대법원 2012

Supreme Court Order 2010Ma222 Decided April 17, 2012[Limitation of Ship Liability]

* First draft

[Main Issues and Holdings]

[1] The meaning of "interested person" who can file an immediate appeal against the commencement order for procedure for limiting liability ("PLLC order") under "the Act on the Procedure for Limiting the Liability of Shipowners, etc."

[2] Where Gap damage control committee under Article 7(1) of "the Special Act on Assistance to Residents Suffering Damage from the Hebei Spirit Oil Spell Accident and Restoration of the Marine Environment, etc" filed immediate appeal against the PLLC order, the case holding that it did not constitute an interested person who can file an immediate appeal on the ground that although organized for protection of damaged fishers' rights, it was not assigned with the claim, but delegated with members' power to claim and receive damages from oil pollution accident; and thus it did not acquire legal right, duty or legal burden from this case's PLLC order

[3] Whether a barge(neither national nor public) cruised by being towed or pushed by another ship under the former Commercial Act, Part V is subject to shipowners limited liability (affirmative)

[4] Whether limited liability can be excluded just because employees of limited liability subject like shipowner acted recklessly(negative) and whether a person with corporate decision-making power in lieu of representative can be deemed as limited liability subject where a limited liability subject is incorporation (affirmative)

[5] Whether a petitioner for shipowner’s limited liability procedure commencement has the burden of proving non-existence of limited liability exclusion grounds (affirmative)

[6] The meaning of "act or omission committed recklessly with knowledge that loss would probably result" as shipowners limited liability exclusion ground under Article 746 of the former Commercial Act

[8] Where a limited liability procedure commences, and limited claim is confirmed in investigation, whether a claimant may file a lawsuit for full recovery against debtor without cap on damages (affirmative)

[Summary of Decision]

[1] Articles 6(1) and 23(1) of the Act on the Procedure for Limiting the Liability of Shipowners, etc. provides that only "an interested person" can file an immediate appeal against the commencement order for procedure for limiting liability ("the PLLC order"). It means a person who comes to have direct specific legal interest due to the PLLC order. Legal interest relation means that the order's effect is direct, or where indirect, its effect should decide the appellant's legal status. Cases of factual or indirect interests are not included in interested persons.

[2] Where Gap damage control committee under Article 7(1) of "the Special Act on Assistance to Residents Suffering Damage from the Hebei Spirit Oil Spell Accident and Restoration of the Marine Environment, etc" filed immediate appeal against the PLLC order, the case held that it did not constitute an interested person who can file an immediate appeal on the ground that although organized for protection of damaged fishers' rights, it was not assigned with the claim, but delegated with members' power to claim and receive damages from oil pollution accident; and thus it did not acquire legal right, duty or legal burden from this case's PLLC order.

[3] Under Article 740 of the former Commercial Act(amended by the Act No. 8581 of Aug. 3, 2007), a ship of this Act is used for navigation for commercial activities or any other profit-making. Under Article 1-2 of the former Ship Act(amended by the Act No. 8621 of Aug. 3 of 2007), a barge is a ship cruised by being towed or pushed by another ship due to the lack of self-navigation capacity. Under Article 29 of the former Ship Act, provisions for maritime commerce of the Commercial Act, Part V, shall apply to ships for sailing even if not for commercial transactions(except national or public ships)

[4] Under Article 746 of the former Commercial Act(amended by the Act No. 8581 of Aug. 3, 2007), "if the loss resulted from shipowner's personal act or omission intended to cause such loss, or recklessly and with knowledge that such loss would probably result("reckless act")," the shipowner is not entitled to limited liability. For limited liability exclusion, a shipowner must act recklessly. Its employee's reckless act does not exclude limited liability under Article 746 unless a ship's charterer or operator entitled to limited liability acts recklessly under Article 750(1)1 of the same Act. But where limited liability is about incorporation including shipowner, if only the representative's reckless act is counted as its reckless act, exclusion grounds became useless and the incorporation will unjustly enjoy benefits of limited liability, since actual ship operation authorities shift to lower level members as its size increases. Thus, a person with corporate decision-making power in lieu of representative shall be deemed as limited liability subject in exclusion although he is neither the board of directors' member nor executive.

[5] Where damages are claimed to shipowners separately from the shipowner’s limited liability procedure("SLLP"), a person asserting limited liability exclusion bears the burden of proving its ground under Article 746 of the former Commercial Act. But it commences upon showing causal facts as petitioner specifies accident and showing that total amount of each limited claim under Article 747(1) of the former Commercial Act exceeds the maximum liability amount. Since the SLLP begins as collective debt procedure with debtors' lead for their profits unilaterally, a petitioner also should show absence of limited liability exclusion ground as to the claim. In the SLLP, petitioner for commencement should show absence of exclusion ground under Article 746 of the former Commercial Act.

[6] "Act or omission committed recklessly with knowledge that loss probably results" as shipowners limited liability exclusion ground under Article 746 of the former Commercial Act means neglecting probability of loss occurrence or deciding recklessly against it. A shipowner's fault cannot be reckless just due to its gravity.

[7] Where residents suffering loss from Hebei Spirit oil pollution accident filed immediate appeal against PLLC order about Gap incorporation("Gap"), a lessee of tug and barge, the case held that non-existence of limited liability exclusion grounds was shown sufficient for the PLLC order in light of all circumstances despite suspicion against Gap's sufficient safety measures on the grounds that Gap has the status of comprehensively managing and supervising the ships' operation; Eul company("Eul") as Gap's delegate or their captains cannot be seen as representative with decision making power in operating tugs in lieu of Gap's representative; and the acts of Eul's representative or captains cannot be the test for whether Gap acted recklessly at marine accident.

[8] Although SLLP as to claim does not establish any exclusion ground of Article 746 of the former Commercial Act; limited liability procedure commences, and limited claim is confirmed in investigation, it is effective within the limited liability procedure. Claimant may sue for full recovery against debtor regardless of limited liability procedure. Such claimant may apply for holding dividend payment by proving lawsuit outside of the procedure before the objection period lapses (Articles 70, 71 subparag. 1 of the Act on the Procedure for Limiting the Liability of Shipowners, etc.). If an exclusion ground is asserted and proved in the later lawsuit outside of the procedure and the judgment of unlimited claim is finalized, the claim can be satisfied from debtor's property without resorting to SLLP.

[Reference Provisions] [1] Articles 6(1), 23(1) of the Act on the Procedure for Limiting the Liability of Shipowners, etc.( "PLLS Act")/[2] Articles 6(1), 23(1) of the PLLS Act, Article 7(1) of the Special Act on Assistance to Residents Suffering Damages from the Hebei Spirit Oil Spill Accident and Restoration of the Marine Environment, etc./[3] Article 740 of the former Commercial Act("CA")(amended by the Act No. 8581 of Aug. 3, 2007), Articles 1-2, 29 of the former Ship Act (amended by the Act No. 8621 of Aug. 3, 2007)/ [4]Articles 746, 750(1)1 of the former CA(current Articles 769, 774(1)1)/[5]Article 10 of the PLLS Act, Article 746 of the former CA/ [6] Article 746 of the former CA/[7] Article 10 of the PLLS Act, Articles 746, 750(1)1 of the former CA/[8] Article 746 of the former CA, Articles 70, 71 subparag. 1 of the PLLS Act

Article 6 of the Act on the Procedure for Limiting the Liability of Shipowners, etc. (Immediate Appeal) (1) As regards trial proceedings for limiting liability, an interested party may file an immediate appeal only for cases specifically provided for in this Act.

Article 10 of the Act on the Procedure for Limiting the Liability of Shipowners, etc. (Proof with Supporting Evidence) A petition filed for the commencement of proceedings for limiting liability shall be proved with supporting evidence of causal facts of the petition as required for identifying the accident in dispute and the fact that the total sum of limited claims under each subparagraph of Commercial Act

Article 23 of the Act on the Procedure for Limiting the Liability of Shipowners, etc. (Immediate Appeal) (1) An immediate appeal may be filed against a decision on a petition for the commencement of proceedings for limiting liability

Article 70 of the Act on the Procedure for Limiting the Liability of Shipowners, etc. (Request for Withholding Distribution of Dividends) (1) An intervener in proceedings for limiting liability may file a request with the administrator to withhold the distribution of dividends before the period for raising an objection against the dividends distribution statement lapses by proving the fact that another lawsuit outside the proceedings is pending in regard to his/her reported claim or that compulsory execution of the claim or exercise of a security right is in progress.

(2) The request under paragraph (1) shall be made in writing.

Article 71 of the Act on the Procedure for Limiting the Liability of Shipowners, etc. (Withholding of Distribution of Dividends) The administrator shall withhold the distribution of dividends for the following claims: 1. A claim for which a request is filed to withhold the distribution of dividends in accordance with Article 70;

Article 740 of the former Commercial Act (Definition of Ship) A ship mentioned in this Act is one which is used for navigation for the purpose of commercial activities or any other profit-making transactions.

Article 746 of the former Commercial Act (Shipowner's Limitation of Liability) The shipowner may limit his liability for the claims falling under any of the following subparagraphs to the amounts as prescribed in Article 747, whatever the basis of liability may be: Provided, That the shipowner shall not be entitled to limit his liability if the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result: 1. Claims in respect of loss of life or personal injury or loss of or damage to property other than the ship, occurring on board or in direct connection with the operation of the ship; 2. Claims in respect of loss resulting from delay in the carriage by sea of cargos, passengers or their luggage; 3. Claims in respect of other loss resulting from infringement of another person's rights other than contractual rights, occurring in direct connection with the operation of the ship other than claims referred to in subparagraphs 1 and 2; and 4. Claims of a person in respect of measures taken in order to avert or minimize loss for which the person liable may limit in accordance with subparagraphs 1 through 3, and further loss caused by such measures.

Article 750 of the former Commercial Act (Persons Entitled to Limit Liability) (1) The following persons may limit their liability to the same extent as the shipowner in accordance with the provisions of this Chapter: 1. Charterer, manager and operator of a ship.

Article 1-2 of the former Ship Act (Definitions) (1) The term "ship" in this Act means sorts of ships which are used or may be put to use for navigation on or under water, and their classification shall be as follows: 3. Barge: A ship which is cruised by being towed or being pushed by another ship due to the lack of self-navigation capacity.

Article 29 of the former Ship Act (Mutatis Mutandis Application of Commercial Act) The provisions concerning maritime commerce of Part V of the Commercial Act shall apply mutatis mutandis to ships used for sailing even if they are not used for the purpose of commercial transactions: Provided, That the same shall not apply to national or public ships.

[Reference Cases] [4] Supreme Court Order 94Ma2431 decided March 24, 1995(Gong1995Sang, 1734), Supreme Court Order 95Ma325 decided June 5, 1995(Gong1995Ha, 2492)

[Reappellant-Petitioned]Reappellant 1 et al. (Law Firm Chungjung, etc., Counsel for reappellant-petitioned)

[The other party-Petitioner]Samsung Heavy Industries Inc. (Law Firm KNC, Attorneys Kwak Kyung-jik et al., Counsel for the other party-petitioner)

[Order of the court below]Seoul High Court Order 2009Ra1045 decided Jan. 20, 2010

[Disposition] All of reappeals are dismissed. The costs are assessed against reappellants.

[Reasoning] The reappeal grounds are examined.

1. Reappeal ground: appellant's standing

Articles 6(1) and 23(1) of the Act on the Procedure for Limiting the Liability of Shipowners, etc. ("the PLLS Act") provides that only "an interested person" can file an immediate appeal against the commencement order for procedure for limiting liability ("the PLLC order"). It means a person who comes to have direct specific legal interest due to the PLLC order. Legal interest relation means that the order's effect is direct, or where indirect, its effect should decide the appellant's legal status. Cases of factual or indirect interests are not interested persons.

Under Article 7(1) of "the Special Act on Assistance to Residents Suffering Damage from the Hebei Spirit Oil Spell Accident and Restoration of the Marine Environment, etc"("the Hebei Spirit Special Act"), residents suffering loss due to Hebei Spirit oil pollution accident may organize and report to the Minister of Food, Agriculture, Forestry and Fisheries, the Minister of Land, Transport, and Maritime Affairs, or the head of local government agency pursuant to the Presidential Decree. According to the court below's reasoning and records, reappellants in list (2) of attachment 2 and reappellant Seosan Suhyup(Fishery Co-op) Hebei Spirit oil damage control committee(all referred to as "the committee") were organized under the Hebei Spirit Special Act for protection of rights of fishers who suffered losses from oil pollution accident. It was delegated from group members with power for damages claim and receipt and settlement/reconciliation with the other party as executioner. Although organized for protection of damaged fishers' rights, the committee was not assigned with the claim, but delegated with members' power to claim and receive damages from oil pollution accident. Thus, the committee did not acquire any legal right, duty or legal burden from this case's PLLC order.

The judgment below justly held that the committee did not constitute an interested person who may appeal against this case's PLLC order. It has no error of misapprehending legal principle.

We reject each reappellant's reappeal ground in list (2) of attachment 2 as mere independent opinion with assertion that if the committee did not constitute an interested person, its representative should be deemed as appealing as interested person under the legal principles of partial invalidity or conversion of invalid act. We reject this reappeal ground.

2. Reappeal ground: applicability of shipowner’s limited liability

A. Under Article 740 of the former Commercial Act(amended by the Act No. 8581 of Aug. 3, 2007), a ship of this Act is used for navigation for commercial activities or any other profit-making. Under Article 1-2 of the former Ship Act(amended by the Act No. 8621 of Aug. 3 of 2007), a barge is cruised by being towed or pushed by another ship due to the lack of self-navigation capacity. Under Article 29 of the former Ship Act, maritime commerce provisions of the Commercial Act, Part V, shall apply to ships for sailing even if not for commercial transactions(except national or public ships).

Thus, a barge, neither national nor public, cruised by being towed or pushed by another ship constitutes a ship covered by shipowners limited liability regardless of navigation purpose of commercial activities or any other profit-making in Part V of the former Commercial Act.

The court below's fact-finding and reasons are as follows. Samsung No.1 constitutes a barge navigating by being towed or pushed by a tug. It is a ship despite temporary uncontrollable situation at this case's marine accident. Further, a petitioner's navigation of tug of this case from Incheon port to Geoje-si is a commercial act. Shipowners limited liability needs not consider whether "navigation is for commercial activities or any other profit-making" under Article 29 of the former Ship Act. It rejected reappellants' dispute as to existence of ground for limited liability procedure commencement.

The court belows' order is just under the above law and records. It has no error of misapprehending legal principle of limited liability applicability as reappeal ground.

B. Where an ordinary ship collided with a crude carrier and its oil leaked and loss occurred by pollution, its shipowner's liability for damages can be limited by the Commercial Act. Crude carrier's owner liability can be limited by the "Compensation for Oil Pollution Damage Guarantee Act." Under both Acts, the PLLS Act applies to limited liability procedure. Procedure is identical in damages claim for oil pollution.

Under the above law, this case's limited liability procedure commencement application cannot be rejected, barring special law, just because the PLLS Act premised on typical marine ship accident is hard to be applied since oil pollution accident's mode is diverse and loss can be continuous as reappellants asserted.

Thus, the court below is just in rejecting reappellant 1's assertion. It has no error of misapprehending legal principle. This ground of reappeal cannot be accepted.

3. Reappeal ground: existence of shipowner’s limited liability exclusion grounds

A. Actor as the test for limited liability exclusion grounds

Under Article 746 of the former Commercial Act, "if the loss resulted from shipowner’s personal act or omission intended to cause such loss, or recklessly and with knowledge that such loss would probably result("reckless act")," the shipowner is not entitled to limited liability. For exclusion of limited liability, a shipowner must act recklessly. Its employee's reckless act does not exclude limited liability under Article 746 unless a ship's charterer or operator entitled to limited liability acts recklessly under Article 750(1)1 of the same Act(see Supreme Court Orders 94Ma2431, Mar. 24, 1995; 95Ma325, June 5, 1995, etc.).

But where a limited liability's subject including shipowner is incorporation, if only the representative's reckless act is counted as its reckless act, exclusion grounds became useless and the incorporation will unjustly enjoy benefits of limited liability, since actual ship operation authorities shift to lower level members as its size increases. Thus, a person with corporate decision-making power in lieu of representative shall be deemed as limited liability subject in exclusion although he is neither the board of directors' member nor executive.

The court below's reasons and records revealed as follows. Petitioner leased Samsung T-5, No.1, A-1 on Dec. 29, 1995 from Samsung Construction, Inc.(later merged to Samsung C&T Corporation) and entrusted their management on Mar. 1, 2007 to Boram Inc.("Boram"). Under the commission contract, Boram is responsible for security like equipment management and ship operation for construction. Petitioner dispatches supervisor to construction site and gives job-related instruction to Boram manager, which is followed, barring just cause. Boram located at petitioner's Geoje shipyard as petitioner's cooperative company operates the above ships without other business. Boram did not prepare a security system or manual for tug operation. It entrusted tug operation security to tug Samsung T-5 captain(non-petitioner 1) or barge Samsung No.1 head(non-petitioner 2) due to absence of manpower or professionalism. Non-petitioners 1 and 2 operated tug of this case under petitioner's employees' control and supervision. Petitioner used them in Geoje shipyard for its business; offered them Incheon bridge construction of Samsung C&T Corporation on Nov. 26, 2007; purchased ship insurance for towing navigation of Geoje-Incheon with insurance inspection with its own money; dispatched non-petitioners 3 and 4 who are its employees to Incheon bridge construction site. At that site, as work is completed, the tug of this case departed to Geoje shipyard. Non-petitioner 3 confirmed work completion and left the site after seeing the tug of this case preparing sailing. Non-petitioner 4 received a sailing report from Boram. Under the above facts, petitioner has the status of comprehensively managing and supervising the above ships' operation. Boram or their captains cannot be seen as representative with corporate decision making power in operating tug of this case. Thus, the judgment below that the acts of Boram's representative or captains cannot be the test for determining whether the petitioner acted recklessly at this case's marine accident is just under the above legal principle. It has no error of misapprehension of legal principle in interpretation of limited liability exclusion grounds.

B. Intentional or reckless act

(1) Where damages are claimed to shipowners separately from limited liability procedure("SLLP"), a person asserting limited liability exclusion bears the burden of proving the ground under Article 746 of the former Commercial Act. But it commences upon showing causal facts as petitioner specifies accident and showing that total amount of each limited claim under Article 747(1) of the former Commercial Act exceeds the maximum liability amount. Since the SLLP begins as collective debt procedure with debtors' lead for their profits unilaterally, a petitioner also should show absence of limited liability exclusion ground as to limited liability claim. In the SLLP, petitioner for commencement should show its absence under Article 746 of the former Commercial Act.

(2) At the court below, reappellant Republic of Korea("ROK") alleged that petitioner ignored navigation safety by delegating solely to tug captain a navigation plan of the west coast in winter with drastic weather fluctuation; petitioner's reckless act caused marine accident of this case by neglecting safety management at sea; thus, limited liability procedure should not commence. The court below rejected the assertion since reappellant ROK failed to specify petitioner's reckless act as limited liability exclusion ground and it partly attributes cause for this case's marine accident to petitioner as tug of this case's operator and lessee, which is insufficient to prove petitioner's reckless act as cause for loss.

Under the above law, petitioner's reckless act at this case's marine accident shall be decided with corporate decision maker's act of operating tug of this case as petitioner's representative under internal job duty division. Petitioner seeking limited liability procedure commencement shall assert and prove absence of limited liability exclusion ground. Thus, petitioner shall specify a corporate decision maker with power of operating tug of this case under job duty division as its representative and affirmatively prove the decision maker did not act recklessly. The court deciding limited liability procedure commencement should ask petitioner to show the above point or conduct ex-officio investigation.

Nonetheless, the court below held that limited liability exclusion ground is not recognized due to reappellant ROK's unspecific assertion, which is erroneous in misapprehending the legal principle as to which party bears the burden of proving limited liability exclusion ground in SLLP.

(3) "Act or omission committed recklessly with knowledge that loss would probably result" as shipowners limited liability exclusion ground under Article 746 of the former Commercial Act means neglecting probability of loss occurrence or deciding recklessly against it. A shipowner's fault cannot be reckless just due to its gravity.

The court below revealed that petitioner may not take safety measures sufficient for this case's navigation. The towing line snapped at this case's accident had been used for years as barge crane wire and later for Samsung T-5, one of this case's tug, which was one of tugs for Samsung No.1, 3,000 ton crane barge, at this case's accident. Its safety needs more review. In light of weather fluctuation and tug of this case's speed, existence of safety measures like fleet composition and equipment is hard to be established.

However, the former Commercial Act is strict about limited liability exclusion grounds such as intentional or reckless act. Mere negligence cannot prevent SLLP commencement. SLLP commences for debtor's benefit by his lead. Based on petitioning debtor's materials, it is reviewed whether claim reported by petitioner is limited under Article 746 of the former Commercial Act, and its amount exceeds liability limit. The procedure does not require a hearing and explanation is enough as proof.

Thus, with the following facts shown in the court below, non-existence of limited liability exclusion grounds is deemed as shown enough for PLLC order. At the accident of this case, snapped towing line exceeded required strength. The pre-navigation towing capability inspection recommended no departure at Beaufort scale 5 and escape to port at scale 6, but passed the test for this case's towing.

Tugs Samsung T-5 and Samho T-3's towing power was not bigger but equal to towed Samsung No.1. VHF wireless radio on the ship worked normally and the crew on board had all required licenses. On the other hand, prosecutor in investigation of case accusing petitioner's navigation division employees concluded no evidence exists that employees ordered tug of this case to leave despite deteriorating weather. Calling records do not show that the non-petitioner 2 aboard the tug of this case did not call or communicated with petitioner's employees after reporting sailing until collision, which shoed non-existence of limited liability exclusion grounds.

(4) The court below may have shifted assertion and proof burden or reason insufficiently as to limited liability exclusion grounds, but concluded that claims asserted by petitioner do not have limited liability exclusion grounds and ordered limited liability procedure commencement. The order of the court below has no error of misapprehending legal principle of limited liability exclusion grounds as asserted in reappeal ground, which affected the order's conclusion. We do not accept this ground of reappeal.

4. Reappeal ground: the court below's order infringed reappellants' right to trial

Although SLLP as to claim does not establish any exclusion ground under Article 746 of the former Commercial Act; limited liability procedure commences, and limited claim is confirmed in investigation, it is effective within limited liability procedure. Claimant may sue for full recovery against debtor regardless of limited liability procedure. Such claimant may apply for holding dividend payment by proving lawsuit outside of the procedure before the objection period lapses (Articles 70, 71 subparag. 1 of the PLLS Act). If a limited liability exclusion ground is asserted and proved in the later lawsuit outside of the procedure and the judgment of unlimited claim is finalized, the claim can be satisfied from debtor's property without resorting to SLLP.

Thus, reappellants no longer have real benefits from continuing the main lawsuit and provisional disposition as to petitioner by the court below's order. The ground of reappeal that its order invaded a right to trial and abused its power is meritless.

5. Reappellant Boryung Suhyup's reappeal ground

Reappellant Boryung Suhyup did not submit a reappeal brief within due date.

6. Conclusion

Therefore, the reappeals are all dismissed by all participating Justices' assent. The costs of reappeal are assessed against the losing party. It is ordered as per Disposition.

Justices Ahn Dai-hee(Presiding Justice)

Kim Nung-hwan

Lee In-bok

Park Byoung-dae(Justice in charge)

* This translation is provisional and subject to revision