This was an appeal from the decision of the Seoul High Court, 30 December 1997, Decision 96Na40457. The dispute related to which law governed the relevant contract of carriage. Both parties appealed to the Supreme Court.

Held: Both appeals are dismissed.

According to the evidence before the lower Court, the relevant clause paramount, cl 2 on the reverse of the bill of lading, stipulated that 'the US Carriage of Goods by Sea Act, 1936', which gave effect to the Hague Rules in the State where the courts are to have jurisdiction and adjudicate in respect of disputes arising out of these terms and conditions, should apply. The Hague Rules should govern the receipt, storage, transportation, and delivery of goods under the contract of carriage in this case.

However, art 6.1 of the Korean Constitution provides: 'Treaties concluded and promulgated under the Constitution and generally recognised international laws have the same effect as domestic laws.' As it is a publicly known fact that Korea is not a State Party to the Hague Rules, the Hague Rules do not have the effect of a legal norm in this country. Although that is correct, it cannot be said that domestic commercial law immediately becomes the governing law of the legal relationship under the contract of carriage in this case under cl 2 of the above terms and conditions just because of such circumstances. The judgment of the lower Court in rejecting the plaintiff's claims that Korean domestic law governs the legal relationship is just, and it cannot be said that there is a misunderstanding of the legal principle regarding the law governing the contract of carriage. There is no basis for this part of the appeal.

The plaintiff further argues on appeal that the provisions of arts 790.1 and 789.2 of the Korean Commercial Act, which prohibit limiting the carrier's liability for compensation beyond the statutory amount, are mandatory provisions. Of course, the above provisions cannot be applied to this case unless they constitute the applicable law. The exception is where there is an issue of 'good customs and other social order' as stipulated in art 5 of the Private International Law Act, in which case it will be said that the provisions of the foreign law cannot be applied directly to the transnational legal relationship between the parties for this reason.

However, in this case, the fact that the compensation amount that the defendant must pay, as calculated by Mexican domestic law, was a fairly small amount, was recognised by the trial Court, as well as the effect that the result was less than the carrier's limit of liability stipulated in the above provisions of the Korean Commercial Act. However, as the trial Court acknowledged, the Mexican liability clause on the bill of lading in this case was attached as a special clause separate from the general terms and conditions on the bill of lading. This cannot be said to be against the 'good customs and other social order' stipulated in art 5 of the Private International Law Act, so its application should not be excluded.

Therefore, the trial Court found that the law governing the existence and scope of liability for damages under the contract of carriage in this case was the domestic law of Mexico, and then applied it to calculate the amount of damages for the defendant. This was just, so there is no reason to argue this point.

The defendant argued on appeal that the extortion of the cargo by robbery during land transportation was a case of force majeure or an act of public enemies, and the carrier was therefore immune under Mexican domestic law. However, according to the records, the reasons for the carrier's immunity under Mexican domestic law are not clear, and do not appear to fall under the generally accepted headings of force majeure, war, riot, civil war, piracy, etc. Since it appears that there are no grounds for immunity for acts similar to this, the conclusion of the trial Court in rejecting the defendant's claim that extortion of cargo by robbery during land transportation was a statutory exemption under Mexican domestic law is just, and it cannot be said that there was a violation or misunderstanding of the law. Also, according to the records, it seems that the trial Court gave the defendant sufficient opportunity to prove the content of Mexican law and its interpretation.