. One representative example is the Serious Accidents Punishment Act, which, as noted above, has greatly increased business risk by prescribing excessive criminal punishment for responsible management personnel and vague elements of criminal offenses.

It is now said even abroad that running a business in Korea is more dangerous than walking on top of a prison wall. In advanced economies such as the United States and Germany, even industrial accidents are addressed mainly by building preventive infrastructure; they do not do something as foolish as shrinking business activity through irrational criminal punishment of responsible management personnel, as the Serious Accidents Punishment Act does.

Rather, by recognizing the business judgment rule through the development of case law or amendments to corporation law, they have supported managers’ active business decisions and secured talented management personnel, which is why they were able to become prosperous countries as they are today.

Advanced Countries Address Industrial Accidents by Building Preventive Infrastructure

The business judgment rule is the principle that, in determining whether a business decision violates a manager’s duties, the primary review should be limited to procedural and subjective matters—such as whether the manager gathered sufficient information, followed the necessary internal procedures, and made the decision faithfully for the company’s maximum benefit without conflicts of interest.

This is meant to exclude the irrationality that arises when judges unfamiliar with management review, from the outset, the substance of a business decision that ended in losses for the company and thereby reflect hindsight bias in ex post review. It is also meant to provide a safe harbor for managers, who must make business decisions in advance despite unpredictable future risks, so that they can manage proactively.

In the United States, because there is no crime of breach of trust, this doctrine developed through case law in lawsuits seeking damages for losses caused by managers’ breaches of duty.

In Korea, however, when a manager is found to have breached his or her duties, the manager not only faces a damages suit but may also be punished for breach of trust. And although the crime of breach of trust is applied far more broadly in Korea than in Germany, Korean courts review even the substance of business decisions from the outset, so Korea is regarded as having very high business risk.

To reduce managerial risk arising from the Serious Accidents Punishment Act and the crime of breach of trust, to secure talented management personnel, and to support proactive management, legislation is needed to amend the unconstitutional provisions of the Serious Accidents Punishment Act and to introduce the business judgment rule when determining whether a business decision breached managerial duties.

If that is difficult, then at the very least it is necessary to correct the uncertainty of the elements of criminal offenses through amendments to the Enforcement Decree of the Serious Accidents Punishment Act, and to establish prosecutorial guidelines that actively reflect the business judgment rule in breach of trust investigations involving corporate activities.

Seokhoon Han, Professor, Sungkyunkwan University Law School

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Original title: 중대재해처벌법이 위헌인 이유

Author: Seok-hun Han

Date: 2022-07-06

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=24832