This was an appeal from a judgment of the Busan High Court, Decision 2020Na50624, delivered on 15 October 2020.

Held: The appellant's appeal in respect of the part of its claim for damages for ongoing excess container usage fees and terminal storage fees at Ho Chi Minh Port succeeds. To that extent, the judgment of the Busan High Court is reversed, and this point is remanded to the High Court for decision. All of the other appeals of the appellant, and the accompanying cross-appeals of the respondent, are dismissed.

The lower Court did not accept that Taiwanese law was the chosen governing law of the contract of carriage between the appellant and the respondent, and instead applied art 26 of the former Private International Law. Accordingly, it was held that the law of the Republic of Korea, which was the most closely connected to the carriage contract, was the governing law. Examining the reasons given for the lower Court's judgment in light of the relevant jurisprudence and evidence, the judgment cannot be faulted on this point. This ground of appeal is therefore dismissed.

Article 814.1 of the Commercial Act provides that the 'debts and obligations of a maritime carrier to a shipper or consignee shall be extinguished if there is no judicial claim within one year from the date the carrier delivered the goods to the consignee, or from the date when they should have been delivered, regardless of the cause of the claim' [although South Korea is not a party to the Hague-Visby Rules, it has adopted most of the provisions of the Rules in the Korean Commercial Act]. This period of expiry of the rights and obligations of the maritime carrier in relation to the shipper or consignee corresponds to a limitation period [literally: a period of exclusion], and the starting date is the day the goods are delivered or should have been delivered. The above limitation period applies to all claims and debts of a maritime carrier in relation to a shipper or consignee, not only when the claim arises from a contract, but also from a tort/delict (Supreme Court 1997.4.11 Decision 96Da42246; Supreme Court 1999.10.26 Decision 99Da41329, etc).

According to the judgment of the lower Court, the following facts can be stated. In January 2017, the appellant, who operated a maritime transport business, concluded a contract with the respondent, who operated a multimodal transport brokerage business, to ship cargo from Gwangyang Port, South Korea, to Ho Chi Minh Port, Vietnam. The cargo was waste that a company disposed of by pretending to export legitimate cargo such as cables. The appellant transported the cargo to Ho Chi Minh Port according to the carriage contract, but neither the respondent nor the consignee designated by the respondent took delivery of the cargo when it arrived in February 2017. The cargo was then transferred to the appellant's container, which remains stored at the Ho Chi Minh Port container terminal.

The lower Court considered that all ongoing container excess usage fees and terminal storage charges incurred as a result of the respondent and consignee not taking delivery of the cargo at Ho Chi Minh Port according to the carriage contract were subject to the application of the limitation period in art 814.1 of the Commercial Act, counted from the day on which delivery was supposed to have occurred. The lower Court decided that all claims based on the carriage contract which were filed after one year had elapsed were unlawful because the limitation period had elapsed.

However, it is difficult to accept this, for the following reasons. The purpose of the limitation system is to establish the legal relationship as promptly as possible by allowing the holders of rights to quickly exercise them, and the rights expire when the limitation period expires (Supreme Court 1995.11.10 Decision 94Da22682, 22699 (Counterclaim), etc). Therefore, the limitation period assumes at a minimum that the right has arisen, and it cannot be said that a right has expired if the limitation period provisions are also applied to rights which have not yet arisen.

Since the cargo was not received by the consignee, and was stored in the Ho Chi Minh Port terminal while loaded in the appellant's container, damages equivalent to container excess usage fees and terminal storage charges continue to accumulate every day, resulting in new defaults day by day. Ongoing damage is occurring. If the appellant and the respondent agreed to pay a certain amount per day for container excess usage fees, etc, at Ho Chi Minh Port, this is the amount of damages recoverable.

The appellant's claims for the aforementioned damages can arise even after the date on which the cargo should have been delivered, which is the starting point for the limitation period under art 814.1 of the Commercial Act. It is reasonable to interpret the starting date of the statutory period for claims for compensation for such damages as the date of occurrence of the claim. From that date the statutory period of one year, which is the duration of rights set forth in art 814.1 of the Commercial Act, applies.

Even taking into consideration the purpose of art 814.1 of the Commercial Act, if the lower Court's reasoning is applied to a claim which arises more than one year from the delivery date or when the goods should have been delivered, the limitation period has elapsed, and therefore the claimant's claim has expired before it even arises. This is irrational, and furthermore does not conform to the ideology of the entire legal order with the Constitution as the highest standard (Supreme Court 2003.7.24 Decision 2001Da48781 regarding the limitation period of the right to claim inheritance under the old customary law or civil law).

Therefore, the lower Court erred in misunderstanding the legal principles relating to the limitation period. The appellant's ground of appeal on this point is well-founded.

The respondent's cross-appeals regarding the validity of the carriage contract, the determination of the contracting parties, and the reduction of the estimated amount of damages, are rejected.