In handling the loss of, or damages to, cargo carried by sea, a foreign company may sue or be sued by a Korean company in Korean court. Unlike the United States or the United Kingdom, Korea does not have separate statutes regulating the carriage of goods by sea such as the Carriage of Goods by Sea Act ("COGSA"). However, Korea does have statutes meant to deal with this specific topic as part of the Korean Commercial Code (the "KCC"). This portion of the KCC was amended in 1991 and effective as of 1993 (the "Amended KCC"). The amendments were made to adopt, with some variations, the Hague-Visby Rules.

This article attempts to find the variation in the Amended KCC and to show the effects thereof by introducing the following hypothetical situation :

Columbus carries Shawn's machines contained in a container on the vessel "Victor" from Foreignland to Korea, issuing a clean bill of lading. However, after discharging the container at a Korean port, it is discovered that the machines are damaged. Shawn must now consider whether he can recover the damages from Columbus in Korean court and the procedures therefore.

I. Shawn's Prima Facie Case
Under Korean law, to make a prima facie case to recover for damages to cargo, Shawn should show that although the machines were delivered to Columbus in good condition, they were re-delivered to him in bad condition. Where a clean bill of lading is issued, the cargo is presumed to be delivered in good condition. Therefore, Shawn can make his prima facie case by showing that he has a clean bill of lading issued by Columbus and that the machines were re-delivered to him in bad condition.

Unlike the Hague Rules which imposes on a carrier the duty to exercise due diligence from only the loading of the cargo to its discharge, the Amended KCC imposes a much broader duty on a carrier since it requires him to exercise due diligence from the receipt of the cargo to the delivery thereof. Based on the Amended KCC, therefore, since Shawn is not required to show that the cargo was loaded onto the "Victor" in good condition, he is not required to produce a 'shipped' bill of lading as the bill of lading issued a the time of delivery is sufficient under the Amended KCC.

II. The Duties of Columbus
The carrier, in general, has a duty to exercise due diligence at the outset of the voyage, to make the vessel seaworthy, properly manned, to equip and supply the vessel, make the hold, refrigerating chambers and all other parts of the vessel in which goods are carried fit and safe for their reception, carriage and preservation (the "Duty of Seaworthiness"). Additionally, the carrier shall properly and carefully not only load, handle, stow, carry, keep, care for, and discharge, but also receive and deliver the goods carried (the "Duty of Care for Cargo"). The carrier must show for himself, the master, mariner or other employee of the vessel that the above duties were carried out with due diligence in order to be relieved of liability for loss of, damage to, or delay in the arrival of the cargo.

There are two differences between the Amended KCC and the Hague Rules in regards to the duties of the carrier. The first is that the Amended KCC added delay in arrival of the cargo as a source of liability in addition to those listed in the Hague Rules. The second is, as noted above in I, that the Amended KCC extended the responsibility of Columbus by adding "receive" and "deliver" to the responsibilities already mentioned in the Hague Rules.

Under the KCC, in order to be relieved of liability arising out of the damage to the Shawn's machines, Columbus must show that he or his employees exercised the due diligence described above in respect of the machines.

III. Other Exemptions
The carrier may nonetheless be relieved of liability for damages to the cargo resulting from fire, unless such fire is caused intentionally or negligently by the carrier (the "Fire Exemption"), or damages to the cargo resulting from an act of the master, mariner, pilot or other employee of the vessel in the navigation or the management of the vessel (the "Navigation Fault Exemption").

There is nothing particular to the Navigation Fault which may be compared to the Hague Rules. However, the exception to the Fire Exemption provided for under the Amended KCC (e.g., intent or negligence) is different from the language in the Hague Rules, which requires "actual fault or privity". The difference may be due to the fact that the Korean legal system does not recognize the common law concept of "actual fault or privity". However, it appears that "actual fault or privity" is a narrower concept than "intent or negligence" because while some knowledge to the result is not considered to be a factor to determine negligence, it is considered to include actual fault or privity. In this regard, it appears that the inclusion of "negligence" in the Amended KCC has broadened the exception to the Fire Exemption. Furthermore, it is not clear whether the carrier or the shipper bears the burden to prove that the fire was caused by the intent or negligence of the carrier. The Korean Supreme Court has not yet resolved this issue. Perhaps the answer rests upon the shipper under the structure of this provision.

Based on the above, Columbus may invoke these exemptions under the circumstances where the damage occurred. However, if Columbus invokes the Fire Exemption, Shawn may rebut it by showing that the fire was caused by the intent or negligence of Columbus or his employees.

The carrier may also be relieved of liability for the damage to the cargo by showing that the damage was probably caused by (i) perils of sea; (ii) an act of God; (iii) an act of war; (iv) an act of public enemies; (v) an arrest or restraint of princes, rulers or people, quarantine restrictions or seizure under legal process; (vi) an act of the shipper or owner of the goods, his agent or representative; (vii) strike or lock-out; (viii) any deviation in saving or attempting to save life or property or any reasonable deviation; (ix) insufficiency or inadequacy of package or marks; (x) inherent vice of the goods; or (xi) latent defect of the vessel. The above is list of exemptions as provided for in the Amended KCC somewhat varies from the Hague Rules (e.g., addition of latent defects of the vessel).

The shipper, however, may rebut these exemptions by showing that had the carrier exercised due diligence regarding the Duty of Seaworthiness and the Duty of Care for Cargo, he could have prevented such damages from occurring.

Based on the foregoing, Columbus may be relieved of liability for the damages to Shawn's machine if he can show that the damages were a result of any of the above additional exemptions. However, Shawn may rebut these exemptions by showing that the damage may have been preventable had Columbus exercised due diligence with respect to his duties.

IV. Limitation of Liability
Even if a carrier is liable for damages to the cargo for his failure to exercise due diligence regarding the Duty of Seaworthiness and the Duty of Care for Cargo, his liability is limited to a certain extent. Under the Amended KCC, the carrier's liability is limited to 500 Special Drawing Rights ("SDR") (not 666 SDR as provided for in the Visby Rules) per package or unit. These is no similar weight limitation under the Visby Rules.

However, the above protection may be ousted where the damages result from the act or omission of the carrier himself done with intention or recklessly with the knowledge that the damage would probably result. The language "recklessly" to the Amended KCC is an odd concept under the Korean legal system where the basis of tort liability is classified only as negligence or gross negligence, and therefore, the "recklessly" should be properly interpreted. There are two possible interpretations of "recklessly" under the Korean legal system.

1. Since the Korean legal system is not familiar with the concept of recklessness, it should be interpreted in accordance with similar concepts already recognized under the Korean legal system. Therefore, it may essentially have the same meaning as "gross negligence". Under this interpretation, the concept of recklessness will have a much broader interpretation than it does in the United States or the United Kingdom.

2. Looking to the intention of Congress and the use of language which is different from "gross negligence", recklessness should be interpreted exactly the same as it is in the United States or the United Kingdom.

The Korean Supreme Court is expected to define the concept "reckless" soon.

Where a container or similar article is used to consolidate goods, the issue arises of what constitutes a package for the purpose of determining the package limitation. The Amended KCC resolved this issue by adopting the Article 2 (c) of the Visby Rules. Thus, when the number of packages or units are specifically enumerated in the bill of lading or other contractual document, each of such packages will constitute a package or unit for the purposes of determining package limitation. Where they are not so enumerated, the container or similar article of transport is deemed to constitute the package or unit.

Furthermore, in the event that the container itself has suffered damages thereto, it is deemed to be a separate package or unit. However, the package limitation does not apply if the consignor expressly gives notice of the types and prices of the cargo, which is described on the face of the bill of lading or other contractual documents, except where the consignor makes a misrepresentation.

Based on the above, Columbus may invoke the package limitation described above even if he is deemed to be liable for the damages to the cargo. However, Shawn may rebut this limitation by showing that the damage was caused by an act or omission of the carrier with intent or recklessness having foreseen the probability of the result.

V. Tort Claim
Under the Korean legal system, cargo interests have two remedies with regard to damage to cargo. The first remedy is under contract law and the other remedy is under tort law.

Under the unamended KCC, the exculpatory provisions stated therein were held not applicable to remedies in tort. Thus, there was a by-pass to avoid a carrier's defense under the unamended KCC. However, the Amended KCC adopted Article 3(1) of the Visby Rules which provides that all provisions of the Amended KCC shall also apply to tort remedies as well. Thus, there is no longer a problem of ousting the carrier's protection in a tort claim under the Korean law.

VI. Time Limit
A suit should be brought within one year after delivery of the goods or the date in which the goods should have been delivered. This one year period, however, may be extended by an agreement between the parties. Accordingly, if Columbus has not compensated Shawn for the damages to his machine, Shawn must file a suit, otherwise Columbus can be discharged from all liability.