This reappeal to the Supreme Court arose out of the 2007 collision between a crane barge owned by Samsung Heavy Industries Inc (Samsung) which was being towed by a tug, and the anchored Hong Kong-registered crude oil carrier, Hebei Spirit, which resulted in a significant oil spill. Under art 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, residents suffering loss due to the Hebei Spirit oil pollution incident were allowed to organise 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 Act. The reappellants formed the Hebei Spirit Oil Damage Control Committee (the Committee) to protect the rights of fishers who had suffered losses from the incident.

The Committee objected to Samsung being allowed to limit its liability and filed a reappeal against the commencement order for the procedure for limiting liability (the PLLC order).

Held: Reappeal dismissed.

The Committee was comprised of delegates from group members with the power of making damages claims and receiving and settling/reconciling with the other party. Although organised for the protection of fishers' rights, the Committee was not assigned the claim, but was merely delegated the members' powers to claim and receive damages from the oil pollution incident. Thus, the Committee did not acquire any legal right, duty or legal burden from the PLLC order. 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 PLLC order. That means a person who has a direct specific legal interest due to the PLLC order. The order's effect on that person must be direct, or where indirect, its effect should decide the person's legal status. Cases of factual or indirect interests are not interested persons. The judgment below correctly held that the Committee did not constitute an interested person who may appeal against the PLLC order.

Under art 740 of the former Commercial Act (amended by the Act No 8581 of 3 August 2007), a ship is used for navigation for commercial activities or any other profit-making. Under art 1-2 of the former Ship Act (amended by the Act No 8621 of 3 August 2007), a barge navigates by being towed or pushed by another ship due to its lack of self-navigation capacity. Under art 29 of the former Ship Act, the maritime commerce provisions of the Commercial Act, Pt 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, navigated by being towed or pushed by another ship, constitutes a ship covered by the shipowner's limited liability regime, regardless of whether it is being navigated for the purpose of commercial activities or any other profit-making.

The Court below found that the Samsung No 1 constituted a barge navigating by being towed or pushed by a tug. It was a ship despite its temporary uncontrollable situation in this marine accident. Further, the navigation of the tug of this case from Incheon port to Geoje-si was a commercial act. Shipowner's limited liability need not consider whether 'navigation is for commercial activities or any other profit-making' under art 29 of the former Ship Act. It rejected the reappellants' complaint that there was no ground for the PLLC order. The findings of the Court below are correct.

Where an ordinary ship collides with a crude carrier and the latter's oil leaks and losses occur by pollution, its shipowner's liability for damages can be limited by the Commercial Act. The 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 the limited liability procedure. The procedure is identical in damage claims for oil pollution. Under the above law, an application for limitation of liability cannot be rejected, barring a special law, just because the PLLS Act is premised upon a typical marine ship accident and is more difficult to apply to an oil pollution incident.

Under art 746 of the former Commercial Act 'if the loss resulted from the shipowner’s personal act or omission intended to cause such loss, or recklessly and with knowledge that such loss would probably result', the shipowner is not entitled to limit its liability. For exclusion of limited liability, a shipowner must act recklessly. Its employee's reckless acts do not exclude limited liability under art 746 unless a ship's charterer or operator entitled to limited liability acts recklessly under art 750(1)1 of the same Act (see Supreme Court Orders 94Ma2431, 24 March 1995; 95Ma325, 5 June 1995). But where a limited liability's subject, including the shipowner, is incorporated, if only the corporation's reckless act is counted, exclusion grounds become useless and the corporation will unjustly enjoy the benefits of limited liability, since actual ship operation and management shifts to lower level members as the size of the corporation increases. Thus, a person with corporate decision-making power, in lieu of the corporation, shall be deemed to be the limited liability subject in exclusion, although he or she is neither the board of directors' member nor executive. Here, Samsung and its related companies had the status of comprehensively managing and supervising the ships' operation. Their day to day operation was entrusted to Boram Inc. Boram Inc or their captains cannot be seen as representatives with corporate decision-making power in operating the tug here. Thus, the finding in the judgment below that the acts of Boram's representatives or captains cannot be the test for determining whether Samsung Heavy Industries Inc acted recklessly is correct.

Where damages are claimed from shipowners separately from the limited liability procedure, a person asserting the exclusion of limited liability bears the burden of proving the ground under art 746 of the former Commercial Act. This burden commences upon showing that the total amount of each limited claim under art 747(1) of the former Commercial Act exceeds the maximum liability amount. In the Court below, the Republic of Korea alleged that Samsung ignored navigation safety by delegating a navigation plan of the west coast in winter with drastic weather fluctuation solely to the tug captain. The Court below rejected this as insufficient to prove Samsung's reckless act as a cause for the loss.

An 'act or omission committed recklessly with knowledge that loss would probably result' as a shipowner's limited liability exclusion ground under art 746 of the former Commercial Act means neglecting the probability of loss occurrence or deciding recklessly against it. A shipowner's fault cannot be reckless merely due to its gravity. The Court below revealed that Samsung may not have taken sufficient safety measures. The towing line which snapped had been used for years. However, the former Commercial Act is strict about limited liability exclusion grounds such as intentional or reckless acts. Mere negligence cannot prevent commencement of the limitation of liability procedure. In this accident, the snapped towing line exceeded the 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 the towing.

The Court below may have shifted the burden of proof insufficiently as to limited liability exclusion grounds, but concluded that the claims asserted by Samsung did not amount to limited liability exclusion grounds, and therefore ordered commencement of the limited liability procedure. The order of the Court below discloses no substantive error which affected the order's conclusion.