If corporations invested money and manpower trusting a project the government said it would push, how far should the state be held responsible if the policy later changed?
As publishers of artificial intelligence digital textbooks (AIDT) filed a damages suit worth more than 100 billion won against the government, a key issue has emerged over how far the court will protect the trust of private investors who relied on a government-led policy.
◇Can investments made in trust of government policy be protected
According to the legal and education sectors on the 1st, more than 10 AIDT publishers, including YBM, Dong-A Publishing, i-Scream Media, VISNAG Education, and NE Neungyule, filed a damages suit against the state with the Seoul Central District Court on the 23rd. The amount in dispute is reportedly 122 billion won.
The publishers say they trusted the AIDT rollout plan the government released in 2023 and began developing content, but suffered losses after an amendment to the Elementary and Secondary Education Act changed AIDT's legal status from "textbook" to "educational material."
The first issue is whether the government gave publishers trust worthy of legal protection. The principle of protection of trust holds that when the public or corporations act in reliance on a policy officially disclosed by an administrative agency, that trust should not be broken without special circumstances.
The publishers are expected to argue that the government presented a policy to pursue AIDT as an official textbook and that they, relying on this, invested development costs, manpower, and system-building expense. The government, by contrast, may argue that AIDT policy is an area that can be adjusted according to changes in the educational environment and the legislative process, and that the legal amendment was also necessary for the public interest.
Byeon Jin-hwan, an attorney at Dongin, said, "We must first examine whether corporations' trust in government policy is subject to legal protection, and even if it is, the crux is whether there was a substantial causal link between the actual damage and the policy change." A substantial causal link means the government's policy change must be a direct and significant cause of the loss.
◇Even when moving in reliance on development plans, plaintiffs lost… Court weighed the possibility of change
There have been past cases where the private sector invested in reliance on central or local government plans and then claimed losses due to plan changes.
The damages case over the withdrawal of Gimhae's development plan is a representative example. A company proceeded with related procedures trusting Gimhae's push to designate a Type 2 district-unit planning zone, but sought damages after the designation was withdrawn and the site was designated as a conservation management area. In 2014, the Changwon panel of the Busan High Court did not recognize Gimhae's liability. It found the company had expertise in development projects and could have known that designation could be thwarted by decisions of higher administrative bodies.
In the case over abolishing the urban management plan for the Gyeyangsan golf course, the court also found it important to compare public and private interests when an administrative plan changes. Incheon announced an urban management plan to install a public golf course and later abolished it. The operator filed suit to cancel the abolition, but in 2018 the Supreme Court, considering the need to preserve the natural environment, local opinion, and discussions of alternatives, found it hard to deem the abolition unlawful.
These precedents show that even if the private sector acted in reliance on an administrative plan, claims for protection of trust are hard to accept when the possibility of change or the need for the public interest is recognized.
Still, some say the AIDT suit differs from typical cases of development plan changes. The government presented a plan and schedule for adopting AIDT under the policy goal of digital education transition, and publishers began developing content accordingly. The key is how the court will assess the specificity of the government's announcement, the publishers' investment background, and the extent to which the possibility of policy change could have been anticipated.
◇Even if a policy change is improper, damages are a separate matter
Even if a policy change is found to violate the principle of protection of trust, that does not immediately mean state liability for damages. For damages to be recognized under the State Compensation Act, there must be a violation of law by a public official while performing duties, intent or negligence, actual damage, and a causal link between the policy change and the damage.
The damages suit filed by patent attorney exam candidates after the government abruptly switched the first-stage exam in 2002 from absolute to relative grading is similar. In that case, the Supreme Court found the Korean Intellectual Property Office commissioner's failing decisions unlawful, but did not recognize state liability, finding that the officials made their judgments at the time based on their own reasonable grounds.
In the AIDT suit, calculating damages and causation is also expected to be key. The losses claimed by publishers could include content development costs, labor costs, system construction costs, and anticipated business profits.
However, disputes may arise over whether already developed content can be used in other educational material projects, whether some costs were recovered, and whether the losses stemmed from the policy change or from market conditions.
Attorney Park Chang-hwan of One said, "In cases where the private sector invested relying on administrative plans or policies, what matters is how specific the government's policy was and to what extent the operator could have anticipated the possibility of a policy change," adding, "The AIDT suit differs from existing development plan cases in that the link between the government's policy change and corporations' investment is relatively clear."