SOUTH KOREA Law and Practice Contributed by: Choon Won Lee and Dahee Kim, Jipyong LLC
• reaching a settlement with the applicant/ creditor and that applicant/creditor withdraw - ing its application for ship arrest; • making a deposit with the court for the appli - cant/creditor’s alleged claim; • filing an objection to the ship arrest and obtaining the court’s decision to cancel the ship arrest; or • frequently, the combination of the last two points above, ie, filing an objection to the ship arrest and, at the same time, considering the time for the objection proceeding, making a deposit with the court in order to release the vessel promptly. The South Korean court will not accept a club LOU or a foreign bank’s bank guarantee. Under South Korean law and practice, only a cash deposit, or the surety bond issued by Seoul Guarantee Insurance Company (when granted by the court), is acceptable for releasing an arrested vessel. 4.10 Procedure for the Judicial Sale of Arrested Ships Judicial Sale Procedure In the case of a pre-judgment attachment, the judicial auction sale proceeding of the vessel shall not commence unless and until the appli - cant/creditor obtains an enforceable court judg - ment or arbitration award for its claim against the debtor/respondent. When that judgment or award is obtained, the attachment proceeding shall be transferred to a judicial auction sale for enforcement of a claim. In the case of a judicial auction sale based on a security right, such as a mortgage or maritime lien, and for the enforcement of a claim under the judgment or arbitration award, the judicial auction sale proceeding of the vessel shall com - mence.
A private sale is not allowed under South Korean law. Maintaining the Vessel During Arrest As briefly discussed in 4.5 Arresting a Vessel , for all types of ship arrest, the applicant/creditor is required to appoint a local ship-preservation and maintenance company, which will embark and watch over the vessel during the ship arrest on behalf of the applicant/creditor. The costs for this preservation and maintenance shall be recovered from the sale proceeds of the ves - sel if the judicial auction sale proceeding is pro - gressed. Priority Ranking of Claims Under South Korean law, claims that are secured by a maritime lien (see 4.2 Maritime Liens ) have priority over claims that are secured by a mort - gage, and thus shall be distributed with priority over the sale proceeds of the vessel. Among the claims secured by maritime liens which arise from the same voyage, the priority will be in the order of the provisions, from (i) to (iv). If the claims secured by maritime liens arise from different voyages, the claims from the last voyage will have priority. One thing to be noted is that, under the Act on Private International Law of Korea, the priority ranking of claims that are secured by a security right (such as a mortgage, pledge or lien) over a vessel shall be determined in accordance with the law of the vessel’s nationality. Thus, even if the judicial auction sale proceeding of a ship is progressed in South Korea, in so far as the vessel’s nationality is not South Korean, the law of the nationality of the ship will need to be checked for priority ranking of claims.
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