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Legitimacy of State's Intervention based upon “The Realization of Public Purpose”(“Gewährleistungsverantwortung”) and Smart Regulation - Focus on the Private Finance Initiative for Infrastructure -

  • Public Land Law Review
  • Abbr : KPLLR
  • 2015, 72(), pp.573-591
  • Publisher : Korean Public Land Law Association
  • Research Area : Social Science > Law

Hwang Jihye 1

1한국외국어대

Accredited

ABSTRACT

New Public Management means that administrative agency performs public service along with private sector and the State has responsibility that it should guarantee good quality of public service. This is so called Gewährleistungsstaat. Although the State doesn't control directly, the State leads and manages in order that Private Finance Initiative would perform well through self-regulation. In spite of the State's delegation of infrastructure management to the private actor, the fundamental legal base is not civil law principle, rather the State should act as the continuous supervisor. This sort of regulation is called as "Smart Regulation". Someone argues that Smart Regulation might violates the private enterprise's autonomy. But according to articles of Constitution of the Republic of Korea, the State's intervention is evaluated as legitimate. Because Constitution of the Republic of Korea is considered to have adopted Social Market Economy. According to article 119 (2), the State may regulate and coordinate economic affairs in order to maintain the balanced growth and stability of the national economy, to ensure proper distribution of income, to prevent the domination of the market and the abuse of economic power. In historical and comparative law view, especially after Global Financial Crisis in 2008, the State's intervention is considered legitimate. The Global Finance Crisis in 2008 is caused by abolition of Glass-steagall Act 1933 that had been made to stabilize financial system. This historical example shows that the State's intervention and regulation are necessary. The State can manage and supervise the private actor to perform self-regulating well. The following two ways can be considered. First, the State can consider whether to adopt Designated Management System. Designated Management System guarantees the private actor's autonomy in the management of infrastructure. But still public actor(in Japan, local government) has the responsibility of management. Second, The administrative disposition for public interest can terminate Private FInance Initiative contract, even though the private actor doesn't violate the law. In different perspective, this administrative disposition has contradiction, because Private Finance Initiative is contract between the public actor and the private actor as mutual contract parties. But the State has responsibility that it should manage and supervise Private Finance Initiative and should protect public interest.

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