The Constitutional Court of Korea ruled that a provision in the Passenger Transport Service Act that in principle restricts driver arrangement services for rental car lessees does not violate the Constitution.
According to legal circles on the 29th, the Constitutional Court issued a constitutional ruling on the 26th of this month in an 8-to-1 decision on a constitutional complaint involving Article 34, Paragraph 2, Proviso No. 2 of the Passenger Transport Service Act. The provision allows driver arrangement for lessees of rental vehicles only in exceptional cases where the lessee cannot drive due to intoxication or physical injury after renting the vehicle.
Platform companies A and B, which had sought to provide passenger transport services by combining rental car leasing with designated driver services through smartphone applications, filed constitutional complaints arguing the provision violates freedom of occupation by contravening the principles of clarity and prohibition of excessive restriction.
The court determined that the terms "intoxication" and "physical injury" are not so unclear as to entirely deprive regulated parties of predictability. It found the provision aims to prevent circumvention of regulations applied to the existing taxi industry by those effectively providing services similar to taxi transport, and to maintain a fair passenger transport order. The court explained that since passenger transport is a sector of significant public interest essential to citizens' daily lives, the state may impose certain regulations and adjustments to ensure market balance and service stability. The court said the public interest pursued by the provision outweighs the restriction on businesses' freedom of occupation, recognizing both the principle of least restrictive means and the balance of legal interests.
However, Justice Kim Bok-hyung issued a dissenting opinion. Justice Kim pointed out that the provision effectively blocks market entry for a new form of passenger transport service combining short-term car rental with designated driver services. He also argued that the legislative purpose could be achieved through less restrictive means, such as strengthening qualification requirements for designated drivers. He concluded that the provision violates the principle of prohibition of excessive restriction.
