Newbuilding contractsTransfer of title
When does title in the ship pass from the shipbuilder to the shipowner? Can the parties agree to change when title will pass?
There is no clear provision as to the timing of the title transfer in the Korean Commercial Act (the KCA). The Shipbuilders’ Association of Japan form is widely used in Korea as a shipbuilding contract (it is usually agreed, however, that the governing law is English law and the jurisdiction is the London Maritime Arbitrators Association), and the title passes from the shipbuilder to the shipowner upon delivery of the ship.
Nonetheless, the parties can agree as to when title will pass. However, the change of title in the ship cannot be contested against a third party unless it is registered and recorded on the certificate of a ship’s nationality (article 743 of the KCA).Refund guarantee
What formalities need to be complied with for the refund guarantee to be valid?
As a contract of guarantee, there are no specific formalities necessary for a refund guarantee to be valid, as long as there is proof of existence of a guarantee contract. A refund guarantee is usually provided by way of a letter of guarantee issued by a bank (sometimes by an insurance company), acceptable to the buyer in accordance with the shipbuilding contract. The letter of guarantee is stamped by the company’s signature seal or signed by the person representing the bank or insurance company.Court-ordered delivery
Are there any remedies available in local courts to compel delivery of the vessel when the yard refuses to do so?
If the yard refuses to deliver the vessel, an order for provisional disposition of delivery can be applied to a local court. The buyer should prove that it has fulfilled all contractual requirements but the yard is refusing to deliver the ship at the agreed delivery time and place. Security by way of a cash deposit or a surety bond will be requested by the court. The security amount will be about one-tenth of the value of the ship.Defects
Where the vessel is defective and damage results, would a claim lie in contract or under product liability against the shipbuilder at the suit of the shipowner; a purchaser from the original shipowner; or a third party that has sustained damage?
Under the shipbuilding contract, the builder is responsible for defective work (liability in contract).
On the other hand, under the Korean Product Liability Act, if a vessel is defective and results in loss of life, personal injury or any damage to properties other than the ship itself, a product liability claim can be brought by the shipowner, a purchaser from the original shipowner or any third party that has sustained damage (article 3 of the Product Liability Act). The time bar will be three years from the time the claimant notices the damage or loss and the identity of the liable party.
Ship registration and mortgagesEligibility for registration
What vessels are eligible for registration under the flag of your country? Is it possible to register vessels under construction under the flag of your country?
Korea maintains two different types of registration of vessels. The first is the recording system (Register Book) maintained by the register office of the district court. The title to the vessel and the mortgage are publicly announced via the Register Book. The other type is the registration records maintained by the local port authority (Regional Maritime Affairs and Port Administration) regarding obtaining the Korean flag. Vessels recorded in Korea have the right to fly the Korean flag.
Korea-flagged ships can be owned by:
- the Korean government or a public entity;
- Korean citizens;
- a commercial corporation established under Korean law; or
- a corporate body other than those mentioned above, whose principal place of business is located in Korea and whose representatives are all Korean (article 2 of the Korean Ship Act).
It is not possible to register vessels under construction under the Korean flag. However, it is possible to record a mortgage on a vessel under construction (articles 787 and 790 of the KCA).
Who may apply to register a ship in your jurisdiction?
As explained in question 5, owners of Korean ships may apply to register a ship under the Korean flag.Documentary requirements
What are the documentary requirements for registration?
To register under the Korean flag, applicants must present the ship’s certificate of tonnage and a certified copy of the ship registry (article 8(1) of the Ship Act and article 10 of the Enforcement Decree).Dual registration
Is dual registration and flagging out possible and what is the procedure?
Dual registration is not possible, but flagging out is possible.Mortgage register
Who maintains the register of mortgages and what information does it contain?
The court register office maintains the register (recording) of mortgages. The mortgage registration contains the date when the mortgage registration was applied for, the date when the ship was mortgaged, the name and address of the mortgagee, the name and address of the debtor, and the credit amount.
Limitation of liabilityRegime
What limitation regime applies? What claims can be limited? Which parties can limit their liability?
Korea is not a contracting party to either the 1976 International Convention on Limitation of Liability for Maritime Claims (LLMC) or the 1996 Protocol to the 1976 LLMC. However, the KCA adopted most provisions in the 1976 LLMC. There is also the Korean Act on the Procedure for Limitation of Liability of the Shipowners, etc, which provides procedures for shipowners’ limitation proceedings.
The following claims are subject to limitation of liability (article 769 of the KCA):
- claims in respect of loss of life or personal injury or damage to goods or property other than the ship herself, which have occurred on board or in direct connection with the operation of the ship;
- claims in respect of loss resulting from delay of the carriage of cargo, passengers or their luggage;
- claims in respect of other loss resulting from infringement of rights other than contractual rights, which have occurred in direct connection with the operation of the ship; and
- claims in respect of measures taken in order to avert or minimise loss arising from the cause of claims described in the first three points of this list.
Registered shipowners, charterers, managers and operators can limit their liability.Procedure
What is the procedure for establishing limitation?
Shipowners or others entitled to limit their liability may file an application to commence the procedure of limitation of liability. They should present the court with prima facie evidence that the claim amount, which may be subject to the limitation of liability, may exceed the limitation amount and the list of the potential claimants’ names and addresses.
If the court considers that the limitation proceeding should be commenced, it will order the applicant to provide a deposit. Instead of a cash deposit, a letter of guarantee from a bank, insurance company or a protection and indemnity (P&I) club is usually acceptable upon the approval of the court.
The limitation fund is calculated according to the law of the vessel’s flag country.Break of limitation
In what circumstances can the limit be broken? Has limitation been broken in your jurisdiction?
A shipowner shall not be entitled to limit his or her liability if it is proven that the loss resulted from his or her personal act or omission committed with intent to cause such loss or recklessly with knowledge that such loss would probably result.
Also, a shipowner shall not limit his or her liability in certain circumstances set out in article 773 of the KCA, which provides:
No shipowner shall limit liability for the following claims:
1. A claim on a shipowner by a person whose duties are related to the affairs of a ship as a shipmaster, a crewman, or any other employee, or his/her inheritors, dependents, or other interested persons;
2. A salvage charge due to rescue operations at sea and a claim concerning a share in general average;
3. A claim for oil pollution damage governed by the International Convention on Civil Liability for Oil Pollution Damage concluded on November 29, 1969 or the amended provisions of the Convention;
4. A claim for a ship sunken, wrecked, stranded, abandoned, or involved with other marine accidents, and salvage, removal or scrapping of, or non-invasive measures for cargo and other goods that are or were in such ship;
5. A claim for nuclear damages.
The limitation on a shipowner’s liability has not never been broken in Korea.
On the other hand, in relation to the similar issue of an act or omission of the carrier itself, there is one Korean Supreme Court decision (Case No. 2004Da27082 dated 26 October 2006), in which the carrier’s package or weight-based limitation was broken (see question 49).Passenger and luggage claims
What limitation regime applies in your jurisdiction in respect of passenger and luggage claims?
Korea has not ratified the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea. Instead, similar to the 1996 LLMC, article 770, section 1, paragraph 1 of the KCA provides that the limit of liability in respect of claims for loss of life or personal injury to passengers of a ship is 175,000 special drawing rights (SDR) multiplied by the number of passengers that the ship is authorised to carry in accordance with the ship’s inspection certificate. This is a global limitation regime and not an individual limitation of 175,000 SDR per passenger.
The luggage claims are subject to the package limitation of 666.67 SDR per package or two SDR per kilogram, whichever is higher, as provided in article 797 of the KCA. The luggage claims are also subject to global limitation, as provided in article 770, section 1, paragraph 3 of the KCA, which reads as follows.
The limit of liability in respect of any other claims than paragraphs 1 and 2 shall be calculated as follows:
- 83,000 SDR for a ship with a tonnage below 300 tonnes;
- 167,000 SDR for a ship with a tonnage not below 300 tonnes but not exceeding 500 tonnes;
- for a ship with a tonnage in excess of 500 tonnes, the following amounts shall be added to 167,000 SDR:
- for each tonne from 501 to 3,000 tonnes, 167 SDR;
- for each tonne from 30,001 to 70,000 tonnes, 125 SDR; and
- for each tonne in excess of 70,000 tonnes, 83 SDR.
Port state controlAuthorities
Which body is the port state control agency? Under what authority does it operate?
The Ministry of Oceans and Fisheries is the body responsible for the port state control.
Staff of the Regional Maritime Affairs and Port Administration of the Ministry of Oceans and Fisheries carry out the port state control.
Korea is a member of the Memorandum of Understanding on Port State Control in the Asia-Pacific Region (the Tokyo MoU), which came into effect in April 1994. The Tokyo MoU is one of the most active regional port state control organisations in the world. The organisation consists of 18 member authorities in the Asia-Pacific region.Sanctions
What sanctions may the port state control inspector impose?
Port state control inspectors are entitled to issue an order to rectify deficiencies or an order prohibiting departure of a vessel until the vessel’s deficiencies have been rectified.Appeal
What is the appeal process against detention orders or fines?
The shipowner may apply for an objection to the Minister of Oceans and Fisheries within 90 days after receipt of the deficiency correction order or departure prohibition order (the Minister should then notify the result within 60 days). The shipowner may also commence an administrative action without applying for an objection.
Classification societiesApproved classification societies
Which are the approved classification societies?
The Korean Register of Shipping (KR) is the approved classification society.Liability
In what circumstances can a classification society be held liable, if at all?
A classification society may be liable based on breach of contract or in tort if it is negligent in its performance. However, there seems to have been no court case seeking the KR’s liability.
Collision, salvage, wreck removal and pollutionWreck removal orders
Can the state or local authority order wreck removal?
The Minister of Oceans and Fisheries can order wreck removal to the owner or possessor of the drifting or sunken object when such an object is found that may obstruct navigation of a vessel or where there is such a risk of obstruction (article 26 of the Korean Public Order in Open Ports Act).International conventions
Which international conventions or protocols are in force in relation to collision, wreck removal, salvage and pollution?
Korea is not a party to the Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels 1910, but several provisions were adopted in articles 876 to 881 of the KCA.
Korea is also not a party to the International Convention on Salvage 1989, but many provisions were adopted in articles 882 to 895 of the KCA.
Korea is not a party to the Nairobi International Convention on the Removal of Wrecks 2007. Korea is a party to the International Convention on Civil Liability for Oil Pollution Damage.Salvage
Is there a mandatory local form of salvage agreement or is Lloyd’s standard form of salvage agreement acceptable? Who may carry out salvage operations?
There is no mandatory local form of salvage agreement, and Lloyd’s standard form of salvage agreement is quite popular in Korea. There are several Korean private salvage companies, including Korea Salvage Co Ltd, and international salvage companies.
Ship arrestInternational conventions
Which international convention regarding the arrest of ships is in force in your jurisdiction?
Korea has ratified neither the International Convention Relating to the Arrest of Sea-Going Ships 1952, nor the International Convention on the Arrest of Ships 1999.Claims
In respect of what claims can a vessel be arrested? In what circumstances may associated ships be arrested? Can a bareboat (demise) chartered vessel be arrested for a claim against the bareboat charterer? Can a time-chartered vessel be arrested for a claim against a time-charterer?
There are two types of vessel arrest available in Korea: the first is the provisional arrest (or prejudgment attachment) and the second is the maritime lien arrest.
Provisional arrest (or prejudgment attachment) is available to a claimant and may be obtained to secure his or her claim (any type of claim including cargo claim and outstanding amount owed by the shipowner) against the shipowner. For a prejudgment attachment, a counter-security is required. A counter-security is usually about one-tenth of the claim amount. If the court allows, a claimant may deposit such a counter-security by way of a surety bond issued by an insurance company. As regards claims giving rise to provisional arrest, any claim can do so regardless of whether such claim is maritime in nature, provided that the registered owner is the debtor. Maritime lien arrest is the other type of arrest available in Korea for those claims that give rise to a maritime lien. A claimant who is entitled to a maritime lien or to foreclose the mortgage on the vessel may arrest a vessel for an auction sale of the vessel. For a maritime lien arrest, a counter-security is not required. However, when an application for the arrest is made, the auction costs including appraisal fees must be paid to the court. These advanced auction costs will be paid back to the claimant prior to other claims from the auction proceeds. The amount of auction costs that must be paid to the court differs depending on the size of the claim.
Under the Korean Conflict of Laws Act, whether a claim gives rise to a maritime lien will be determined under the law of the vessel’s flag country. For a vessel flying the Korean flag, see question 47 setting out the list of claims giving rise to maritime liens.
An associated or sister ship may be arrested by way of pre-judgment attachment so long as such ship is owned by the debtor. However, if the ship is owned by a different entity, piercing the corporate veil is required to justify such pre-judgment attachment.
In principle, neither a bareboat-chartered nor a time-chartered vessel can be arrested by way of pre-judgment attachment, unless the bareboat charterer or the time-charterer is the registered owner of the vessel. However, a maritime lien arrest will be available if the claim against the bareboat charterer or the time-charterer gives rise to maritime liens.Maritime liens
Does your country recognise the concept of maritime liens and, if so, what claims give rise to maritime liens?
See question 23 for more detail.Wrongful arrest
What is the test for wrongful arrest?
When it manifestly turns out that the claim itself does not exist at all or provisional arrest of an associated vessel.Bunker suppliers
Can a bunker supplier arrest a vessel in connection with a claim for the price of bunkers supplied to that vessel pursuant to a contract with the charterer, rather than with the owner, of that vessel?
This is generally difficult. However, a bunker supplier can effect a maritime lien arrest (not provisional arrest) in connection with a claim for the price of bunkers supplied to that vessel pursuant to a contract with the charterer, rather than the owner, of that vessel, provided that bunker supplies give rise to a maritime lien under the law of the vessel’s flag country.Security
Will the arresting party have to provide security and in what form and amount?
See question 23.
How is the amount of security the court will order the arrested party to provide calculated and can this amount be reviewed subsequently? In what form must the security be provided? Can the amount of security exceed the value of the ship?
The arrested party has to provide the full amount claimed by the arresting party in cash, or a letter of undertaking (usually issued by the vessel’s P&I club), if the arresting party agrees to accept it in exchange for withdrawal of the application for provisional arrest or maritime lien arrest.
The amount of security can exceed the value of the ship.Formalities
What formalities are required for the appointment of a lawyer to make the arrest application? Must a power of attorney or other documents be provided to the court? If so, what formalities must be followed with regard to these documents?
A power of attorney and certificate of incorporation of the applicant must be provided to the court. The documents need not be notarised or legalised. Korea is a signatory to the Apostille Convention. The original documents are not required and scanned copies suffice. The Korean translation of the power of attorney or certificate of incorporation (CoI) must be provided, but it need not be from a sworn public translator. A free translation suffices. The relevant documents can be filed electronically. On average, three days’ notice at least is required to prepare an arrest application. Note, however, that a notarised and legalised original power of attorney or CoI is needed when receiving a refund of the counter-security from the court.Ship maintenance
Who is responsible for the maintenance of the vessel while under arrest?
Upon the arresting party’s application to the court, a company that is specialised in the maintenance and preservation of a vessel is usually appointed by the court.Proceedings on the merits
Must the arresting party pursue the claim on its merits in the courts of your country or is it possible to arrest simply to obtain security and then pursue proceedings on the merits elsewhere?
As regards provisional arrest, it is possible to arrest simply to obtain security and then pursue proceedings on the merits elsewhere (usually at a competent tribunal according to the terms of the carriage contract or the bill of lading). A provisional arrest in Korea does not automatically create jurisdiction on the merits in Korea.
In the case of maritime lien arrest, the auction sale of the vessel is also carried out in Korea, so the arrested party, if he or she wishes, should object to the auction sale of the vessel at the Korean court.Injunctions and other forms of attachment
Apart from ship arrest, are there other forms of attachment order or injunctions available to obtain security?
The attachment of real estate, bank account, account receivables or chattel owned by the shipowner is possible.Delivery up and preservation orders
Are orders for delivery up or preservation of evidence or property available?
Upon the claimant’s application, an order for delivery up or preservation of evidence or property and an order for production of documents can be issued by the court.Bunker arrest and attachment
Is it possible to arrest bunkers in your jurisdiction or to obtain an attachment order or injunction in respect of bunkers?
It is theoretically possible to arrest the bunkers, but this would be difficult in practice.
Judicial sale of vesselsEligible applicants
Who can apply for judicial sale of an arrested vessel?
Judicial sale can be applied for by a claimant who has a maritime lien claim (as explained in question 23 above) or mortgage over the ship or the final and conclusive judgment against the shipowners in favour of the claimant.Procedure
What is the procedure for initiating and conducting judicial sale of a vessel? How long on average does it take for the judicial sale to be concluded following an application for sale? What are the court costs associated with the judicial sale? How are these costs calculated?
The procedure for initiating and conducting judicial sale of a vessel will be in the following order: application by the arresting party, the court’s order for the arrest and judicial sale of the vessel, appraisal of the vessel, advertisement of the auction, sale procedure (bidding), payment by the successful bidder and distribution of the auction proceeds.
The process would usually take six to 18 months, depending on the market situation.Claim priority
What is the order of priority of claims against the proceeds of sale?
The order of priority is determined according to the law of the vessel’s flag country.
For Korea-flagged vessels, maritime lien claims have priority over pledge and mortgaged claims.
The auction costs (service costs, appraisal fees and costs for, inter alia, maintenance, preservation of the vessel and wharfage during the auction proceeding) will, in principle, be paid prior to other claims from the auction proceeds. Also, crew members’ claims for salary for the past three months and for accident compensation have priority over maritime lien claims.Legal effects
What are the legal effects or consequences of judicial sale of a vessel?
Judicial sales serve to extinguish all prior liens and encumbrances on the vessel, including maritime liens, and thereby give the purchaser clean title.Foreign sales
Will judicial sale of a vessel in a foreign jurisdiction be recognised?
Usually, judicial sale of a vessel in a foreign jurisdiction will be recognised, unless it is against Korean public policy.International conventions
Is your country a signatory to the International Convention on Maritime Liens and Mortgages 1993?
No, Korea is not a signatory to the International Convention on Maritime Liens and Mortgages 1993.
Carriage of goods by sea and bills of ladingInternational conventions
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.Multimodal carriage
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.Title to sue
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.Charter parties
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.Demise and identity of carrier clauses
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).Shipowner liability and defences
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.Deviation from route
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.Liens
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).Delivery without bill of lading
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.Shipper responsibilities and liabilities
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.
Shipping emissionsEmission control areas
Is there an emission control area (ECA) in force in your domestic territorial waters?
There is no ECA in force in Korean domestic territorial waters.Sulphur cap
What is the cap on the sulphur content of fuel oil used in your domestic territorial waters? How do the authorities enforce the regulatory requirements relating to low-sulphur fuel? What sanctions are available for non-compliance?
The 3.5 per cent m/m on sulphur content of fuel oil (bunker C oil) is applicable (article 42, paragraph 2 of the Enforcement Decree on Marine Environment Management Act). Port state control inspectors inspect ships in Korean waters to verify that they possess a valid International Air Pollution Prevention Certificate certificate, and in the absence of a valid certificate, they can issue an order to rectify the deficiency or an order prohibiting the departure of a vessel.
A shipowner that fails to comply with the said requirement shall be liable for a fine not exceeding 10 million won or to imprisonment for a term not exceeding one year (article 129, section 1, paragraph 6 of the Marine Environment Management Act).
Ship recyclingRegulation and facilities
What domestic or international ship recycling regulations apply in your jurisdiction? Are there any ship recycling facilities in your jurisdiction?
Korea is not a signatory to the International Convention for the Safe and Environmentally Sound Recycling of Ships, but domestic statutes, such as the Marine Environment Management Act, the Ship Safety Act, the Public Waters Management Act and the Wastes Control Act, may apply when a ship is dismantled in Korea. For example, under the Marine Environment Management Act, a declaration paper containing a ship recycling plan should be submitted to the Korea Coast Guard where a ship with a gross tonnage of 100 tonnes or more or an oil tanker is going to be dismantled.
There are dozens of recycling facilities in Korea, although the industry has been declining over recent years mainly owing to an increase in environmental regulation and awareness.
Jurisdiction and dispute resolutionCompetent courts
Which courts exercise jurisdiction over maritime disputes?
There is no maritime court specialising in maritime claims. The relevant district court will have jurisdiction over a maritime dispute. Usually, the court having jurisdiction over the port (eg, the Busan District Court or the Seoul Central District Court) has jurisdiction over a maritime dispute.Service of proceedings
In brief, what rules govern service of court proceedings on a defendant located out of the jurisdiction?
Korea ratified the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters in 1965. All service to foreign countries shall be done through the Korean diplomatic authority.
In the case of provisional arrest or maritime lien arrest of a vessel, the service will be effected on the master, and in the case of action on the merits, the service will be on the place if the place of service has been designated or otherwise, service overseas.Arbitration
Is there a domestic arbitral institution with a panel of maritime arbitrators specialising in maritime arbitration?
The Korean Commercial Arbitration Board (the KCAB) and the Seoul International Dispute Resolution Centre (established in 2013, the SIDRC) have a panels of maritime arbitrators specialising in maritime arbitration. In addition, the Seoul Maritime Arbitrators Association (the SMAA) was founded in 2018 to conduct ad hoc arbitration in respect of maritime disputes.
The KCAB reported 12 maritime cases were newly referred to the arbitration tribunals in 2018, which is a slight increase on 10 cases in 2017.
As regards the SIDRC’s reference, there is unfortunately no information publicly available.
The SMAA has recently made its first award in May 2019. The award was handed down by the writer, Mr Sung Keuk Cho, who was appointed as the sole arbitrator.Foreign judgments and arbitral awards
What rules govern recognition and enforcement of foreign judgments and arbitral awards?
Foreign judgments may be enforceable if all the following conditions are fulfilled:
- the foreign court holding the judgment has jurisdiction over the case in accordance with the applicable law or convention;
- the defeated defendant was served with the necessary writ or complaint at the commencement of the procedure or defended his or her case at the litigation;
- the contents of the judgment or procedure is not against Korean public policy; and
- there is reciprocity.
As for arbitration, Korea ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958.
To enforce the foreign judgment or arbitral award in Korea, claimants should obtain an enforcement judgment from a Korean court. In the proceedings of the enforcement judgment, only the question of the legality of the procedure shall be considered, not the merits of the case.Asymmetric agreements
Are asymmetric jurisdiction and arbitration agreements valid and enforceable in your jurisdiction?
It is unclear whether asymmetric jurisdiction and arbitration agreements are valid and enforceable in Korea as there has been no decided case in respect of the validity of such agreements.
However, Korean courts would be reluctant to hold an asymmetric jurisdiction and arbitration agreement as valid. If such clauses were held invalid, Korean courts would have jurisdiction over the underlying dispute.Breach of jurisdiction clause
What remedies are available if the claimants, in breach of a jurisdiction clause, issue proceedings elsewhere?
Even if the claimants issue proceedings in a foreign country in breach of the exclusive jurisdiction clause providing for a Korean court, a Korean court or Korean law does not have any remedies for the defendant. Anti-suit injunction does not exist in Korea. On the other hand, a Korean defendant in a foreign court proceeding may be entitled to commence legal proceedings in Korea based on the Korean court exclusive jurisdiction clause and to raise defences and limitation of liability according to Korean law.
What remedies are there for the defendant to stop domestic proceedings that breach a clause providing for a foreign court or arbitral tribunal to have jurisdiction?
The defendant would be entitled to argue the foreign court or arbitral tribunal jurisdiction and to request that the court dismiss the proceedings. Proceedings shall be dismissed, not stayed, if the jurisdiction clause is deemed valid.
Limitation periods for liabilityTime limits
What time limits apply to claims? Is it possible to extend the time limit by agreement?
- Claim under a bill of lading: one year (article 814 of the KCA), extendable by parties’ agreement;
- claim under the charter party: two years (articles 840, 846 and 851 of the KCA), extendable by parties’ agreement; and
- claim for collision: two years (article 881 of the KCA), extendable by the parties’ agreement.
May courts or arbitral tribunals extend the time limits?
No, neither courts nor arbitral tribunals can extend the time limits.
MiscellaneousMaritime Labour Convention
How does the Maritime Labour Convention apply in your jurisdiction and to vessels flying the flag of your jurisdiction?
Korea ratified the Maritime Labour Convention on 9 January 2014.Relief from contractual obligations
Is it possible to seek relief from the strict enforcement of the legal rights and liabilities of the parties to a shipping contract where economic conditions have made contractual obligations more onerous to perform?
In principle, it is impossible to seek relief from the strict enforcement of the legal rights and liabilities of the parties to a shipping contract. However, if the Debtor Rehabilitation and Bankruptcy Act is applied, the debt or obligation shall be subject to this act.Other noteworthy points
Are there any other noteworthy points relating to shipping in your jurisdiction not covered by any of the above?
Update and trendsKey developments of the past year
Are there any emerging trends or hot topics that may affect shipping law and regulation in your jurisdiction in the foreseeable future?No updates at this time.