The Shipping Law Review: South Korea
Commercial overview of the shipping industry
Notwithstanding the unprecedented recession that has resulted from the covid-19 pandemic, South Korea's controlled fleet has increased by 2.5 per cent, maintaining her position as the fifth-largest state in the industry. As at 2020, 1,510 ocean-going commercial vessels totalling more than 83.7 million gross tonnage (GT) were owned or operated under bareboat charter hire purchase by Korean shipping companies. Of particular note is that the GT of tankers has increased by 193 per cent in the past year.2
The total volume of cargoes handled in Korean ports in 2020 was 1.2 per cent greater than in 2019, at 1.644 million revenue tonnes.3 The increase is much reduced in comparison to previous years owing to the fall in the volume of global trade, which can attributed to the covid-19 pandemic, trade disputes between the United States and China, and between Korea and Japan, and Brexit, among other things.
Korean shipyards have held the top ranking in shipbuilding contracts since 2018, winning 8.2 million compensated gross tonnage.4 The shipyards have successfully focused on the higher-value vessel market in recent years, having been awarded a large majority of the contracts for very large crude carriers, very large carriers of liquid petroleum gas and liquefied natural gas, and very large container ships.
General overview of the legislative framework
The fundamental domestic legislation providing for the carriage of goods by sea and admiralty issues is the Commercial Code. Chapter 5 covers maritime matters such as captain's rights and responsibility, global limitation of liabilities, maritime lien, contracts to carriage of goods and charter parties, collision, salvage and general average.
There are several other statutes addressing specific subjects (for example, the Marine Safety Act and the Ship Safety Act, which regulate shipping-related business from an administrative perspective). Pilotage, crew, procedures for limitation of liabilities and investigation of marine accidents are governed by applicable regulations and notifications.
Upon ratification by the Korean government, international conventions are granted the authority equivalent to national statutes under Article 6 of the Constitution, and should the convention refer to the seaworthiness of a ship and the safety of human lives at international voyage, the relevant international convention shall trump the domestic regulations in its application under Article 5 of the Ship Safety Act.
South Korea has ratified:
- the Convention on the International Maritime Organization 1948;
- the International Convention for the Safety of Life at Sea 1974 (SOLAS) and its 1978 and 1988 Protocols;
- the International Convention on Load Lines 1966 (the Load Lines Convention) and its 1988 Protocol;
- the International Convention on the Tonnage Measurement of Ships 1969 (the Tonnage Convention);
- the International Regulations for Preventing Collisions at Sea 1972 (COLREGs);
- the International Convention for Safe Containers 1972;
- the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers 1978 (the STCW Convention);
- the International Convention on Maritime Search and Rescue 1979 (the Search and Rescue Convention);
- the Convention on the International Mobile Satellite Organization 1976 (the IMSO Convention);
- the Convention on the International Maritime Satellite Organization 1976 (the INMARSAT Convention);
- the Convention on Facilitation of International Maritime Traffic 1965 (the FAL Convention);
- the International Convention for the Prevention of Pollution from Ships 1973 (as modified by the Protocol of 1978) (MARPOL (73/78)) and its 1997 Protocol;
- the Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter 1972 (the London Convention) and its 1996 Protocol;
- the 1976 and 1992 Protocols to the International Convention on Civil Liability for Oil Pollution Damage 1969 (the CLC Convention);
- the 1992 and 2003 Protocols to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (the Fund Convention);
- the Convention for the Suppression of Unlawful Acts of Violence Against the Safety of Maritime Navigation 1988 (SUA) and its 1988 Protocol;
- the International Convention on Oil Pollution Preparedness, Response and Co-operation 1990 (the OPRC Convention);
- the Protocol on the Preparedness, Response and Co-operation to Pollution Incidents by Hazardous and Noxious Substances 2000 (the OPRC-HNS Protocol);
- the International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 (the Bunker Convention);
- the International Convention on the Control of Harmful Anti-Fouling Systems on Ships 2001 (the Anti-Fouling Convention); and
- the Convention for the Control and Management of Ships' Ballast Water and Sediments 2004 (the Ballast Water Management Convention).
Forum and jurisdiction
There is no independently established court dedicated to handling maritime and admiralty matters, yet there are a number of departments in the district courts and the appellate courts handling maritime matters. The maritime department of a district court shall hear a case at the first instance. The unsuccessful party may appeal against the first instance judgment to the relevant appellate court, and finally to the Supreme Court.
In principle, the successful party would be entitled to recover legal costs from the opposing party, but the amount of recoverable costs is substantially restricted depending on the claim amount under relevant regulation.5
The hearings will take place consecutively at approximately four-week intervals, and written briefs and documentary evidence shall be submitted in preparation for the hearings. Each hearing will thus be conducted for a short period (under an hour unless there is cross-examination of a witness or a pre-scheduled oral pleading, such as an audiovisual presentation, in relation to complicated factual or technical issues), mainly for the judges to identify the arguments and evidence submitted by each party, rather than a full-scale oral pleading of the case.
With regard to the evidence, the full disclosure procedure is not available under Korean law, although a party may apply to the court to order the other party to disclose specific documents. Witness and expert evidence are usually available at the court's discretion.
Procedural issues of jurisdiction and governing law will be determined pursuant to the Civil Procedure Act and the Private International Law Act (PILA). An agreement between the parties on the exclusive jurisdiction is recognised as valid unless that jurisdiction lacks a reasonable link to the case or the agreement is contrary to the public order.6 With respect to the conflict of laws, the PILA provides for general governing law for contracts and torts, and the governing law for certain maritime issues, such as ownership of a vessel and, importantly, maritime lien. According to the PILA, ownership and maritime lien upon a vessel are to be determined based on the law of the vessel's flag state.7
Korean law has two types of limitation period: time bar to sue and extinctive prescription, both of which apply to a claim, depending on its nature. In either case, the limitation period is regarded as an issue of substantive law under Korean law. The nature of each limitation period is substantially different from the other in many aspects. For example, the extinctive prescription period may not be extended, even by agreement between the parties, whereas an extension agreement will be given effect in the case of a time bar to sue. The limitation period of extinctive prescription would be 10 years for a general civil claim, but for a commercial contractual claim it would be five years from the occurrence of the claim.8 In the case of a tort claim, the limitation period is either three years from the date on which the injured party became aware of damages or 10 years from the date of the occurrence of the tort, whichever comes earlier.9 However, in various cases, the period would be shortened by statute; for example, a one-year limitation period of extinctive prescription applies to a claim among the parties to a contract of carriage of goods by land.10 However, certain claims are subject to a time bar to sue, including (1) one year for claims between the parties to a contract of carriage of goods by sea (including the consignee) counting from the date of delivery of goods, and (2) one year for contribution claims under a general average counting from the completion of calculation.11 Further, a two-year time bar to sue applies to (1) claims among the parties to a voyage charter (including the consignee) counting from the delivery date of the goods, (2) claims between the parties to a time charter party or a bareboat charter party counting from the redelivery date of the vessel, (3) damages claims arising from a collision counting from the date of the collision, and (4) salvage remuneration counting from the completion of salvage.12
With regard to maritime accidents, the Marine Safety Tribunal (MST), an administrative tribunal established under the Act on the Investigation of and Inquiry into Marine Accidents, will decide on the administrative penalty against the liable seafarers and, upon request, the ratio of contributory negligence between the parties involved. The MST's decision and special reports on marine accidents are not legally binding on the relevant parties regarding the liability issues, but in practice are likely to be respected, if not cited as a main ground for the judgment, in other proceedings (civil and criminal) regarding navigation and marine engineering.
ii Arbitration and ADR
The Korean Commercial Arbitration Board serves as a general arbitration institution. Further, the Seoul Maritime Arbitrators Association supports ad hoc arbitration proceedings for maritime disputes exclusively.
As well as in the case of court proceedings, extinctive prescription and time bar to sue will be stopped when arbitration is commenced insofar as Korean law applies as the governing law on substantive matters.
Other means of alternative dispute resolution are not as popular in Korea as arbitration.
iii Enforcement of foreign judgments and arbitral awards
Foreign judgment, if final and conclusive, may be enforced by an enforcement judgment by a Korean court, which will not judge on the merits but determine only whether it qualifies as required under Article 217 of the Civil Procedure Act.
The requirements are that (1) the jurisdiction that rendered the judgment should be acknowledgeable as competent under Korean law or international conventions ratified by Korea, (2) the parties were properly served with relevant documents for the proceedings of the foreign judgment, (3) no violation of public order in Korea is present, and (4) reciprocity exists between Korea and the state of the jurisdiction that rendered the judgment.
In practice, the reciprocity requirement tends to be an issue, as there are not many precedents to refer to. Korean courts have recognised reciprocity between Korea and the United States (usually for the states that have adopted the Uniform Foreign Country Money-Judgments Recognition Act),13 Japan14 and Canada,15 but denied reciprocity between Korea and Australia.16 In the case of lower court judgments, reciprocity has been recognised for judgments by English courts and Chinese courts but it still appears to be disputable.
Korea ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention) and, thus, arbitral awards rendered in a contracting state of the Convention would be enforceable. To enforce an arbitral award, the successful party will have to obtain an enforcement judgment from a Korean court, which will not judge on the merits of the case but determine whether the award qualifies as required in the Convention for enforceability (Article V).
Limitation periods applicable to the enforcement of foreign judgments and arbitral awards are regarded as substantive issues and, thus, will be decided by the governing law of those judgments or arbitration.
Most shipbuilding contracts with Korean shipyards are concluded based on the Shipbuilders' Association of Japan (SAJ) Form, with some variations. They are usually subject to English law, with disputes arising therefrom usually being referred to the London Maritime Arbitrators Association for arbitration.
Korean law will inevitably apply to the title to and ownership of the vessels under construction at the shipyards in Korea, particularly before the delivery under the shipbuilding contracts. Although the parties are at liberty to agree on the issue, the builder, based on the SAJ Form, would be likely to acquire the title to a vessel under construction and then, at delivery, transfer it to the buyer.
However, it appears that a vessel under construction is usually provided as security to a bank issuing a refund guarantee for the shipbuilding contract, and the title to the vessel under construction is transferred for security purposes to the bank that issued the refund guarantee. Thus, should the buyer apply to the court for an injunction for delivery of the vessel or an arrest of the vessel, verification of the title to the vessel between the builder and the bank could become an issue.
ii Contracts of carriage
Contracts of carriage are regulated by the Korean Commercial Code. Korea has not ratified the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924 (the Hague Rules), the Protocol to amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading 1968 (the Hague-Visby Rules), the UN Convention on the Carriage of Goods by Sea 1978 (the Hamburg Rules) or the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea 2009 (the Rotterdam Rules), but incorporated certain provisions of the Hague-Visby Rules into the Commercial Code in 2007. The Commercial Code provides for rights and obligations of the parties in bareboat charter party, time charter party, voyage charter party and other contracts for carriage of goods by sea.
Pursuant to the Commercial Code, the carrier bears the duty of care regarding the seaworthiness of the vessel and the goods, and will be liable for damages unless it is proven that the duty of care has been fulfilled. In the case of general contract of carriage of goods by sea, carriers' liability cannot be decreased by agreement beyond that under the provisions of the Commercial Code;17 this prohibition is also applicable to bills of lading even when they are issued under charter parties.
The shipper is obliged to present the goods to the carrier at the time and place designated in the contract or pursuant to practice in the loading port, and to submit the documents required for the carriage of goods to the captain within the loading period.
The carrier or shipowner, including beneficial owners, are obliged to issue bills of lading at the request of the shipper or charterer after the carrier or shipowner has received the goods.
The carrier and the captain may exercise maritime lien in relation to the cargoes. They are entitled to refuse to deliver the goods until freight or hire is paid in full and to sell the goods by auction after obtaining the court's approval to recover the unpaid freight or hire from the auction proceeds.18 The same principle applies to voyage charter parties and time charter parties.
With respect to multimodal transport, the Commercial Code19 has adopted a network liability system to provide that the carrier's liability will be subject to the applicable law of each specific mode of transport where loss has occurred. If the leg where loss occurred is unclear or the loss was extended to multiple modes of transport, the carrier's liability will be subject to the applicable law of the leg covering the longest distance. If it is impossible to determine which leg is the longest, then the applicable law of the leg with the highest freight prevails.
Cabotage between Korean ports is exclusively available to domestic shipping companies.20
iii Cargo claims
Cargo claims under Korean law are not very different from general civil or commercial claims. The lawful holder of bills of lading, who has the rights to the cargoes, usually holds the title to sue, and also its insurers, if they are subrogated to the rights of the holder through payment of the insurance proceeds. In some cases, the shipper or the consignee named in the bills of lading may have the title to sue under particular circumstances.
It would be the carrier that is liable for cargo claims in general, but in practice it would often be difficult to point out who the carrier is, which will often be an issue of fact-finding. Along with the carrier, employees and agents of the carrier or shipowner and the demise charterer could be the target of the suit, and are entitled to the defences and limitation of liability applicable to the carrier, shipowner and demise charterer. Independent contractors of carriers are not entitled to carriers' defences and limitation of liability, unless a Himalaya clause is applicable.21
Loss and damages directly arising from the carriage shall be recoverable in principle. However, in the case of the contract of carriage, recoverable damages are limited under the Commercial Code and will be calculated by the price of the cargo at the destination as at the date (1) when the cargo would have been delivered in the case of total loss or delay, or (2) when the cargo was actually delivered in the case of partial loss. Nevertheless, should the loss, damage or delay result from the carrier's wilful misconduct or gross negligence, the carrier is liable for the full loss and damages directly attributable to that misconduct or negligence, less any freight or expenses saved because of the loss, damage or delay.22
Whether charter party terms are validly incorporated into a bill of lading is an issue to be determined pursuant to the law applicable to the bill of lading, which will be the law of the place where the bill of lading was issued unless there is agreement thereon between the parties to the bill of lading. In particular, regarding incorporation of arbitration clauses in charter parties between the carrier and the holder of the bill of lading, the Supreme Court23 held that an arbitration clause in a charter party would be considered to be validly incorporated into a bill of lading only if it provides that:
- the arbitration clause is incorporated with a reference to the charter party or the holder of the bill of lading is aware of the charter party with the arbitration clause therein; or
- every term of the charter party is incorporated and the holder of the bill of lading is aware of the existence and contents of the arbitration clause, which is not inconsistent with other terms of the bill of lading and its wording sufficiently applies to a third-party holder of the bill of lading.
A demise clause is not valid as it is regarded to be reducing the liability of the carrier.24 However, in an appellate court case in which a foreign law was the governing law to a contract of carriage, and the foreign law recognised the validity of demise clauses, it was held that a demise clause was valid.25
iv Limitation of liability
With regard to global limitation of liability, Korea has incorporated a substantial part of the Convention on Limitation of Liability for Maritime Claims 1976 (the LLMC Convention 1976) and part of the Protocol to amend the LLMC Convention 1996 (the LLMC Protocol 1996) for limitation amounts in respect of a passenger's death or injury into the Commercial Code,26 but has not ratified any of these conventions. However, as South Korea is not a signatory, the constitution of funds in Korea would not bar claimants from exercising their rights in another jurisdiction or vice versa (at least if not prohibited in the other jurisdiction). A person entitled to global limitation must apply to the court for commencement of limitation proceedings within one year of receiving a claim letter.27
Package limitation under the Commercial Code28 is the same as that under the Hague-Visby Rules, namely the higher of 666.67 special drawing rights (SDRs) per package or unit and 2 SDRs per kilogram, although Korea has not ratified the Hague-Visby Rules.
The procedure for the limitation of liability is set out in the Act on the Procedure for Limiting the Liability of Shipowners, etc.
i Ship arrest
Korea has not ratified any conventions in this respect.
Under Korean law, there are two distinct types of arrest. One is to enforce claims for final satisfaction (based on an enforceable judgment, a mortgage or a maritime lien) and the other is by way of prejudgment attachment for the purpose of obtaining security for either a domestic or foreign judgment or an arbitral award to be rendered in the future. The distinction is stringent and, thus, it is crucial to determine at the outset which process is to be followed; for example, an arrest by way of prejudgment attachment where the claim attracts a maritime lien could be revoked.
In any case, the arrest is available only if the target vessel is legally owned by the person who is liable for the claims. The only exception would be an arrest based on a maritime lien, when the target vessel may be arrested irrespective of the owner's identity once the maritime lien is imposed on the target vessel. Thus, it is very difficult to arrest a sister vessel or an associated vessel in Korea.
The court that has jurisdiction over the location of the vessel shall be able to render the arrest order. The application for the arrest is made ex parte, and an application for a maintenance and preservation order for physical custody of the target vessel usually follows the application for the arrest of a foreign vessel. Once an arrest order is rendered, the court officer will serve the order on board the vessel, by which the enforcement of the arrest will be completed.
In the case of a prejudgment arrest, the applicant is generally required to provide counter security to the court in an amount equivalent to 10 per cent of the claim amount either in cash or by a guarantee insurance policy at the court's discretion. Conversely, regarding an arrest for enforcement of claims, counter security is not required but expenses for a court sale are required to be paid to the court, as the court sale automatically commences following the court's arrest order. For maintenance and preservation for the custody of a vessel, it is usual practice for the applicant to pay the fees for the first month when the application is made.
A prejudgment attachment arrest must be followed by legal proceedings on the merits of the claim before the agreed jurisdiction or arbitration, where the arrest to enforce the claim may be based on an enforceable judgment already rendered on merits, or if it is based on a maritime lien or a mortgage, the vessel interests will have to challenge the arrest order before a Korean court. Meanwhile, the vessel interests, usually in the name of the registered owner, may apply to the court for the release of the vessel by providing security of the total amount claimed in cash, unless otherwise agreed with the applicant. The security for the release of the vessel will be regarded as a substitute for the vessel or the sale proceeds.
If the claimant's claim turns out to have been groundless, the claimant would be liable for the wrongful arrest in tort. To deny liability, the claimant would need to prove that it was not negligent and may have to compensate the shipowner both for the loss of trading during the arrest period and, if the ship was released on security, the interest accrued on the amount of the security.
The jurisdiction of the court reaches beyond the port limit and, thus, a vessel at anchor in territorial waters but not within the port limit can be arrested. However, it is unprecedented to use a helicopter in a vessel arrest.
ii Court orders for sale of a vessel
An arrest based either on an enforceable judgment or security rights such as a mortgage or a maritime lien shall commence court sale proceedings of the vessel. In the case of a prejudgment attachment arrest, court sale proceedings may be commenced once an enforceable judgment (in the case of an arbitral award, an additional enforcement judgment by a Korean court to enforce the award) is obtained from the court.
The court will have the vessel valued and its condition appraised. Meanwhile, other claimants against the shipowner or those entitled to a maritime lien can file their claims with the court. Within one month of the expiry of other claimants' filing period, the court will have a notification of the court sale published in newspapers. The court will determine the highest bidder and decide whether to approve the sale. The sale proceeds will be distributed to the claimants and the shipowner according to the priority listings determined after the hearing for the distribution of the proceeds.
Korea has ratified the Load Lines Convention and its 1988 Protocol, the Tonnage Convention, the COLREGs, the International Convention for Safe Containers 1972, the STCW Convention, the Search and Rescue Convention, the INMARSAT Convention, the FAL Convention and SUA and its 1988 Protocol. The domestic legislation in this respect includes the Ship Safety Act, the Maritime Safety Act, relevant presidential decrees and public notifications, which set out requirements and restrictions incorporated from the aforementioned conventions.
Korea is one of the countries on the International Maritime Organization's STCW White List.
ii Port state control
Korea is a member of the Tokyo Memorandum of Understanding on Port State Control in the Asia-Pacific Region 1994 (the Tokyo MOU). The authority in charge is the Ministry of Oceans and Fisheries (MOF). The domestic legislation in this respect includes the Ship Safety Act, the Ship Act, the Seafarers Act, the Ship Employees Act, the Maritime Safety Act and the Marine Environment Management Act.
Under the above regulations, in 2020, the port authority under the MOF inspected 2,043 vessels and detained 63 vessels (detention rate of 3.1 per cent).29
iii Registration and classification
There are two registries applicable to ships in South Korea. One ship register is managed by the courts, which provides information about ownership, bareboat charter and registrable securities, such as mortgages, and other registrable encumbrances, such as court arrest orders and injunction orders. The other ship register is operated by the regional port authorities, which deal mainly with administrative issues when obtaining trading licences as well as the particulars about the ship.
Both registers are available only for vessels owned by Korean legal entities (including companies).
Many members of the International Association of Classification Societies operate in Korea, as Korea is renowned for its shipping and shipbuilding businesses. Among others, the Korean Register and Bureau Veritas are authorised by the Korean government to conduct annual and temporary ship surveys and to issue certificates on behalf of the government.
It seems to be generally accepted that a classification society will be held liable for the damage caused to others by its neglect of duty of care to monitor and supervise the building of a defect-free ship, although there is not yet any published case directly addressing this issue. In a 2018 district court case involving dual classification for the same ship, the issue to be determined was whether a classification society shall be liable for damage to others due to the neglect of duty of care by another society in approving defective designs wherein the former is supposed to accept the other's designs as approved and only monitor and supervise the shipbuilding as per those designs; the first instance court held that the former classification society shall not be liable.30
iv Environmental regulation
Korea has ratified MARPOL (73/78) (Annexes I to V) and its 1997 Protocol (Annex VI), the OPRC Convention (and the OPRC-HNS Protocol), the 1976 and 1992 Protocols to the CLC Convention, the 1992 and 2003 Protocols to the Fund Convention, the Bunker Convention, the Anti-Fouling Convention and the Ballast Water Management Convention. The domestic legislation in this area includes the Marine Environment Management Act and the Clean Air Conservation Act.
v Collisions, salvage and wrecks
Korea has not ratified any collision convention. The Commercial Code deals with collisions in Articles 876 to 881.
If a collision case is brought before a Korean court, it will decide whether the applicable law is (1) the law of the country of the territorial water where the collision took place, or (2) the law of the flag of the vessel at fault in the case of a collision on the high seas.
If Korean law applies, the victim shall bear the loss or damage and will not be entitled to claim damages if the collision was caused by a force majeure or the cause of the collision is in doubt. If the collision was caused by the fault of the crew or pilot of one vessel, the owner of that vessel is liable for damages. If the collision was caused by the fault of the crew or pilot of both vessels, the owner of each vessel is liable in proportion to the degree of the respective faults; however, the owners of the vessels are jointly and severally liable for any death or injury. Damages claims arising from a collision will expire if a lawsuit is not brought within two years of the date of the collision, unless the parties agree to extend the limitation period.
Investigation of collisions is mainly performed by the MST, overseeing an administrative trial on the cause of the accident to decide on the penalty against the liable parties and the contributory negligence between the parties involved. The ratio of contributory negligence is likely to be referred to by the Korean court in relevant proceedings.
Korea has not ratified the International Convention on Salvage 1989 (the 1989 Salvage Convention). Salvage is dealt with in Articles 882 to 895 of the Commercial Code.
If a salvage remuneration claim is brought before a Korean court, it will decide the applicable law as follows: (1) the law of the country of the territorial water where the salvage operation took place; or (2) the law of the flag of the salvor vessel if the salvage operation took place on the high seas.31
If Korean law applies, a person who salvaged a vessel or cargo without obligation is entitled to appropriate remuneration not exceeding the price of the salvaged vessel or cargo, and if the amount of remuneration is not agreed between the parties, the court will make adjustments to the amount. If the salvage operation was such that it prevented or minimised damage to the environment, the salvor is entitled to special compensation irrespective of the outcome. The remuneration claims for salvage will expire if a lawsuit is not brought within two years of the completion of salvage, unless the parties agree to extend the period.
Korea has not ratified the Nairobi International Convention on the Removal of Wrecks 2007 (the Nairobi WRC 2007). The legislation dealing with wreck removal includes the Act on Vessels Entering and Departing Port, the Marine Environment Management Act and the Maritime Safety Act.
The owner or the occupant of any object that causes or may cause a hindrance to a vessel's navigation, or the master, owner or operator of a vessel that causes obstruction in navigation, is obliged to remove the object or obstruction or bear the costs and expenses for its removal.32 The master of a vessel that causes certain pollutants to be emitted into the sea is obliged to report to the relevant authority and to take measures to prevent the spread and further emission and to remove the emitted pollutants, and to bear the costs and expenses of the operation.33
vi Passengers' rights
Korea has not ratified the Athens Convention on the Carriage of Passengers and their Luggage by Sea 1974 (the Athens Convention) or any protocols. Passenger carriage is dealt with in Articles 817 to 826 of the Commercial Code.
The carrier is liable for the death or personal injury of passengers unless the carrier proves that neither it or its employees were not negligent. The global limitation amount for a passenger's death or personal injury is in line with that of the 1996 LLMC Protocol, which Korea has not ratified.
vii Seafarers' rights
Korea has ratified the Maritime Labour Convention 2006, which came into force in Korea in January 2015. The major domestic legislation in this area includes the Seafarers' Act, the Ship Employees Act and the Act on the Investigation of and Inquiry into Marine Accidents.
The shipping and shipbuilding industries in Korea have maintained a remarkable presence in the international market. Although the global recession in the shipping industry had a harsh effect on the Korean shipping industry, restructuring with support from public and private sectors has significantly improved the financial status of shipping in Korea, and it is gradually making a recovery from the difficulties of the past.
The shipbuilding industry, above all, has recovered significantly, securing 43 per cent of total global shipbuilding contracts in 2020, which is attributable to the knowledge, expertise and experience accumulated over several decades, and the financial support provided by the government-established Korea Ocean Business Corporation. The number of shipbuilding contracts in 2020 was lower compared to the previous year owing to the covid-19 pandemic. However, the market is recovering and the trend in early 2021 shows that Korean shipyards will continue to be the favourites in the higher-value vessel market.
Although there has been no significant change in the legal regime in 2020, and it seems that Korea will maintain the current legal framework on maritime law for the time being, there could be some development in the court system highlighting shipping and maritime matters. The Supreme Court has decided to add shipping and maritime to its list of categories of cases, which means that the court will recognise cases on shipping and maritime matters separately from others. Furthermore, we expect that some major district courts, such as in Seoul and Busan, may assign these cases to the divisions (either collegiate or single judge) that have knowledge and experience both in shipping and maritime matters (under Korean and foreign laws) to hear those cases, so as to enhance the speed and quality of the judgments. There is further likelihood that some of these cases may be heard in foreign languages as per the parties' preference (although this is most likely to be English).
Further, the establishment of maritime courts (dedicated to maritime issues exclusively) in Seoul and in major ports such as Busan and Incheon has been a hot topic in the shipping industry and legal circles.
Some members of the National Assembly have presented a bill to establish a special court to hear shipping and maritime cases. According to the bill, the new court would not only hear shipping and maritime cases but even some disputes on international commercial matters. Maritime courts, as proposed by this bill, are a special type of court, purported to exercise jurisdiction over maritime nature disputes only (as patent courts do for patent issues, for instance), whereas general courts will hear any disputes not under the jurisdiction of any special court without any reference to the subject matter. According to the bill, they are intended to be the first instance courts with the same level of hierarchy as general district courts, against which both appeal to the appellate court and final appeal to the Supreme Court are allowed. Appellate courts and the Supreme Court are general courts to hear all issues within their jurisdictions. In our view, this combination of courts could enhance efficacy to some extent but debates on this subject are expected within the National Assembly.
Nevertheless, the Korean judicial system is expected to function as a competent jurisdiction for both domestic and foreign cases on shipping and maritime matters under foreign governing law.
1 Jong Ku Kang is a partner and Joon Sung (Justin) Kim is an associate at Bae, Kim & Lee LLC.
2 VesselsValue, Fleet database.
3 Statistics Korea, Index on traffic of goods in national ports.
4 Clarkson Research, World Shipyard Monitor.
5 Rules for Including Legal Fee to the Cost of Litigation.
6 Supreme Court Judgment, 26 August 2010, 2010Da28185.
7 Private International Law Act [PILA], Article 60.
8 Civil Code, Article 162(1); Commercial Code, Article 64.
9 Civil Code, Article 766.
10 Commercial Code, Articles 122 and 147.
11 ibid., Articles 814 and 875.
12 ibid., Articles 840, 846, 851, 881 and 895, respectively, for each claim.
13 Supreme Court Judgment, 28 October 2004, 2002Da74213. There are also cases of Korean courts acknowledging reciprocity between Korea and Kentucky where the Uniform Act is not adopted (Supreme Court Judgment, 28 January 2016, 2015Da207747) but it is not clear whether this could be extended to other US states.
14 Supreme Court Judgment, 11 June 2015, 2013Da208388.
15 Supreme Court Judgment, 25 June 2009, 2009Da22952.
16 Supreme Court Judgment, 28 April 1987, 85Daka1767.
17 Commercial Code, Article 799.
18 ibid., Articles 807 and 808.
19 ibid., Article 816.
20 Ship Act, Article 6.
21 Supreme Court Judgment, 13 February 2004, 2001DA75318; Supreme Court Judgment, 27 April 2007, 2007DA4943.
22 Commercial Code, Articles 815 and 137.
23 Supreme Court Judgment, 10 January 2003, 2000Da70064.
24 Seoul Appellate Court Judgment, 13 June 2008, 2006Na28074.
25 Seoul Appellate Court Judgment, 15 May 1989, 88Na44126.
26 Commercial Code, Articles 769 to 776.
27 ibid., Article 776.
28 ibid., Article 797.
29 Statistics Korea, Port State Control Inspection Rate.
30 Changwon District Court Judgment, 6 September 2018, 2015Gahab32905.
31 PILA, Article 62.
32 Act on Vessels Entering and Departing Port, Article 40; Maritime Safety Act, Articles 25 to 29.
33 Marine Environment Management Act, Articles 63 and 65.