SOUTH KOREA Law and Practice Contributed by: Woorin Sung and Hee Kyung Jeong, D&A LLC
3.5 Procedure and Requirements for Establishing a Limitation Fund
their duties, service, working conditions, employment security, welfare, education and training.
Under the Commercial Act of South Korea, the com - mencement of limitation proceedings of liability may be sought by ship-owners, charterers, ship manag - ers, operators, the general partners of corporate ship- owners, and, subject to certain conditions, ship mas - ters, pilots, etc. An application for such proceedings is initiated by fil - ing an application for the establishment of a limitation fund for a vessel. The application must be supported by written materials setting out, inter alia, details of the incident, the applicable limit of liability, the grounds for the limited claims and the identities of the lim - ited creditors. Applicants are required to prove not only the occurrence of the incident, but also that the aggregate amount of the limited claims exceeds the relevant limit of liability. Upon such application, the court may issue a deposit order directing the appli - cant to deposit with the court an amount equivalent to the applicable limit of liability, together with interest calculated at an annual rate of 6%. The deposit may be substituted by the submission of a deposit bond. Once limitation proceedings are commenced follow - ing the deposit, an administrator is appointed, and a reporting period and an investigation date are fixed and publicly announced. Upon commencement of the proceedings, limited creditors are, in principle, enti - tled to receive dividends within the scope of the fund, and the exercise of their rights against the applicant’s assets outside the fund is restricted. The limitation of liability is calculated pursuant to the Commercial Act of South Korea, which, under sep - arate provisions, prescribes the applicable limits of liability by reference to the nature of each claim and the tonnage of the vessel. 3.6 Seafarers’ Safety and Owners’ Liability South Korea is a party to the Maritime Labour Con - vention (MLC, 2006), and the rights and safety of sea - farers in South Korea are governed by the Seafarers Act and the Ship Safety Act. In particular, the Seafar - ers Act plays a central role in regulating seafarers’ rights and safety. It aims to guarantee the basic liveli - hood of seafarers by regulating matters concerning
4. Cargo Claims 4.1 Bills of Lading
South Korea is not a party to the Hague-Visby Rules or the Rotterdam Rules. Matters relating to the carriage of goods by sea and bills of lading are governed by
the Commercial Act of South Korea. 4.2 Title to Sue on a Bill of Lading
To bring an action based on a bill of lading in South Korea, a person must be the lawful holder of the bill of lading. When a carrier issues and delivers a bill of lad - ing to the consignor, the consignor becomes the initial lawful holder of the bill of lading, and any person who can demonstrate that they have acquired the substan - tive rights from the previous lawful holder through an uninterrupted series of endorsements, or by other means, may exercise rights as the lawful holder of the bill of lading. However, the assignment of the title to sue alone, without the transfer of the bill of lading itself, is not recognised under South Korean law. 4.3 Ship-Owners’ Liability and Limitation of Liability for Cargo Damages Under South Korean law, ship-owners are, in princi - ple, liable for damages arising from the loss of, dam - age to or delay in the delivery of the goods, unless they can prove that neither they, their seafarers nor other employees of the vessel neglected to exercise due care in relation to the goods. Ship-owners may claim a limitation of liability for cargo loss or damage in accordance with the provisions on limitation of liability under the Commercial Act of South Korea. However, the extent of such liability does not differ depending on whether the ship-owner acts as the actual carrier or the contractual carrier. 4.4 Misdeclaration of Cargo The Commercial Act of South Korea provides that a consignor who enters a false or inaccurate statement in a waybill is strictly liable for any damage resulting therefrom to the carrier. At present, there is no judicial precedent in South Korea that directly addresses the misdeclaration of cargo.
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