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Seungbum Lee
Yulchon LLC, Seoul
seungbumlee@yulchon.com

Daniel Tehyok Yi
Yulchon LLC, Seoul
thyi@yulchon.com

Yong Ju Lee
Yulchon LLC, Seoul
yongjulee@yulchon.com

Doil Son
Yulchon LLC, Seoul
dison@yulchon.com

Introduction

The Republic of Korea is the world’s 7th largest automobile manufacturing country in terms of the number of vehicles produced^[1] and the home to Hyundai Motor Group, which owns the Hyundai and Kia brands and is the 6th largest global automobile manufacturer.^[2] However, in terms of the development of autonomous or self-driving vehicles and related technologies, Korean companies have not been able to keep up with the world’s fastest movers. According to an analysis conducted by the Korea Institute for Industrial Economics & Trade, a research institute for Korean national policies, Korea’s current level of vehicle autonomy is 80 out of 100, whereas that for China and the United States is 85 and 100, respectively.[3] Moreover, Korea is ranked 13th out of 25 countries in the Autonomous Vehicles Readiness Index (AVRI) developed by KPMG.^[4]

Some observers point to the relatively stringent government regulations as the primary reason for Korea to fall behind in the race for the development of autonomous vehicle technologies.^[5] For instance, while a temporary operation permission is required to drive an autonomous vehicle on public roads for research purposes in Korea, the requirements for obtaining such permission are considered to be onerous. Thus, only 100 vehicles have obtained such permission since 2016.^[6]

Establishment of government-led roadmap for developing an autonomous vehicle industry

In response to the criticism against such stringent government regulations, the Korean government has announced the ‘Future Vehicle Industry Development Strategy’ in October 2019. With respect to autonomous vehicles, the focus of the Strategy is (1) to revamp the relevant regulatory framework as well as major roads and other related infrastructure to accommodate complete autonomous driving by 2024; and (2) to commercialise Level 4 autonomous vehicles on major roads across the nation by 2027. To this end, the government has announced its plan to set certain safety standards for Level 3 and Level 4 vehicles in 2020 and 2021, respectively, and establish an insurance system for completely autonomous vehicles after 2021 and autonomous vehicles performance verification system by 2022.

Some critics have argued that such plan is overly optimistic in light of the current level of technology and existing infrastructure and may need to be revised shortly. Nevertheless, it is still noteworthy that the Korean government has expressly acknowledged the inadequacy of its legal system regulating autonomous driving in comparison to that of other countries and has presented measures to address such inadequacy.

Enactment of the Act on Promotion and Support of Commercialization of Autonomous Vehicles

The most remarkable change driven by the Strategy is the enactment of the Act on Promotion and Support of Commercialization of Autonomous Vehicles (the ‘AVA’) whose objective is to support the autonomous vehicle industry. While the AVA came into force on 1 May 2020, such enactment could be deemed relatively late, given that the SELF DRIVE Act in the US and other general laws and regulations for autonomous vehicles in other countries were introduced in or around 2017.

The most eye-grabbing part of the AVA is the introduction of designated ‘testing zones’ for autonomous vehicles. The AVA provides that Korea’s Ministry of Land, Infrastructure and Transport (MOLIT) which is the government agency responsible for regulating motor vehicles, may designate testing zones upon reviewing applications from local governments. An array of regulations that apply to operation of an autonomous vehicle in Korea will be exempted within these testing zones. For example, within a testing zone, a vehicle that does not meet the vehicle safety requirements under the Act on Motor Vehicle Management, which is the Korean law regulating the safety of motor vehicles, is permitted to drive on public roads if approved through a separate and relatively less stringent performance verification process. In addition, regulations on passenger and freight transportation will not be applied within the testing zones such that various business models related to autonomous vehicles can be tested.

The MOLIT is also authorised under the AVA to designate ‘safety zones’ for autonomous driving among public roads to promote driving of autonomous vehicles. The reliability of such safety zones is intended to be increased through continued investment in self-driving-related infrastructure such as road facilities and intelligent transport systems that support autonomous driving.

Furthermore, the collection and use of big data essential for the development of autonomous vehicles will be exempted from the laws and regulations that aim to protect personal information such as the Act on Personal Information Protection, to the extent that market participants in the autonomous vehicle industry first anonymise and process any personal information collected into non-personally identifiable information.

Since the AVA is still at its nascent stage, it is too early to assess the various changes that the law has brought to the Korean autonomous vehicle industry thus far. However, designation of testing zones, which is one of the key focuses of the AVA, has not yet taken place although several months have already passed since the enactment of the AVA,^[7] and Korean autonomous vehicles manufacturers are still testing their autonomous vehicles on foreign roads.^[8] Also, the AVA still has not sufficiently relaxed the regulations on the development of autonomous vehicles: for example, operation of prototype autonomous vehicles even within the testing zones is still subject to prior performance verification process. As such, a number of challenges and problems may continue to arise in the implementation of the AVA.

Introduction of safety standards for autonomous vehicles

Prior to the enactment of the AVA, the MOLIT introduced new safety standards for autonomous vehicles on 31 December 2019 by amending the Rules on the Performance and Standards of Automobiles and Automobile Parts (the ‘Safety Standards’). The amended rules relevant to Level 2 autonomous driving (which has already been widely introduced in the market) became effective on 1 January 2020, while those related to Level 3 autonomous driving came into force on 1 July 2020. In the past, no prescribed safety standards for autonomous vehicles existed and only Level 2 technologies, such as remote-parking assist or lane-keeping assist, were partially permitted.

Although the Act on Motor Vehicle Management, a statute that governs the Safety Standards, already contains a provision that conceptually defines an ‘autonomous vehicle,’ the amended Safety Standards introduces the definition of ‘autonomous driving system’ which encompasses all equipment, software and other devices directly related to autonomous driving. It also subdivides different levels of autonomous driving system in accordance with the Society of Automotive Engineers (SAE) standards. In addition, the Safety Standards adopts the concept of ‘operable area’ (similar to the Operational Design Domain under SAE J3018), according to which an autonomous vehicle manufacturer is required to designate a specific area where the autonomous driving system can be operated normally and safely. However, the Safety Standards does not place an obligation on such manufacturer to notify buyers of the operable area.

Above all, the amended Safety Standards has significance in that it has introduced a set of detailed standards for lane-change assist (a Level 2 technology) as well as standards for Level 3 technologies, including automated lane-keeping assist, driver monitoring system and performance upon system failure. The details of the Safety Standards are known to reflect UN regulation No. 79 and the discussions of the Working Parties for the UNECE World Forum for Harmonization of Vehicle Regulations (WP.29).

Amendment to the Act on Guarantee of Automobile Accident Compensation

The Act on Guarantee of Automobile Accident Compensation (the ‘Compensation Guarantee Act’), a law governing compensation for damage caused by operation of a motor vehicle, was amended in April 2020 to accommodate new regulations on autonomous vehicles. The amendment will take effect in October 2020.

Notably, the amended Compensation Guarantee Act, with the aim of protecting victims of autonomous vehicles and ensuring prompt relief for them, stipulates that any damage caused during the operation of an autonomous vehicle shall be first covered by an insurance policy maintained by the vehicle owner and that the insurance company may later seek indemnification from the manufacturer of the vehicle if such damage is attributable to any defect in the vehicle. Such amendment follows similar legislative trends in Germany and the United Kingdom.

The amendment requires manufacturers of autonomous vehicles to equip each vehicle with a self-driving information recording device which enables more accurate and technical investigation into causes of an automobile accident. The vehicle owner has the obligation to keep the information collected by such device for a period of one year. Furthermore, the law newly establishes an accident investigation committee under the MOLIT which is responsible for identifying causes of an accident involving automated vehicles through collection and analysis of the information recorded in the device.

However, the amended Compensation Guarantee Act does not yet provide for a clear guideline on which party is liable in case of an autonomous vehicle accident. To that end, further amendment to other relevant laws such as the Product Liability Act, as well as accumulation of relevant court precedents, will be necessary to answer the question.

Conclusion

The regulatory landscape for autonomous vehicles in Korea is rapidly changing due to the government's strong drive for becoming a leading country in self-driving technologies, and such changes are being adopted based both on the regulatory trends in the countries where autonomous vehicle technologies are advanced, including Europe and the US, and on relevant discussions at the United Nations.

Some observers, however, are concerned over the potential instability of the law caused by ill-prepared changes. For instance, some confusion is expected to arise as the Safety Standards for autonomous vehicles has been adopted while the standards for testing whether an autonomous vehicle meets the Safety Standards have not been established yet.

The Korean government’s Future Vehicle Industry Development Strategy and other regulatory changes allow autonomous vehicle manufacturers and other market participants to gauge the direction of future regulatory changes in Korea. They should take the above-discussed regulatory changes and risks into account in the research, development, manufacture, import and distribution of their products and services in Korea.

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