Takings in Korea: Law-and-Economics Research and Major Lessons for Reform

The paper explains the law-and-economics research on eminent domain in Korea. The paper starts with outlining the legal system of eminent domain in Korea, followed by a description of massive activities of taking and the related social conflicts for the half century. We then briefly discuss the rationale behind taking power as a constitutional privilege. We also give theoretic explanations regarding why many countries have made it explicit that private property shall not be taken without fulfilling a few necessary conditions, such as public interest, just compensation, and high transaction costs. Records, however, sufficiently show that ridiculous and unfair takings and their related disasters have abounded in Korea. Representative examples include the tragic burning down of Sungnyemun in an arson attack, the brutal crackdown on evictees in Yongsan, and, more recently, the Daejang-dong scandal. The paper diagnoses that the origins of all these misfortunes are the laws that are too generous to coercive takings and the deficient undertakings of compensation. The paper then summarizes the substantial law-and-economics research conducted to ameliorate these defects over the past 30 years. The paper highly underlines the main characteristics of these analyses: i.e., filling a grave gap between theory and reality particularly regarding unrealistic core assumptions in the model of taking, setting the controversial issue in the fashion of the Coasian scrutiny, and emphasizing the collaboration efforts of researchers from different work areas and from different jurisdictions. Reform agenda are then derived from this research. This paper discusses only five potential improvements that have to be made with great urgency although there are many others. The paper concludes discussions though with a forward-looking perspective, suggesting that Korea would have a merit in its course of reform as the single baseline law of taking can provide a well standardized procedure that is applied to the entire types of projects nationwide. We also positively feature several reasonable decisions made recently by the highest courts in Korea.