The issue on appeal in this case was whether Ervik Holding ACE (EH), who took over the claim of Labrador ACE (Labrador), was entitled to an assigned or subrogated maritime lien for paying wages to seafarers. The Courts below found that, at the request of Ervik Marine Service (EMS), Labrador had paid wages for some of the crew members of the Caroline Glacial, the Christina Glacial and the Alida Glacial, ships owned by Glacial Shipping Ltd Norway. EMS was the manager of the vessels at the time. Labrador was an associated company - both EMS and Labrador were subsidiaries of EH. Subsequently, EMS and Labrador merged with EH. It was accepted by the Courts below that the payment of NOK 2,214,472.18 was justified, and the Courts below acknowledged that the seafarers' wage claims actually existed at that amount and at that time. The Courts below found in favour of EH. The appellant appealed.

Held: The original judgment is reversed and the case is remanded back to the Busan High Court.

Since the burden of proof on the grounds for objection to the priority of claims in distribution must also follow the principle of the burden of proof in general civil litigation, if the appellant asserts that the respondent's claim to a maritime lien has not been established, it is the responsibility of the appellant to prove the basis of that claim, and if the appellant asserts that the respondent's claim is invalid as an result of false information, or has been extinguished by repayment, it is the appellant's responsibility to prove those facts.

A maritime lien is a right specifically recognised by law to secure certain claims. Generally, it is difficult for it to exist independently or to be transferred separately from the secured claim. Therefore, whether a maritime lien is effectively transferred depends on the ship. Matters concerning the voluntary subrogation of the secured claim shall be governed by the applicable law of the secured claim pursuant to art 35(2) of the Private International Law, unless there are special circumstances.

If the claim secured by a maritime lien is a wages claim arising from a seafarer's employment contract, issues concerning the wages claim shall be governed by the applicable law of the seafarer's employment contract, which is the law where the employee habitually provides his or her service. In the case of wage claims arising from seafarers' employment contracts, the law of the country of registry of the ship becomes the governing law under art 28(2) of the Private International Law, unless there are special circumstances. Matters concerning subrogation of wage claims shall be governed by the law of the country of registry of the ship, similarly to matters concerning the priority of maritime liens securing seafarers' wage claims.

Here, the relevant ships were registered in St Vincent and the Grenadines (St Vincent). St Vincent's Shipping Act (the Act) becomes the applicable law, and the relevant laws and regulations of St Vincent also apply to the subrogation of seafarers' wage claims secured by the maritime lien. The Act was amended in 1997 to include arts 1-16 of the MLM Convention 1993, which replaced the MLM Convention 1926 (see s 74F of the Act). Therefore, the transfer or subrogation of claims secured by maritime liens is governed by art 10.1 of the MLM Convention 1993, which provides: 'The assignment of or subrogation to a claim secured by a maritime lien entails the simultaneous assignment of or subrogation to such a maritime lien.' However, the provision does not stipulate what requirements or procedures there are for the transfer or subrogation of the claim itself which is secured by the maritime lien. This is subject to the application of each country's domestic law, as the rules are different for each country's legal system, and therefore it is difficult to uniformly stipulate this issue according to the Convention.

Section 4 of the Application of English Law Act 1989 provides that the rules of English common law and equity still apply in St Vincent, subject to some exceptions. Therefore, it is not clear whether the binding precedent in The Petone [1917] P 198, which ruled that voluntary payment of the crew's wages by a third party did not result in the transfer of the crew's wages maritime lien, lost its effect in St Vincent after the amendment of the Act in 1997. There must be special circumstances that can lead to a consideration that this precedent no longer applies, or that it does not conform to St Vincent's circumstances, but there is no evidence to support such circumstances. Rather, according to the relevant evidence submitted by the parties, all of the St Vincent lawyers who were commissioned expressed their opinion that The Petone was still a valid precedent in St Vincent. It is difficult to say that the precedent lost its binding force just because St Vincent introduced art 10.1 of the MLM Convention 1993 into the Act in 1997.

If so, the trial Court had to decide whether Labrador was a voluntary third party in the terms of The Petone, and, if so, whether Labrador obtained permission from a court of competent jurisdiction in St Vincent before paying the wages of the crew in this case. After examining this issue, the trial Court would have to consider whether Labrador could legally be subrogated into the crew's wage claims.

On the other hand, the trial Court did not have enough evidence of foreign law to support the appellant's claim that Labrador could only exercise the rights of seafarers by subrogation if it obtained the court's permission before paying their wages. Neither the Convention nor the amended Act expressly provides for the court's permission for subrogation of maritime claims. On that basis, it could be concluded that Labrador could legally be subrogated to the wage claims of the seafarers immediately, based on the fact of the payment of their wages.