Analysis and Enlightenment of the Main Disputes in the Korean Courts’ Judgments of the Hebei Spirit Oil Pollution Incident

HAO Huijuan

Abstract:The Hebei Spirit oil pollution incident took place in 2007,while compensation for the damage has yet to be completed.There are controversies over the judgments made by the Korean courts in respect of limitation of liability of shipowners,limit of liability,scope of compensation,etc.The issues involved in the trial process are related to the different provisions stipulated by both the Korean oil pollution damage compensation law and the International Oil Pollution Compensation Funds (hereinafter referred to as“IOPC Funds”).At present,China plans to amend its Maritime Law and add a specialized chapter related to“liability for compensation for pollution damage from ships”.It is necessary to learn from South Korea’s experience in dealing with the Hebei Spirit oil spill incident which was in accordance with its domestic oil pollution damage compensation law.This paper aims to provide some references for the amendment to the Maritime Law of the People’s Republic of China by analyzing the judgments related to this incident.

Key Words:The Hebei Spirit oil spill incident;Limitation of liability;Limit of liability;Scope of compensation

I.Overview of the Hebei Spirit Oil Pollution Incident in South Korea

TheHebei Spiritoil spill incident (hereinafter referred to as“Incident”) refersto a major oil spill incident that happened in waters near Taean County,South Chungcheong Province,Korea.On 7 December 2007,the Hong Kong-registered tankerHebei Spirit,with a total tonnage of approximately 146,848 tonnes,was struck by a crane barge,Samsung No.1,owned by Samsung Heavy Industries(SHI).When the Incident happened,the crane bargeSamsung No.1was floating free after the cable linking it to two tugs (Samsung T-5andSamho T-3) snapped in the rough seas.As a result,approximately 10,900 tonnes of oil spilt into the sea.This is by far the worst oil spill in Korean history.1Park Daewoo,Social Capital Analysis of the Hebei Spirit Oil Spill Incident,National Crisis Management Society,Vol.2,No.2,2010,p.70.(in Korean)

A.Description of the Damage

A total of some 375 kilometers of shoreline was affected along the western coast of South Korea by this Incident.Many places in South Chungcheong Province and South Jeolla Province have consequently become contaminated,including 101 islands,15 beaches and 35,000 hectares of farms and other facilities.The total number of affected families was about 40,000.In addition,the oil spill has also affected the Taean Peninsula,which is a favourable destination for visitors from metropolitan Seoul,as well as other areas of Taean National Park.22007 South Korea Oil Spill,at https://en.wikipedia.org/wiki/2007_South_Korea_oil_spill,11 April 2019.The west coast of South Korea is an important area for shellfish cultivation and has been exploited by small-scale fisheries.As this area boasted a large number of maricultural facilities,such as marine aquaculture,shellfish farming and large-scale hatchery production,it was also affected by this Incident.The Korean government protected public health from the potential negative effects brought by sales and distribution of contaminated fisheries products by means of arranging fishing nets,limiting acquisitions and restricting fishing in the affected areas.3Naver Encyclopedia,at https://terms.naver.com/entry.nhn?docId=2598599&cid=51929&cat egoryId=54140,12 April 2019.(in Korean)In short,this oil spill incident has caused great harm to the coastal areas,such as the lives of coastal residents,the environment,tourism and aquaculture.

On April 18,2008,the South Korean government lifted restrictions on fishing activities based on both the progress of oil cleanup in the affected areas and the results of marine environmental research and safety tests of fisheries products.And since September 3,2008,all affected waters and coasts have resumed fishing activities.4Naver Encyclopedia,at https://terms.naver.com/entry.nhn?docId=2598599&cid=51929&cat egoryId=54140,12 April 2019.(in Korean)

B.Emergency Measures

On the day of the Incident,the South Korean government immediately established three departments,namely,the“Incident Treatment Headquarter”,the“Prevention and Countermeasures Headquarter”and the“Comprehensive Department for Disasters”.The state of the Incident was announced promptly on the second day,and the environmentally sensitive sea area was first cleaned up.5Naver Encyclopedia,at https://terms.naver.com/entry.nhn?docId=2598599&cid=51929&cat egoryId=54140,12 April 2019.(in Korean)On December 9,the South Korean government blocked the damaged area where the tanker was struck,and,with the aid of volunteers,thoroughly cleaned up the area.On December 11,the South Korean government declared six cities and counties,including Taean County,as special disaster areas,and allocated manpower and relief supplies to carry out rescue work.In July 2009,the South Korean government designated an affected sea area of more than 6,000 square kilometers in the Taean County as a special area for the recovery of marine environment,and announced that it would invest 17.3 billion Korean Won (around 100 million RMB) in the next ten years for 25 environmental restoration projects.By the end of 2009,the water quality of the affected areas had improved.In April 2010,the government in South Chungcheong Province announced that the restoration of the fisheries environment is underway.Until now numerous animals and plants still show no sign of growth,and the marine environment has not fully recovered,which causes huge losses to South Korea.The loss in Taean County alone has reached trillions of Korean Won,while the compensation has not yet been fully fulfilled.6White Paper on the Hebei Spirit Oil Spill,Ministry of Land,Infrastructure and Transport(Korea),2010,p.14.(in Korean)Some claims for compensation relevant to this Incident are expected to be settled by 2020-2021.7IOPC Funds,Balancing Payment to the Skuld Club,at https://www.iopcfunds.org/incidents/#140-2007-185-December,20 April 2019.

This paper analyzes the disputes over the judgments of the Korean Supreme Court on the Incident.How the compensation for damage after this Incident goes on is also explained in detail under the domestic oil pollution damage compensation law in Korea and the relevant provisions of the IOPC Funds.This paper aims to provide references for the response to major oil spill incidents in the future.

II.The Korean Courts’ Decisions

A.Criminal Responsibility

On December 20,2007,the Public Prosecutor of the Seosan Branch of the Daejeon District Court (hereinafter referred to as“Seosan Court”) applied for a warrant to arrest the masters of the two tugboats (Samsung T-5andSamho T-3) and five other people under the accusation of violating the Prevention of Marine Pollution Act of the Republic of Korea.8It is Act No.8466 issued by the Ministry of Land,Infrastructure and Transport and the Ministry of Environment.It is a law enacted to regulate marine environmental protection.During the process,Samsung Heavy Industries (SHI),which was accused of violating the Prevention of Marine Pollution Act,filed a“submission of the tanker being responsible”,which caused dissatisfaction among the South Korean public.On April 18,2008,the Ministry of Land,Infrastructure and Transport (hereinafter referred to as“MOLIT”) released a report entitled“First Result of the Marine Pollution Impact Survey Related to theHebei SpiritOil Pollution Incident”.According to this report,“both Samsung Heavy Industries and the tankerHebei Spirithave committed negligence”.9First Result of the Marine Pollution Impact Survey Related to the Hebei Spirit Oil Pollution Incident,Ministry of Land,Infrastructure and Transport,2008.(in Korean)On June 23,2008,the Seosan Court delivered its judgment to the effect that:the master of one of the tugboats was sentenced to three years’ imprisonment and a fine of KRW 2 million;the master of the other tugboat was sentenced to one year’s imprisonment;the master and the duty officer of the tankerHebei Spiritwere found not guilty;and the master of the crane bargeSamsung No.1was also found not guilty.10Naver Encyclopedia,at https://terms.naver.com/entry.nhn?docId=2598599&cid=51929&cat egoryId=54140,11 April 2019.(in Korean)However,on June 29,2008,both the Public Prosecutor and the owners of the tugboats filed an appeal against the judgment.In the second trial,the Criminal Court of Appeal (Daejeon Court) overturned the not-guilty judgments of both the master and the duty officer of theHebei Spirit,causing uproar amongst the international shipping industry.11On December 10,2008,in the judgment of the Criminal Court of Appeal (Daejeon Court),the master of the Hebei Spirit,Jasprit Chawla,was sentenced to 1.5 years’ imprisonment and fined 20 million Korean Won (about 168,660 US dollars).Reasons for the judgment:(1) the engine was not properly operated;the master of the Hebei Spirit should be able to anchor in the direction of the stern at the time,but he failed it.Therefore,he was under the accusation of being responsible for preventing oil leakage and was found guilty;(2) inert gas will only exacerbate oil leakage and should not be used;(3) 3.5 hours of oil spill are too long.The duty officer of the Hebei Spirit,Syam Chetan,was sentenced to eight months in prison and was fined 1.2 million Korean Won (about 85,735 US dollars).Reasons for the judgment:(1) the duty officer should be more vigilant,and he should have notified the master before 05:50 a.m.;thereby he was accused of being responsible for preventing oil leakage and was found guilty;(2) inert gas will only exacerbate oil leakage and should not be used;(3) 3.5 hours of oil spill are too long.Hebei Spirit Struck by Floating Crane,Master and Duty Officer Innocently Sentenced,at https://www.sohu.com/a/209114657_654328,20 April 2019.(in Chinese)Since then,the local courts,the Public Prosecutor and the accused have repeatedly argued against each other around the issue of liability,before the case was finally brought to the Korean Supreme Court.On April 30,2009,the Korean Supreme Court annulled the Court of Appeal’s(Daejeon Court) decision to arrest the crew members of theHebei Spiritand they were allowed to leave South Korea.The Supreme Court upheld the decision to arrest the masters of the towing tugs (Samsung T-5andSamho T-3) and of the crane bargeSamsung No.1,and reaffirmed the fines imposed by the Court of Appeal.On June 11,2009,the master and the duty officer of theHebei Spiritwere released and returned to India.12Naver Encyclopedia,at https://terms.naver.com/entry.nhn?docId=2598599&cid=51929&cat egoryId=54140,12 April 2019.(in Korean)

B.Civil Compensation

About 99% of the lawsuits related to theHebei Spiritdamages compensation were terminated due to insufficient evidence.They have been mainly tried by the Seosan Court,the Daejeon Court and the Korean Supreme Court.As of January 2018,54 cases had been completed,but there were still 22 cases that have not yet been processed.13The arrangement of all the lawsuits ruled by the Korean Supreme Court on the Hebei Spirit oil spill incident,at https://www.iopcfunds.org/uploads/tx_iopcincidents/Judgments_relating_to_the_Hebei_Spirit_incident_01.pdf,11 April 2019.As of January 18,2008,the residents sought compensation for damage of 4227.4 billion Korean Won.However,the amount of compensation for the final decision concluded was only about 1/11 of the requested amount,around 383 billion Korean Won in total.14Naver Encyclopedia,at https://terms.naver.com/entry.nhn?docId=2598599&cid=51929&cat egoryId=54140,11 April 2019.(in Korean)

1.Korean Domestic Compensation

The Korean Ministry of Oceans and Fisheries (MOF) and the shipowner’s insurer,the Skuld P&I Club,initially started negotiations for damage compensation on January 5,2008.During the first round of negotiations,the two sides reached an agreement to give priority to paying the residents for their efforts to prevent and control oil pollution,and to use 9.7 billion Korean Won as the operating expenses for domestic damage compensation firms.Based on the above agreement,the 1992 Fund and the Skuld P&I Club opened a claims-handling office,“Damage Compensation Office of the International Oil Pollution Compensation Funds -Hebei SpiritCentre”(hereinafter referred to as“Hebei SpiritCentre”),in Seoul on January 24,2008.At the beginning of February,2008,the labor cost paid to the disaster-stricken residents for their effort to prevent and control the pollution was up to 11.2 billion Korean Won.15Naver Encyclopedia,at https://terms.naver.com/entry.nhn?docId=2598599&cid=51929&cat egoryId=54140,April 11,2019.(in Korean)

A special law for the“support of affected inhabitants and the restoration of the marine environment in respect of theHebei Spiritoil pollution incident”(hereinafter referred to as“Special Law of theHebei Spirit”) was approved by the Korean National Assembly in March 2008 and entered into force on June 15,2008.On February 29,2008,Samsung Heavy Industries made a contribution of 100 billion Korean Won to the development fund in the affected region.And on June 19,2008,the Korean government had convened the first special countermeasures committee for oil pollution incidents based on the abovementioned law to discuss countermeasures against the Incident and relevant issues concerning compensation for damage.However,contradictions regarding prevention work and compensation for damage in the affected areas among local residents,the shipowner’s insurer and the government still exist.

2.Compensation Made by the International Oil Pollution Compensation Funds

The Incident qualified both under the Protocol of 1992 to Amend the International Convention on Civil Liability for Oil Pollution Damage,1969(hereinafter referred to as“the 1992 CLC”) and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage,1992 (hereinafter referred to as“the 1992 Fund Convention”).TheHebei SpiritCentre in Seoul was set up to receive and process claims related to this Incident.As of March 2014,128,403 claims totalling KRW 2,775 billion (£1,550 million) had been submitted.Approximately 110,000 of these claims were from the fisheries sector and about 10,700 claims were related to tourism.All but 11 of the claims submitted have been assessed with 41,217 assessed claims totalling KRW 198,842 million (£110 million) meanwhile 87,175 were rejected for various reasons,primarily due to a lack of supporting documentation or evidence of loss.16LI Haoting,Research on Improvement Program for Compensation Law on Marine Oil Pollution Damage -the Hebei Spirit Incident,Seoul:Master’s Thesis of Korea University,2018,p.55.(in Korean)According to data released by the MOLIT,the tonnage of theHebei Spiritis 146,848 GT,exceeding 140,000 GT.The limitation amount applicable is,therefore,the maximum under the 1992 CLC,namely,SDR 89.77 million.Since the court has not decided the limits of liability for the shipowners at the time of submission,the shipowners and their insurer,together with the joint claims handling officeHebei SpiritCentre,estimated the liability limit based on the exchange rate on the day of submission to the court which was estimated at 186,826,630,900 Korean Won.The 1992 Fund Convention will be responsible for the remaining compensation of around SDR 113.23 million.17IOPC Funds,at https://www.iopcfunds.org/incidents/#140-2007-185-December,20 April 2019.

III.Main Disputes and Comments on the Korean Courts’Decisions Concerning the Incident

A.The Law Applicable to Compensation Liability for Damage

In this Incident,as the shipowners of theHebei SpiritandSamsung No.1are the perpetrators,according to the Korean law,victims suffering from oil pollution can claim for compensation in accordance with the provisions of Article 879 of the Korean Commercial Act.In accordance with Article 879 of the Korean Commercial Act,when the collision of a ship takes place due to the fault of the crew of both parties,each shipowner shall share the liability for compensation for damage according to the relative seriousness of the faults of both parties.In such cases,when it is unable to judge the relative seriousness of such faults,the liability for damages compensation shall be shared equally.18Art. 879 of the Korean Commercial Act (Collision due to Fault of Both Parties): (1) When the collision of ship takes place due to the fault of the crew of both parties, each shipownershall share the liability for compensation for damage according to the relative seriousness of faults of both parties. In such cases, when it is unable to judge the relative seriousness of such faults, the liability for compensation for damage shall be shared equally. (2) In cases of paragraph (1), the shipowners of both parties shall be jointly and severally liable for compensation for damage to death and injury of a third party. [This Article Wholly Amended by Act No. 8581, Aug. 3, 2007] Art. 877 of the Korean Commercial Act (Collision due to Force Majeure): When the collision of ship takes place due to force majeure or the cause of the collision is not clear, a sufferer shall not claim damages due to the collision.[This Article Wholly Amended by Act No. 8581, Aug. 3, 2007] Art. 878 of the Korean Commercial Act (Collision due to Fault of One Party): When the collision of ship takes place due to the fault of a crewman of one party, a shipowner of such party shall be liable to a sufferer for compensation for damage due to the collision. [This Article Wholly Amended by Act No. 8581, Aug. 3, 2007]However,considering that the Incident also involves oil tankers,the person concerned,that is,the shipowner of theHebei Spirit,must apply to the provisions stipulated in the Compensation for Oil Pollution Damage Guarantee Act.

According to the principle of privilege of the Special Law of theHebei Spirit,therefore,the court made its decision in accordance with Article 5 of the Compensation for Oil Pollution Damage Guarantee Act which stipulates that“where an oil tanker causes oil pollution damage,the owner of the oil tanker as at the time of the incident shall be liable for the damage”.Subsequently,the court ruled that the shipowner of theHebei Spiritshould assume responsibility for the damage,and he could exercise the right of recovery to claim compensation from the guilty party,namely,Samsung Heavy Industries.19Art.5 of the Korean Compensation for Oil Pollution Damage Guarantee Act.As for Samsung Heavy Industries,it should apply to the provisions of the Korean Commercial Act.In accordance with Article 770 of the same Act20Art.770 of the Korean Commercial Law of Korea (Limit of Liability).,the prescribed liability limit is limited to around 5 billion Korean Won,and for the excess,the liability for damage shall be waived.21If the behavior of the tugboats of the Samsung Heavy Industries can be regarded as the grounds for the exclusion of limited liability of shipowners,the shipowners of the tugboats will not be held liable,and damages to victims suffering from oil pollution should be compensated according to the proportion of negligence.

As stipulated in the Korean Commercial Act,the obligor or the infringer who causes the loss of the creditor or the victim due to his own intention or negligence shall be responsible for fully compensating the damage caused.However,in order to protect the disadvantaged shipowners,every State establishes a liability limitation system for shipowners in its maritime law.22JIN Renxi,the Fourth Edition of the Maritime Law,Gwangju:French Press,2014,p.66.(in Korean)Such a liability limitation system for shipowners includes not only international conventions in relation to oil pollution damage,but also relevant national laws established in the State.In the case of the Incident,the parties concerned -the shipowners ofHebei Spiritand the tugboats of Samsung Heavy Industries -also apply to this system.The oil tankerHebei Spiritused oil in bulk,so did the floating crane of Samsung Heavy Industries that hit theHebei Spirit,Samsung No.1.In addition,the floating craneSamsung No.1was also within the scope of ships as stated in the law.23The protesting party claimed that the floating crane that collided with the Hebei Spirit had already left the main ship,so it was not in the scope of the ship as stipulated in the Korean Commercial Act,and therefore could not be held accountable in accordance with the provisions of this Act.In the case of sailing in bad weather,whether the limitation of liability of the person responsible can be excluded is highly controversial.

The Judgment of the Korean Supreme Court Related to the Limitation of Ship Liability (Supreme Court Order 2010 Ma 222 Decided April 17,2012)

1.The Connotation of an Interested Person

Disputed Point:After the Incident,victims are entitled to ask for compensation in accordance with Article 7(1) of the Special Law of theHebei Spirit.24Art.7 of the Special Law of the Hebei Spirit (Affected Residents):Residents who are victims of the Hebei Spirit oil pollution incident may form a group to file to the minister of the Ministry of Oceans and Fisheries or the person in charge in the local self-governing body in accordance with the provisions of the Presidential Decree.During the process of claiming,whether the Compensation Countermeasures Committee for Victims Suffering from Oil Pollution has a direct legal interest to the interested person as provided in the Act on the Procedure for Limiting the Liability of Shipowners,Etc.is controversial.

Article 6(1)25Art.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.and Article 23(1)26Art.23 of the Act on the Procedures 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.of the Act on the Procedure for Limiting the Liability of Shipowners,Etc.state that only an interested person can file an immediate appeal against the commencement order for procedure for limiting liability.According to the General Provisions of the Korean Civil Act,interest relation means that a person who is not a party to a factual act or a legal act,but whose rights or interests are affected by these acts;“an interested person”refers to a person who has a legal relationship with a particular fact,and his own rights and obligations are directly affected by different facts.27The provisions of Arts.22,27,44,63 and 963 of the Korean Civil Act concerning interested parties.Where the Korean Supreme Court tried the case,legal interest relation in this case was defined as:where 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.28Supreme Court Order 2010 Ma 222 Decided April 17,2012.As an organization that protects the rights and interests of the affected fishermen,the Compensation Countermeasures Committee for Victims Suffering from Oil Pollution established under the Special Law of theHebei Spirit,therefore,has the right to claim compensation for the damage,to accept compensation and to reach an agreement with the other party concerned.However,the committee does not have the right to transfer the compensation received or the right to claim compensation for damage engendered by the oil pollution incident and only has the entrusted right to claim and accept compensation,etc.Therefore,there is no interest between the committee and the“interested person”specified in the Act on the Procedure for Limiting the Liability of Shipowners,Etc.

2.Whether the Floating Crane of the Samsung Heavy Industries is Subject to the Limitation of Liability

Disputed Point:Whether the floating crane of the Samsung Heavy Industries(Samsung No.1) that collided with theHebei Spiritshould comply with the provisions of the ship specified in the Korean Commercial Act and whether the shipowner can enjoy the right of the limited liability are controversial.

Under Article 74029The Korean Commercial Act was amended by the Act No.8581 of Aug.3,2007 and implemented in 2008.Since this Incident occurred in 2007,most of the provisions used in the trial were in the former Commercial Act.And this paper will point out if they are provisions in the revised Commercial Act.Article 740 of the former Commercial Act(Definition of Ship):The term“ship”in this Act means a ship used for navigation for the commercial activities or for other profit-making purposes.(This Article Wholly Amended by Act No.8581,Aug.3,2007)of the former Commercial Act of the Republic of Korea,a ship is used for navigation for commercial activities or any other profitmaking purpose.Under Articles 1 &230Arts.1&2 of the 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:1.Steamship:A ship propelled by an engine (including any ship which has an engine attached outside the hull which may be separated from the hull and any ship which mainly uses an engine from among ships using both engines and sails);2.Sail ship:A ship propelled by a sail (including any ship which mainly uses a sail from among ships using both engines and sails);3.Barge:A ship which is cruised by being towed or being pushed by another ship due to the lack of self-navigation capacity.(2) The term“small-type ship”in this Act means ships falling under any of the following subparagraphs:1.Steam ships and sail ships under 20 gross tons;2.Barges under 100 gross tons.of the former Ship Act of the Republic of Korea,31The Ship Act was amended by the Act No.8621 of Aug.3 of 2007 and implemented on July 1,2008.Since this Incident occurred in 2007,the provisions quoted by the court are in the former Ship Act.If provisions used are different from the revised Ship Act,there will be an additional explanation.a barge that is being towed or pushed by another ship is also a ship.And under Article 2932Art.29 of the 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.of the former Ship Act,provisions for maritime commerce of the Commercial Act,Part V,shall apply to ships for sailing even if it is not for commercial transactions (except national or public ships).Therefore,for the stateowned or non-common ship that is being towed or pushed by another ship in this disputed point,it should be subject to the shipowner’s limited liability as stipulated in Part V of the Commercial Act.33In the previous decision made by the Seoul High Court (Soul High Court Order 2009 Ma 2045 Decided January 20,2010),the floating crane of the Samsung Heavy Industries falls into the scope of the ship as stipulated in the Commercial Act.As described in the Compensation for Oil Pollution Damage Guarantee Act,the term“oil tanker”means any sea-going vessel(including a barge) of any type whatsoever constructed or adapted for the carriage of oil in bulk as cargo:a ship capable of carrying oil or other cargo shall be deemed an oil tanker under this act only when it is actually carrying oil in bulk as cargo,or it is proven that it has residues of such carriage of oil in bulk aboard;the term“general vessel”means any ship,except oil tankers and oil storage barges;the term“oil storage barge”means a ship used for oil storage which is a floating maritime structure under Article 2(1) of the Ship Safety Act.34Art.2 of the Compensation for Oil Pollution Damage Guarantee Act.The court,therefore,held that theHebei Spirit falls into the scope of“ship”.And the floating craneSamsung No.1that collided with theHebei Spiritshould also be the same,and the shipowner should enjoy the right to limit his liability.

3.Whether the Shipowners Are Excluded from Limited Liability Because of“Act or Omission Committed Recklessly with Knowledge That Loss Would Probably Result”

Where damages are claimed against shipowners separately from the Shipowner’s Limited Liability Procedure,a person claiming limited liability exclusion bears the burden of proving its ground under Article 74635Art. 796 of the revised Commercial Act (Reason for Exemption from Liability of Carriers):If a carrier has proved that the facts of the following subparagraphs have existed and that the damage concerning the cargo may usually arise due to such fact, he shall be exempted from the liability for compensation for it: Provided, That the same shall not apply if it is proved that he has not exercised due diligence notwithstanding the fact that he could have avoided such damage if he had exercised the due diligence under Articles 794 and 795 (1): 1.Perils or accidents on the sea or on other navigable waters; 2. Force majeure; 3. War, a riot,or a civil war; 4. Piracy and other similar conduct; 5. Judicial seizure, quarantine restrictions and other restrictions by public authorities; 6. Conduct of a consignor or an owner of the freight or his/her employee; 7. Strike or other acts of dispute or lockout of a ship; 8.Conduct of salvage of life or property at sea or a deviation by this reason or a deviation by other justifiable reasons; 9. Insufficient packing of the cargo or incomplete indication of marks; 10. Particular nature or latent defect of the cargo; and 11. Latent defect of a ship. [ThisArticle Wholly Amended by Act No. 8581, Aug. 3, 2007]of the former Commercial Act.As the Shipowner’s Limited Liability Procedure stipulates,if the claimant makes a necessary application under certain circumstances,according to the willingness of the applicant and the provisions of Article 747(1) of the former Commercial Act,explanation is also required even if the claimant fails to prove the existence of limited liability exclusion ground during the process of checking the shipowner’s limited liability.36The related theories can be divided into two parts:the shipowner bears the burden of proving limited liability exclusion ground,and the creditor bears the burden of proving limited liability exclusion ground.The British law mainly stands for the latter,while the US law mainly advocates the former.See JIN Canrong,Research on Exclusion Ground of Legal Limitation of Liability and Reasonable Interpretation of Liability,Law Research,Vol.18,No.1,2015,pp.178～180.(in Korean)

Disputed Point:Whether the intentional misconduct by the shipowner and others of limited liability subject can be considered as the reason to deprive their right of limited liability,and whether the ship management company operating the tugboats is the main body responsible for the operation of the tugboats owned by Samsung Heavy Industries.

According to Article 74637Art.769 of the revised Commercial Act (Limited Liability of Shipowner):A shipowner may limit his liability for the claims of the following subparagraphs to the amount of money referred to in Article 770,whatever the cause of the claims may be:Provided,That the same shall not apply if the claim is concerning the damage incurred due to a shipowner’s intention or his recklessly committed commission or omission while recognizing the concern about the occurrence of the damage:1.A claim concerning the damage incurred by death of a person,bodily injury,or loss or damage to the goods other than the ship,which occurred on board or in direct connection with the navigation of a ship;2.A claim concerning the damage incurred due to delay in the transport of cargo,passengers or baggage;3.A claim concerning the damage incurred due to infringement on another person s right,other than contractual right,which occurred in direct connection with the navigation of the ship,other than subparagraphs 1 and 2;and 4.A claim concerning the measures taken to prevent or minimize the damage which has become the cause of the claims of subparagraphs 1 through 3 or a claim concerning the damage incurred as a result of such measures.[This Article Wholly Amended by Act No.8581,Aug.3,2007]of the former Commercial Act,for the exclusion of limited liability where a shipowner is the subject of limited liability,the captain and the shipowner’s employees shall be excluded from the limited liability as provided in this Article if they act recklessly without justification.Nonetheless,the same shall not apply if the damage occurred is due to the shipowner’s intention or his recklessly act or omission while noticing the possibility of the occurrence of the damage.

In accordance with Article 750(1)(1)38Art.769 of the revised Commercial Act (Limited Liability of Shipowner).of the former Commercial Act,even if the ship’s charterer or operator is entitled to limited liability,limited liability is voided if they act recklessly.But where a limited liability’s subject,including shipowner,is not the corporation,and if the representative’s reckless act is deemed as an reckless act committed by the corporation,the corporation will be more concerned about the management of the ship as its size increases.The actual ship operation authorities will shift to lower-level members.The representative body has jurisdiction over all management business or specific departments in accordance with the internal job duty division of the smallest corporation.Thus,a person with corporate decision-making power in lieu of representation shall be deemed as a limited liability subject in exclusion although he is neither the board of directors’ member nor executive.However,in this Incident,the corporation gave the applicant the right to transport and manage the tugboats.And according to the record provided by the applicant,in the operation manual of the tugboats,it is said that the safety checklists of theSamsung T-5,Samsung No.1andSamsung A-1and the ship’s safe transportation manual were all prepared.In this Incident,the navigation of the tugboats and the relevant management system are guaranteed.How the representative body reacts to this Incident has nothing to do with the training of captains and standard of conduct.The corporation is irrelevant to the applicant’s act or omission committed recklessly with the knowledge that loss would probably result,and therefore cannot be entitled to the subject of limited liability.

Disputed Point:The shipowner of the tugboat of Samsung Heavy Industries entrusts the basic navigation plan to the captain of the tugboat on the west coast during winter where severe meteorological changes are expected.The act of commission shows that the shipowner lacks sufficient knowledge of navigation safety and neglects the maritime safety management system.Whether such an act by the shipowner can be regarded as“intentional misconduct”is controversial.

The Korean Supreme Court considers that the meaning of“act or omission committed recklessly with knowledge that loss would probably result”in the exclusion of the shipowner’s limited liability refers to:when the damage occurred,possibly because of negligence,how to tell whether the act of the shipowner is“intentional misconduct”is complex,and the act of the shipowner cannot be seen as“intentional misconduct”just on the ground of his negligence.39See the jurisprudence similar to this case,Supreme Court Order 94 Ma 2431,Mar.24,1995.

B.Comments on the Judgments Related to the Limitation of Liability in Korea

There is no clear definition of the limitation of liability for maritime claims in the maritime legislation of various States or the maritime international convention.Interpretations of some provisions related to this Incident are of great significance.First of all,various disputes related to the limitation of liability of shipowners,etc.in this case have been settled by the Korean Supreme Court in its judgement.(a)A person is not necessarily an interested person,as specified in law,even if he has a factual or indirect interest;(b) the floating crane is also subject to the limitation of liability;(c) even though the creditor in the liability limitation procedure has a proper ground for liability exclusion,the application submitted by the debtor should also be properly dealt with;(d) where affiliated relations exist between the corporation and the shipowner,their conduct needs to be identified.For exclusion grounds of limited liability,damage caused by negligence may not always be regarded as“intentional misconduct”.

The judgment of the Korean Supreme Court reconfirmed that provisions related to limited liability of shipowners in the Korean Commercial Act are in line with that of the 1992 CLC.This judgment is of great significance for it shows that it’s hard to deprive shipowner of the right to limit his liability.The Korean Commercial Act was extensively amended on August 3,2007,while the Incident occurred on December 7 of the same year.In the case of differences between provisions in the former and the revised Commercial Act,the Supreme Court,in its judgment,strictly explained certain concepts in the former Commercial Act before the amendment in 2007,including concepts of limited liability exclusion grounds,intentional or reckless acts,and intentional misconduct.The provisions related to the limit of liability in this judgment also tended to be as fair and equal as possible.

Secondly,there are many arguments concerning the meaning of shipowner’s limited liability exclusion grounds.The Korean Supreme Court has clarified the meaning of the limited liability exclusion grounds in its judgement so as to provide references for the trial of similar cases in the future.From the standpoint of victims,though they may understand what the Supreme Court called“possible loss”,the system of liability limitation may be seen as a privilege enjoyed by the shipowner.Therefore,in the application of the grounds for exclusion of liability limitation,it is necessary for the court to make further provisions on“disregarding the possibility of damage”and“act or omission committed recklessly with knowledge that loss would probably result”.

In the case of the Incident,there is a big debate over whether the limited liability exclusion grounds of the tugboats of Samsung Heavy Industries have something to do with subjective conditions.That is to say,whether it is an“act or omission committed recklessly with knowledge that loss would probably result”or not.When performing maritime missions in bad weather in winter,a maritime plan,in particular,is of great importance for ship safety.Captain YE Renshan,who had been fully entrusted to command the ship,however,lacked knowledge concerning safe navigation,displayed a negative attitude towards maritime security and inappropriately responded to this Incident.In this regard,the Korean Supreme Court analyzed the definition of an“act or omission committed recklessly with knowledge that loss would probably result”.Thus the Supreme Court believes that“there was a possibility of knowing that loss would probably result,but neglected the probability of loss occurrence or believed that no loss would occur.‘With knowledge’ emphasizes that the responsible subject does know that loss may occur.The word ‘reckless’ refers to the actor himself not being careful or is very negligent to the consequences of the potential incident.The result is that the actor can be regarded as not considering the consequences or even not noticing any possibility of occurrence”.40JIN Renxuan,Decision on the Limitation of Liability of Shipowners Etc.Related to the Taean Oil Pollution Incident,Collection of International Trade Law Research,Vol.23,No.2,International Law Institute,2014,p.132.(in Korean)Here in this paper,the author compares the judgment of the Korean Supreme Court with various theories related to the Incident.

The meaning of“act or omission committed recklessly with knowledge that loss would probably result”closely resembles“intentional misconduct”in the common law.The concept of the former is relatively unfamiliar in the Korean and Chinese legal systems for it stems from Anglo-American law.Different interpretations of“act or omission committed recklessly with knowledge that loss would probably result”may result in different limited liability exclusion grounds for shipowners.Theories,in this regard,therefore,worth learning.The existing theory tends to explain it with the reason for the attribution in the Korean legal system,while the concept of“intentional misconduct”is based on the Anglo-American law.Therefore,it is not appropriate to assert that“intentional misconduct”is the same as the reason for the attribution in the Korean legal system.The author believes that with regard to gross negligence,according to Article 769 of the Korean Commercial Act,the word“intentional”refers to the intention of the shipowner himself or the act or omission committed recklessly with knowledge that loss would probably result.In such cases,therefore,it is unreasonable to invoke the limitation of liability for the benefit of shipowners.While the above assertion recognizes that“intentional misconduct”may cause damage,it should include situations in which it is believed that no severe consequences will occur (i.e.there is gross negligence in understanding).The word“quasi-intentional”,premised on the understanding of the occurrence of damage,means intentional misconduct.Therefore,the Korean Supreme Court distinguishes“intentional misconduct”from“purely gross negligence”and stands for interpreting it as“intentional”rather than“gross negligence”.

Lastly,the judgment is also of great significance in the way that it provides insights on the determination of new reasons for the attribution.The Korean Supreme Court complied with the purpose of the 1976 Convention on Limitation of Liability for Maritime Claims (hereinafter referred to as“1976 CLLMC”)and elaborated Article 769 of the Commercial Act thoroughly in its judgment.According to Article 4 of the 1976 CLLMC,41Art.4 of the 1976 Convention on Limitation of Liability for Maritime Claims (Conduct barring limitation):A person liable shall not be entitled to limit his liability if it is proved that 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.“damage”refers to loss of desire,so if the actual damage is inconsistent with the loss of desire,then a limitation of liability can be taken.Therefore,an“act or omission committed recklessly with knowledge that loss would probably result”means that the actor himself,though knowing that the shipowner’s loss equals to the potential loss,and the loss will be huge,does not take any action to avoid that from happening.

There are various kinds of theories regarding the meaning of limited liability exclusion grounds for shipowners,but the Korean Supreme Court’s clear explanation of it in this judgment really carries significant meaning.In the claim for damage,however,a victim wrote in his petition that“[a shipowner]knows the possibility that damage may occur,but ignores it,believing it may not cause damage”.It can be proven that this possibility does exist just by taking a look at the petition.In its judgment,based on the application of limited liability exclusion grounds,the Korean Supreme Court considered that the concepts of“neglecting the possibility of damage”and“reckless judgment”need to be further clarified.

With regard to the interested parties,according to the 1976 CLLMC,the subject of limitation of liability includes the shipowner,the charterer,the operator,the administrator,the salvor and his servants,the sub-contractors and their liability insurers.Moreover,it is clearly stated that“if any claims set out in Article 2 are made against any person for whose act,neglects or defaults the shipowner or salvor is responsible,such person shall be entitled to avail himself of limitation of liability provided in this convention”.However,the responsible subject needs to be identified in accordance with two principles:first,except for the conduct of the responsible person,only the natural person or legal person who is legally regarded as the responsible person can be deemed as the responsible subject;second,in principle,the responsible subjects do not affect each other in their behavior.42HU Zhengliang and HAN Lixin,Admiralty Law,Beijing:Peking University Press,2016,p.662.In the case of the Incident,the responsible person is the shipowner of the tugboat and belongs to the natural person.The legal person of the tugboat company and the shipowner did not affect each other in their behavior;therefore,the legal person had nothing to do with the shipowner’s loss of the right to limit his liability.Article 209 of the Maritime Law of the People’s Republic of China does not emphasize that the subject of limited liability exclusion is limited to the person responsible.Article 18 of Several Provisions of the Supreme People’s Court on the Trial of Cases of Disputes over the Limitation of Liability for Maritime Claims,however,states that the“responsible person”in the Maritime Law refers to the person responsible for the maritime accident.43HU Zhengliang and HAN Lixin,Admiralty Law,Beijing:Peking University Press,2016,p.662.

Ships subject to the limitation of liability for maritime claims in China may be explained in the provisions of Chapter XI of the Maritime Law concerning the limitation of liability for maritime claims.As is stipulated in Article 3 of the same law,“ship”as referred to in this law,means sea-going ships and other mobile units,but does not include ships or crafts to be used for military or public service purposes,nor small ships of less than 20 tons gross tonnage.In accordance with the provisions of this law,floating cranes,therefore,should also fall into the scope of ships specified in this law,and the shipowners shall have the right to limit liability for maritime claims.

Judging from relevant laws in China,the aforementioned judgment made by the Korean Supreme Court is also in line with the purpose of the relevant provisions of China’s Maritime Law. This judgment,therefore,can provide relevant references for China in case of similar accidents in the future.

1.Limit of Liability

Hebei Spiritis a tanker and therefore applicable to the Compensation for Oil Pollution Damage Guarantee Act,which was widely recognized in the trial.The Korean Supreme Court limited the amount of liability in accordance with paragraphs (1) and (2) of Article 8 of the Compensation for Oil Pollution Damage Act.44Art.8 of the Compensation for Oil Pollution Damage Guarantee Act (Aggregate Amount of Liability):(1) Where the owner of an oil tanker is able to limit his/her liability under the main sentence of Article 7 (1),the aggregate amount of liability shall be as follows:1.For an oil tanker with the gross tonnage not exceeding 5,000 units of tonnage:the amount equivalent to 4.51 million units of account;2.For an oil tanker with the gross tonnage in excess of 5,000 units,the amount calculated by multiplying each additional unit of tonnage by 631 units of account shall be added to the amount mentioned in subparagraph 1,within the limit of the aggregate amount corresponding to 89.77 million units of account.(2) The“units of account”referred to in paragraph (1) is the Special Drawing Right as defined by the International Monetary Fund,and the calculation of units of account in terms of the Korean currency shall be made in accordance with the provisions of Article 11 (2) of the Act on the Procedure for Limiting the Liability of Shipowners,etc.In addition,South Korea is a party to the 1992 CLC and the 1992 Fund Convention,but at the time of the spill,had not ratified the Protocol of 2003 to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage,1992.The tonnage of theHebei Spirit(146 848 GT) was in excess of 140,000 GT.The limitation amount applicable was therefore the maximum under the 1992 CLC,which is SDR 89.77 million.The total amount available for compensation under the 1992 CLC and the 1992 Fund Convention is SDR 203 million.

Since the tugboat of the Samsung Heavy Industries is not a ship as stipulated in the Compensation for Oil Pollution Damage Act,according to Korean law,the shipowner should be liable for the damage in accordance with the Korean Commercial Act.According to Article 769(3)(4) of the Korean Commercial Act,45Art.769 of the Commercial Act (Limited Liability of Shipowner):A shipowner may limit his liability for the claims of the following subparagraphs to the amount of money referred to in Article 770,whatever the cause of the claims may be:Provided,That the same shall not apply if the claim is concerning the damage incurred due to a shipowner s intention or his recklessly committed commission or omission while recognizing the concern about the occurrence of the damage:1.A claim concerning the damage incurred by death of a person,bodily injury,or loss or damage to the goods other than the ship,which occurred on board or in direct connection with the navigation of a ship;2.A claim concerning the damage incurred due to delay in the transport of cargo,passengers or baggage;3.A claim concerning the damage incurred due to infringement on another person s right,other than contractual right,which occurred in direct connection with the navigation of the ship,other than subparagraphs 1 and 2;and 4.A claim concerning the measures taken to prevent or minimize the damage which has become the cause of the claims of subparagraphs 1 through 3 or a claim concerning the damage incurred as a result of such measures.[This Article Wholly Amended by Act No.8581,Aug.3,2007]one should be held accountable for the damage caused by his own illegal act,that is to say,the shipowner of the Samsung Heavy Industries should be responsible for the damage to local residents caused by oil spill after his tugboat collided with theHebei Spirit.The shipowner of Samsung Heavy Industries may also comply with Article 770(1)(3)46Art.770 of the Korean Commercial Act (Limit of Liability):(1) Limit of the liability a shipowner may limit shall be the amount of money of the following subparagraphs:1.Limit of the liability with respect to a claim for the damage incurred due to a death of a passenger or a bodily injury shall be the amount obtained from multiplying the passenger capacity entered in a ship inspection certificate of the ship by 175 thousand units of account (referring to an amount equivalent to one special drawing right of the International Monetary Fund;hereinafter the same shall apply);2.Limit of the liability with respect to a claim for the damage incurred due to a death or a bodily injury of a person,other than a passenger,shall be the amount of money calculated as prescribed by the following items according to the tonnage of a ship:Provided,That in cases of a ship of less than 300 tons,limit of the liability shall be the amount of money equivalent to 167 thousand units of account:(a) Amount equivalent to 333 thousand units of account in cases of a ship not exceeding 500 tons;and (b) In cases of a ship exceeding 500 tons,the amount of money added the amount of money obtained from multiplying the unit of account as follows,by that of item(a):For a ship exceeding 500 tons up to 3,000 tons,500 units of account per ton,for a ship exceeding 3,000 tons up to 30,000 tons,333 units of account per ton,for a ship exceeding 30,000 tons up to 70,000 tons,250 units of account per ton,and for a ship exceeding 70,000 tons,167 units of account per ton;and 3.Limit of the liability with respect to a claim,of account as follows,by that of item (a):For a ship exceeding 500 tons up to 30,000 tons,167 units of account per ton,for a ship exceeding 30,000 tons up to 70,000 tons,125 units of account per ton,and for a ship exceeding 70,000 tons,83 units of account per ton.(2)Each limit of the liability referred to in each subparagraph of paragraph (1) shall extend to all the claims against a shipowner coping with each limit of the liability arising from the same accident of each ship.(3) A claim for which the liability is limited as referred to in Article 769 shall compete at a rate of the amount of each claim with respect to each limit of the liability under the subparagraphs of paragraph (1).(4) If the limit of the liability under paragraph (1) 2 is insufficient to repay the claims of the same subparagraph,the limit of the liability under subparagraph 3 shall be appropriated for repayment of the unpaid balance of the claims.In such cases,when the claims of subparagraph 3 have arisen from the same accident,these claims and the balance claims of subparagraph 2 shall compete at a rate of each claim amount with respect to the limit of the liability under subparagraph 3.[This Article Wholly Amended by Act No.8581,Aug.3,2007]other than subparagraphs 1 and 2,shall be the amount of money calculated as prescribed by the following items according to the tonnage of a ship as follows:Provided,That limit of the liability shall be the amount of money equivalent to 83,000 units of account in cases of a ship of less than 300 tons:(a) Amount of money equivalent to 167 thousand units of account in cases of a ship not exceeding 500 tons;and (b) In cases of a ship exceeding 500 tons,the amount of money added the amount of money obtained from multiplying the unitof the Korean Commercial Act to limit his liability.In this case,the responsible party of the Incident is Samsung Heavy Industries.Four ships of SHI,namely,Samsung No.1,Samsung T-5,Samho T-3andSamsung A-1,were involved in the Incident.How to calculate the limited amount of liability of the shipowners involved became a controversial issue,that is,whether it should be calculated according to the value of the total tonnage of both the tugboats and the floating crane,or it should be the aggregate amount of the limit of liability of each ship according to their own tonnage respectively.

The Stella incident is a case in point.On the calculation of the liability limits of the tugboats,the Busan High Court held that the tugboat and other vessels should be seen as separate vessels regardless of whether the shipowner or the shipping entity is the same.The limits of liability of the tugboats,therefore,should be the aggregate amount of limited liability of each ship calculated respectively according to their own tonnage.47Busan High Court’s Judgment 97 No.26,decision on October 2,1997.(in Korean)

Since then,the Korean Supreme Court,in the case of the collision ofModern Royal 1001at the First Jindo Bridge in 2007,clarified that the tugboat and the towed ship should be seen as separate vessels similar to the Stella incident.That is to say,in addition to the applicable laws,the so-called“tugboat integration principle”related to the civil liability relationship and liability limitation of the tugboat owner is not legally recognized in maritime traffic.48Supreme Court Order 97 Ma 2758,decision on March 25,1998.(in Korean)

In the case of the Incident,the court also took the same measurement as taken in the abovementioned incidents and calculated the total liability limits of the four tugboats related to the case.The total amount of limited liability is calculated as follows:49JIN Renxi,Disputed Points in Damage Compensation and Improvement Plan for the Hebei Spirit Oil Pollution Incident,Business Law,Vol.21,No.2,2011,p.602.(in Korean)

According to the judgment of the Korean Supreme Court,the“tugboat integration principle”is not applicable for the calculation of the liability limits of the tugboats.The limit of liability should be calculated on a method that is based on the aggregate amount of limited liability of each ship according to its tonnage.This approach is generally considered from the perspective of raising the limit of liability.

2.The Scope of Compensation for Damage

The Compensation for Oil Pollution Damage Guarantee Act is targeted at providing compensation for damage caused by oil pollution and for preventive measures taken to prevent or minimize such damage.This Act shall apply to pollution damage caused within the territory of the Republic of Korea and in the exclusive economic zone of the Republic of Korea.In contrast to the relevant provisions set out in China’s Oil Pollution Damage Compensation law,the Compensation for Oil Pollution Damage Guarantee Act of the Republic of Korea does not have any limitations on the defendant’s nationality,address,place of residence,etc.And preventive measures as stipulated in Article 2 under the same Act,50Art.2 of the Compensation for Oil Pollution Damage Guarantee Act:the term“oil pollution damage”means the following damage or costs caused by an oil tanker,general vessel and/or oil storage barge:(a) Loss or damage caused outside the ship by contamination resulting from the spillage or discharge of oil from a ship,wherever such spillage or discharge may occur:Provided,That compensation for environmental damage,other than the loss of profit from such damage,shall be limited to the costs incurred for measures taken or to be taken for the recovery thereof;(b) The costs of preventive measures;(c) Additional loss or damage caused by preventive measures;The term“preventive measure”means any and all reasonable measures taken by any party or a third party after an incident has occurred to prevent or mitigate oil pollution damage.wherever taken to prevent or minimize such pollution damage in the territory of the Republic of Korea,should be directly applicable to this act with no geographical restriction.51David W.Abecassis,Richard L.Jarashow,et al.,Oil Pollution from Ships,London:Stevens&Sons,1985,p.204.According to the Korean Compensation for Oil Pollution Damage Guarantee Act,the compensable losses for damage caused by ship-source oil pollution are as follows:i.oil pollution occurring outside the ship and having a causal relationship with the damage;ii.actual economic losses caused by environmental damage;iii.costs of environmental restoration;iv.costs of preventive measures;v.additional damage costs due to the adoption of preventive measures.In particular,on the basis of i.and iv.,the scope of compensation for certain damage is defined,but ambiguity still remains in some part of compensation.In this regard,reference may be made to the provisions of the international conventions on compensation for oil pollution damage to which South Korea has acceded.Under such circumstances,the scope of compensation for pollution damage could be narrowed down.

The compensation for damage in the Korean Civil Act is mainly provided in Articles 751 to 766.Article 750 of the Korean Civil Act stipulates that any person who causes losses to or inflicts injuries on another person through an unlawful act,willfully or negligently,shall be bound to pay compensation for damage arising therefrom.Article 751 of the same Act states that a person who has injured the body,liberty or fame of another or has inflicted any mental anguish to another person shall be liable to make compensation for damages arising therefrom.

The scope of compensation for damage in the Claims Manual of the IOPC Funds mainly includes the following aspects:the costs of clean-up and preventive measures;property damage;economic losses in the fishing industries,marine aquaculture and aquaculture industries;economic losses in the tourist industries,costs of preventive measures taken to prevent and reduce pure economic losses;research costs after an oil spill incident and environmental damage.In terms of pure economic losses caused by environmental damage,possible losses of income cannot be compensated in Korea just like that in the Anglo-American law,except for losses in material caused by the incident.This is for the sake of preventing excessive expansion of compensation for damage.However,unlike the Anglo-American law,the Korean law recognizes environmental damage,but limits the scope of compensation to costs on environmental restoration.In the Incident,because the provisions of the Korean Civil Act are inconsistent with the scope of damage specified in the Claims Manual of the IOPC Funds,some losses have not been paid,which can be mainly divided into the following aspects:

a.Costs of Preventive Measures

Measures taken to control or prevent damage are specified in the Compensation for Oil Pollution Damage Guarantee Act and international conventions52The 1992 CLC and the 1992 Fund Convention define“preventive measures”as:“any reasonable measures taken by any person after an incident has occurred to prevent or minimize pollution damage”.in order to compensate for the costs of taking various reasonable control measures to reduce pollution damage.The scope of compensation for control measures refers to the expenses incurred by the party concerned or the third party (control unit,etc.) for the purpose of the prevention and treatment of damage.In the Incident,the main problem is how to calculate the costs on measures taken to control damage.Put it differently,whether it is necessary to adopt a specific prevention and control measure and whether the expenses arising therefrom are reasonable.Though differences remained,most of the problems were solved peacefully.53In this Incident,the parties concerned all agree on relevant costs of items and equipment used in preventing oil pollution and costs on the repairmen of ships and equipment,etc.

b.Costs of Property Damage and Pure Economic Losses

(a) Tourism

Tourism or other industries,whose commercial units located next to the polluted public holiday beach and lived on profits from tourists,may suffer a loss of profits due to the decline in the number of tourists during the period of pollution.However,for claims for such losses (often referred to as pure economic losses),the IOPC Funds will only accept compensation claims if their losses or damage are directly caused by the pollution incident.54“For compensation there should be a close link of causation between the contamination and the loss or damage”,Claims Manual,International Oil Pollution Compensation Fund 1992,2016,p.36.In other words,the occurrence of a pollution incident does not guarantee a claim will be accepted.All claims submitted by the tourism industries need to meet the criteria set out in the Claims Manual of the IOPC Funds,that is,for a compensation claim in a certain area,there should be a close link of causation between the contamination and the loss or damage.In determining the existence or non-existence of such a relationship,the following factors will be weighed:i.the geographical distance between the claimant’s business activities and the contaminated area (e.g.whether the hotel,camp,restaurant or bar is located at or near the affected coast);ii.the extent to which the claimant’s business activities are economically dependent on the contaminated shoreline (e.g.whether the hotel or restaurant located on the affected coast is targeted solely or primarily at tourists or other business groups);iii.the freedom of the claimant to access to other supply resources or business opportunities (e.g.whether the reduced income from tourism can be compensated by providing paid services to people concerned with pollution incidents,such as cleaning workers and media representatives).In this Incident,based on these standards,the IOPC Funds have determined that there is no obvious causal relationship between the pollution and the losses of wholesalers,souvenirs,etc.Their losses were not directly caused by the tourism industry,and therefore,they were excluded from the scope of compensation.55Incidents Involving the IOPC Funds -1992 Fund,at https://www.gob.mx/cms/uploads/attachment/file/445500/IOPC-APR19-3-3.pdf,20 April 2019.However,the Korean court rules that the causal relationship identified in the Claims Manual of the IOPC Funds is narrower than that of the Korean legal system.Claims for compensation should be processed in accordance with the provisions stipulated in the Korean Civil Act instead of the simple provisions of the Claim Manual.Therefore,claims of the abovementioned industries with evidence to prove that there is an indirect causal relationship between the losses and the pollution incident shall be tried and compensated according to the provisions stipulated in the Korean Civil Act.56The Practice of the Large -Scale Marine Pollution Accident,Daejeon District Court,2017,p.313.(in Korean)

(b) Hotel Accommodation and Sales Industries

In the field of accommodation and sales,whether losses of illegal business can be compensated has become the biggest issue in this Incident while identifying the scope of compensation for damage.In principle,the IOPC Funds do not compensate for such losses,but these industries are indeed affected by the pollution.Certain losses are caused therefrom,and there are many lawsuits against damage in this field.The Korean Supreme Court did not rule all the claims of such losses the same just based on the provisions of the law.Most of the claims,instead,were treated as individual cases and decided respectively according to their degrees of damage,57No.36733 of the 2001 Decision of the Supreme Court,April 28,2004.which could be divided into the following three aspects.

Firstly,companies and stores that are not registered in the designated sector for tobacco retailers or liquor sales industries can be grouped into two categories:one is that although it is not registered in the designated department,but possess a sales license;the other are those who have neither registered nor possess a sales license.According to the relevant provisions of the Korean Commercial Act,the court has determined that the business income of tobacco retailers or liquor sales industries was illegal as they did not register in the designated sector.Therefore,their compensation cannot be determined according to the actual loss.In order to promptly hear the claims filed by these companies and stores,the court conducted a comprehensive investigation for the above-mentioned enterprises.It turned out to be that quite a number of enterprises that submitted claims for compensation did not register in the designated sectors for sales of cigarette or alcohol.These enterprises,however,somehow did have a sales license that enables them to directly sell related products.Therefore,according to the investigation,the court found that,in accordance with the compensation standard,58According to the Korean legal standard,cigarette or alcohol sales only met one legal condition are compensated according to 2/3 of the unit price;in the case where all the conditions are not available,the amount of loss is calculated according to 1/3 of the unit price.only a part of the cigarettes and alcohol sold in sales stores can be compensated.59The Practice of the Large-Scale Marine Pollution Accident,Daejeon District Court,2017,p.313.(in Korean)

Secondly,it is hard to determine whether claimants who sold aquatic products or agricultural products by means of communication without reporting to the communication sales industry have violated the purpose of the Act on the Consumer Protection in Electronic Commerce,Etc.That is to say,it is difficult to rule that the selling activities are illegal according to the regulations of the communication sales sector.60Art.1 (Purpose) of the Act on the Consumer Protection in Electronic Commerce,Etc:the purpose of this Act is to protect the rights and interests of consumers and enhance market confidence by prescribing matters relating to the fair trade of goods or services by means of electronic commerce transactions,mail orders,etc.,thereby contributing to the sound development of the national economy.[This Article Wholly Amended by Act No.11326,Feb.17,2012]The Korean court,under these circumstances,found that these claimants should receive full compensation for their losses,and then submitted these claims to the IOPC Funds.

Thirdly,most of the claimants who operated unregistered hotels are considered to be in violation of the law.61The court ruled:“The accommodation operators have the facilities needed for health management,and they can receive health education in advance and report in the lodging industry,but claims from operators who didn’t report in the lodging industry due to procedures shall not be compensated.”Therefore,no compensation has been obtained.However,taking into account the reality of the farmers and villagers,if the court found that the violations were a minor infraction,they could claim compensation within a certain range.Judging from the decision of the court on whether or not the illegal income was recognized in the Incident,it is necessary for the Korean central government or local self-governing body to tilt toward industries that have a greater impact on the lives,health and safety of the citizens.

c.Aquaculture Industry

For claims against damage in the aquaculture industry,it is relatively easier to prove that there is a causal relationship between the pollution and the damage in fisheries compared to the above several areas.However,disputes remain in determining whether there is a related causal relationship between the pollution and the death of fish and shellfish in the farm.The IOPC Funds require specific certification for losses in this regard,resulting in a great contradiction between the fund and claimants who requested compensation for damage.The author,through inspections of similar decisions ruled by the Korean Supreme Court in relation to the death of fish and shellfish in the farm,found that the complainant’s income did not decrease due to the impact of oil pollution incidents,death or developmental disorders of marine life or sluggish sales.62The Seoul High Court’s Judgment on No.14633,May 14,2001.And despite this contradiction,most of the claims related to theIncident were settled peacefully through arbitration by the court.

d.Claims for Compensation for Consulting Fees

Most of the victims,due to a lack of expertise in claims for oil pollution damage,must consult relevant experts for help during the claim process,in particular for claims against the IOPC Funds.However,neither the Compensation for Oil Pollution Damage Guarantee Act or the IOPC Funds have defined consultation fees.In this regard,the Korean court has to invoke the provisions of the Civil Act to decide on whether the consulting fees could be regarded as damage resulting from the oil pollution incident and therefore compensated.The court needs to clarify the relationship between the consulting fees and the accident while ruling a case.In general,losses caused by the investigation of wrongful acts and costs of expert consultation while preparing for claims shall be seen as expenses incurred in preparation for the request and shall be compensated.Therefore,whether the cost of expert consultation can be compensated has a lot to do with the determination of wrongful acts.63The Practice of the Large-Scale Marine Pollution Accident,Daejeon District Court,2017,p.449.By taking a look at the judgments of the South Korean Supreme Court on similar cases related to compensation for consulting fees,it is clear that the“consultation fees”applied to the claimants of most appeals are basically spent in the pre-litigation stage,in order to consult how to calculate the accident losses,not to find out the cause or the extent of damage of the accident.64Judgement of the Supreme Court of Korea on April 9,2004,appealing to No.66314,2001.The Korean court,however,insisted that the Incident is different from other incidents that just involved the liability of the shipowner;therefore,the consultation fees requested by the claimants are within the scope of payable compensation.65The Seosan Branch of the Daejeon District Court (Seosan Court),Judgment No.897 of 2013,January 10,2016.

e.Compensation for Mental Damage

According to the guidelines of the IOPC Funds,any type of damage can be compensated if it is financially measurable.The IOPC Funds do not compensate for mental damage.According to Article 1 of the 1992 CLC,“pollution damage”means:loss or damage caused outside the ship by contamination resulting from the escape or discharge of oil from the ship,wherever such an escape or discharge may occur,provided that compensation for impairment of the environment other than loss of profit from such impairment shall be limited to costs of reasonable measures of reinstatement actually undertaken or to be undertaken;the costs of preventive measures and further loss or damage caused by preventive measures.“Pollution damage”as provided in the 1992 Fund Convention is consistent with that of the 1992 CLC.In international conventions,there are no relevant provisions for compensation for mental damage.Therefore,for cases related to mental damage in this Incident,the Korean court ruled these cases by referring to previous judgments made by the Korean Supreme Court on similar cases pertaining to mental damage66The Supreme Court of the Republic of Korea,Judgment No.36733 of 2001,April 28,2004.and on the basis of Articles 751 and 752 of the Korean Civil Act.In the Incident,the plaintiff asserted that his own fishery suffered from oil pollution,thus claimed compensation for mental damage.The Korean court approved the occurrence of compensation for property damage,but because of the difficulty in determining the amount of the loss,the actual amount of the loss could not be calculated.Therefore,if the loss cannot be fully recovered,the amount of compensation for damage should be increased as appropriate to offset the loss caused by imbalance in calculation.However,the court still decided not to recognize the mental damage,nor could it be determined as property damage.67The Seosan Branch of the Daejeon District Court (Seosan Court),Judgment No.897 of 2013,January 10,2016,p.455.This judgment is consistent with the purpose of the IOPC Funds.68For the court’s judgment,the Compensation for Oil Pollution Damage and Guarantee Act upholds the purposes of the 1992 CLC and the 1992 Fund Convention.JIN Renxian,The Study of Maritime Law II,Seoul:Sanwu Press,2008,pp.576～580.(in Korean)

IV.Enlightenment for the Amendment of the Maritime Law of the People’s Republic of China

The provisions,pertaining to the limitation of liability and the limit of liability in the Korean law,are basically consistent with that of the international oil pollution compensation system.Disputes,however,still remain in the trial regarding the scope of the responsible person,the exclusion of limited liability and the limit of liability.In China,at present,cases pertaining to the limitation of liability and the limit of liability in an oil pollution incident caused by ships fall into two parts in terms of the application of laws.Foreign-related cases shall apply to the 1992 CLC and the International Convention on Civil Liability for Bunker Oil Pollution Damage,2001,while the domestic cases shall apply to Chapter XI“limitation of liability for maritime claims”of the Maritime Law of the People’s Republic of China,the Regulation on the Prevention and Control of Vessel-induced Pollution to the Marine Environment and other relevant provisions of the Ministry of Transport of the People’s Republic of China.Due to a lack of legal provisions related to compensation for oil pollution damages from ships stipulated in the Maritime Law of the PRC,foreign-related cases must adhere to international conventions.In China,therefore,the issue of legal application concerning compensation for oil pollution damage from ships is more complicated than that of South Korea.

With regard to the grounds for the exclusion of the limitation of liability of shipowners,China is in conformity with the provisions of international conventions.South Korea has provided a more detailed explanation of an“act or omission committed recklessly with knowledge that loss would probably result”,and further elaborated whether the“reckless act”could be deemed as gross negligence.Therefore,where similar cases happen,China could refer to the relevant judgments ruled by South Korea for the determination of such acts.

With regard to the limit of liability,the oil pollution incident shall be applied to the international conventions on which South Korea is a Party,and the limit of liability shall be consistent with the provisions stipulated in the international conventions since theHebei Spiritis a tanker.The limit of liability for the Samsung floating crane that hit theHebei Spiritwas also defined by the Korean court.While in China,only foreign-related cases concerning oil pollution damage from ships could be applied to international conventions at the current stage.How to ensure the provisions on the limitation of compensation for oil pollution damage from ships are in line with that of the international conventions as much as possible in order to turn the“dual track system”into a“monorail system”is an issue of importance.

In the Maritime Law of the People’s Republic of China (Exposure Draft)(hereinafter referred to as“Maritime Law (Exposure Draft)”),a specialized chapter on“liability for compensation for oil pollution damage from ships”was set up to improve the existing provisions in this regard.For the amount of limited liability arising from oil pollution damage from ships,Article 13(11) of the Maritime Law (Exposure Draft) stipulates that the compensation is limited to 4.51 million for ships below 5000 GT.69The Maritime Law of the People’s Republic of China (Exposure Draft),the General Office of the Ministry of Transport of the People’s Republic of China,2018.(in Chinese)Such provisions,indeed,are in line with international conventions,but also impose huge pressure on the shipowners of oil tankers below 2000 GT.According to the statistical analysis of relevant surveys,oil tankers below 2000 GT sailing along the coastal routes in China accounted for 77.6% of the total.70LIU Gongchen,Building a Compensation System for Oil Pollution Damage from Ships in Accordance with Chin’s National Conditions,at https://www.Docin.com/p-1855911998.html,August 16,2019.(in Chinese)And requiring these shipowners to bear such a high amount of limited liability,though helping to phase out small tankers,it actually imposes a heavy burden on the owners of these ships.From the perspective of legislators,high standards can better protect the marine environment and the interests of victims suffering from pollution damage;even though,a considerable majority of the shipowners of oil tankers in practice face a heavy burden.Under such circumstances,the author believes that a separate regulation for domestic oil tankers can be set out in the Maritime Law (Exposure Draft).At present,the issues concerning the limitation of liability and the limit of liability need to be settled in light of China’s current national conditions.However,how to define a proper scope for both the limitation of liability and the limit of liability requires a thorough investigation for practice,a comprehensive consideration of national interests and a coordination of the interests of all parties concerned.In the Maritime Law(Exposure Draft),it may be unfair to fully refer to the amount of limited liability set out in the international conventions.The author agrees with some domestic scholars that inflation should be fully considered,that is to say,the limit of liability of the 1992 Maritime Law should be multiplied by the inflation rate to calculate the limit of liability applicable to this amendment.71Discussion Session for the Amendment of the Maritime Law on the Limitation of Liability for Maritime Claims,August 13,2017.(in Chinese)

With regard to the scope of oil pollution damage,relevant terms,such as ships,oils,pollution damage and preventive measures,have been clearly defined in the Maritime Law (Exposure Draft);in particular,the scope of compensation for environmental damage has been clarified.However,in practice,how to define and compensate for cleanup costs and pure economic losses is the most controversial issue.Therefore,it is recommended that the scope of compensation for pure economic losses arising from oil pollution damage from ships provided in the Maritime Law (Exposure Draft) should be further specified as follows:(a) loss of income caused by environmental damage resulting from oil pollution by ships;(b) costs on taking preventive measures to prevent or mitigate damage caused by ship pollution;to determine the costs of preventive measures and the further loss or damage caused by preventive measures,the people’s courts in China shall take into account the scope of pollution,the extent of pollution,oil leakage,the reasonableness of preventive measures,the number of personnel participating in the cleanup of oil pollution,the costs of using relevant equipment,etc.(c) the costs of preventive measures that have been or will be taken shall be limited to a flexible and specific scope,which mainly includes the following aspects:i.the operating losses of offshore enterprises that make a profit out of sea water resources,such as saltworks and power plants;ii.losses related to aquaculture;iii.losses of tourism industry;iv.losses of industries such as hotel accommodation;v.claims for compensation for consulting fees,etc.

Claims for compensation for losses resulting from oil pollution accidents are generally carried out in the following order:requests for damage compensation from victims → verification (approve the request or not) → determination of liability → compensation.There are more problems involved in a large-scale oil pollution accident such as the Incident,so it takes a long time to determine the extent and scope of the damage.72Claims for compensation related to the Hebei Spirit still remain unsolved since 2007 when this Incident happened.Even if the extent and scope of the damage are determined,some of the losses still can’t be recognized by the international oil pollution compensation conventions and funds,and some other losses need to be determined by the court.Under this circumstance,local residents who depend on fisheries or tourism for their livelihoods will encounter great difficulties,and some small businesses will face bankruptcy due to non-receipt of relevant fees.After analyzing some of the disputes involved in the judgment of the Incident,we could see how important it is for domestic laws to be in line with relevant laws of the international oil pollution compensation system.

In the judgment of the Incident,some terms have been clarified by virtue of disputes over the limitation of liability,the limit of liability and the scope of damage.Additionally,in China,the scope of damage has always been a major controversy in cases related to claims for compensation for oil pollution damage.In this regard,we could learn from Korea on how it defined the scope of compensation involved in cases related to the Incident,and we could also draw on relevant provisions set out in the Claims Manual of the IOPC Funds.At present,China plans to add a new chapter related to“liability for compensation for pollution damage from ships”in the amendment of its Maritime Law,which may be more favorable for compensation for oil pollution damage from ships in the future.However,there is no specific provision on“pure economic loss”in the current amendment,nor does it stipulate that there must be a sufficient close causal relationship between the pure economic loss and the pollution.Regarding the determination of losses in fishing industries,aquaculture and tourism caused by oil pollution,we could refer to the relevant judgments made by the Korean courts concerning the Incident;combined with the reality of China,we could also absorb from the relevant provisions and cases of the international oil pollution compensation system so as to determine the losses aforesaid.