In brief: carriage of goods by sea in South Korea

Carriage of goods by sea and bills of lading

Are the Hague Rules, Hague-Visby Rules, Hamburg Rules or some variation in force and have they been ratified or implemented without ratification? Has your state ratified, accepted, approved or acceded to the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea? When does carriage at sea begin and end for the purpose of application of such rules?

While Korea has neither ratified nor acceded to the Hague Rules 1924, the Hague-Visby Rules 1968, the Hamburg Rules, or the UN Convention on Contracts for the International Carriage of Goods, Korea has adopted most provisions of the Hague-Visby Rules 1968 in the KCA.

The carriage of goods by sea begins from receipt of goods at the loading port and ends upon delivery of goods at the discharge port (port to port).

Korea has not yet decided to ratify the Rotterdam Rules.

Are there Conventions or domestic laws in force in respect of road, rail or air transport that apply to stages of the transport other than by sea under a combined transport or multimodal bill of lading?

The KCA is applicable to road transport. There is no separate law applicable to rail transport. On the other hand, the Railroad Enterprise Act (article 25) provides that article 135 of the KCA applies mutatis mutandis with respect to loss, damage or delay of cargo during railroad transport.

As Korea has ratified the Montreal Convention, such Convention is applicable to international air carriage. Articles 895 to 935 of the KCA have similar provisions to the Montreal Convention, which would be applicable for domestic air carriage and air carriage between Korea and non-signatory countries.

Who has title to sue on a bill of lading?

A holder of the original bill of lading has title to sue on a bill of lading.

To what extent can the terms in a charter party be incorporated into the bill of lading? Is a jurisdiction or arbitration clause in a charter party, the terms of which are incorporated in the bill, binding on a third-party holder or endorsee of the bill?

The terms in a charter party can be incorporated into the bill of lading, as long as the date of the charter party is described on the bill of lading. A jurisdiction or arbitration clause in a charter party, the terms of which are incorporated in the bill, is binding on a third-party holder or endorsee of the bill.

Is the ‘demise’ clause or identity of carrier clause recognised and binding?

A previous decision of a Korean court recognised the validity of the ‘demise’ clause or identity of carrier clause. However, more recent Korean court decisions seem to put more emphasis on the description on the front of a bill of lading (ie, who is described and signed ‘as carrier’ at the bottom right of the signature section on the front of a bill of lading) (thus it seems that the demise clause or identity of carrier clause in the reverse terms of a bill of lading is no longer valid and binding).

Are shipowners liable for cargo damage where they are not the contractual carrier and what defences can they raise against such liability? In particular, can they rely on the terms of the bill of lading even though they are not contractual carriers?

Even if the shipowners are not the contractual carrier, they can be liable for cargo damage in tort. If they are the actual carrier or the subcontractors named under the Himalaya clause in the bill of lading, they can rely on the defences and limitation of liability available under the KCA or the terms of the bill of lading, as long as such terms are not invalid under the KCA.

What is the effect of deviation from a vessel’s route on contractual defences?

The carrier shall not be liable for any loss or damage to cargo resulting from any deviation to save life or property at sea or any other reasonable deviation. However, the majority academic view is that an unreasonable deviation is a breach of the contract of carriage, despite existence of a liberty clause.

What liens can be exercised?

The statutory maritime lien recognised over the ship, its appurtenances and unpaid freight under the KCA (article 777) are the following:

• court-related expenses, port dues, pilotage, towing charges and preservation expenses or survey fees for the vessel after entering the port;
• claims of the crew or servants of the owner arising from the employment contract;
• salvage remuneration and the ship’s contribution to general average; and
• claims for collision and other maritime accidents, damages to the navigational aids, port facilities and fairway, and claims for loss of life or damages to crew or passenger.

The lien shall be valid for one year from when the claim has arisen (article 786 of the KCA). No extension is allowed.

The master has a lien on the cargo for the unpaid freight, demurrage, contribution for general average or salvage, etc (article 807 of the KCA), and the carrier can place the cargo on auction sale so as to receive the said outstanding amount (article 808 of the KCA). The carrier also has a commercial lien on the cargo (owned by the debtor) in their possession for an outstanding amount arising from a commercial transaction (article 58 of the KCA).

What liability do carriers incur for delivery of cargo without production of the bill of lading and can they limit such liability?

The carrier shall be liable for the loss of cargo caused by the delivery without receipt of the original bill of lading. However, the carrier can rely on the package (666.67 SDR per package or unit) or weight limitation (two SDR per kilogram) under the KCA, unless it is proven that loss or damage resulted from an act or omission of the carrier itself him or herself (representative director or managerial level officers in case of a corporation) done with intent to cause damage or recklessly with knowledge that cargo loss or damage would probably result.

In a case where a carrier sought to limit its liability contending that the words ‘carrier him/herself’ provided in the KCA should be narrowly construed to senior officers of a company, at or close to board level, the Korean Supreme Court held that the carrier shall not limit liability where damage to or loss of the cargo can be attributable to intention or recklessness of an employee who has been delegated part of its management functions although such employee was not at board level, and therefore that the act or omissions of the employee should be imputed to the carrier him or herself.

What are the responsibilities and liabilities of the shipper?

The shipper shall deliver the cargo at the time and place as agreed between the parties or according to the custom of the loading port (article 792 of the KCA), pay the freight, declare the dangerous cargo to the carrier (article 801 of the KCA) and not provide dangerous goods (article 800 of the KCA). The bill of lading holder shall be liable for unpaid freight and other charges over the cargo if he receives the cargo.