This was an appeal from the decision of the Seoul District Court of 26 January 1999.

Various fishing villages brought claims against the International Oil Pollution Compensation Fund (the Fund) as a result of oil pollution which exceeded the shipowner's ability to compensate. The villages were engaged in aquaculture or co-operative fishing operations in neighbouring waters at the time of an oil pollution incident resulting from a collision between the Chinese cargo ship Bijiashan and the oil transport barge Geumdong No 5.

Held: The plaintiffs' claims for loss of household income, for mental injury, and for damage to illegal fishing activities are not upheld.

In general, in cases of tort claims for damages, the burden of proving the causal relationship between the injurious act and the occurrence of damage is borne by the victim, ie the plaintiffs, but claims for damages caused by environmental pollution caused by oil discharge, as in this case, may involve situations where the causative agent causes damage indirectly, and there are issues which cannot be explained by current scientific expertise. It would be appropriate in the interests of social equity to consider that if the discharged oil and the substances used to remove it affect objects and cause damage, the perpetrator cannot escape responsibility unless the perpetrator proves that they are harmless.

The Oil Pollution Damage Compensation Fund Act (the Act) in art 2.4 provides for loss or damage caused outside the ship due to pollution caused by oil spillage or discharge from the ship, regardless of the place where the 'pollution damage' was spilled or discharged. This accords with art 1.6 of the CLC 1992. Article 23 of the same Act provides for the implementation of the Fund Convention 1992 regarding oil pollution damage for which the victim did not receive compensation from the shipowner or insurer. It is stipulated that compensation may be claimed against the Fund pursuant to art 4.1 of the Fund Convention 1992.

The primary damage suffered by the plaintiffs was caused by oil pollution as prescribed by the Act, and there was no dispute between the parties that they did not receive adequate compensation from the shipowner or insurer, so the defendant Fund is responsible for compensating for the oil pollution damage suffered as a result.

As regards the scope of compensation liability, the occurrence of property damage as stipulated is recognised by the defendant Fund. However, there is an issue with regard to whether loss of business profits exceeding the portion of property damage contended by the plaintiffs occurred. There is no objective and specific standard to calculate the extent of the decreases in household income suffered, and even if there were such decreases, there is no data to substantiate whether the decreases had a significant causal relationship with the oil pollution accident in this case. The surplus of the plaintiffs' claims for property damage relating to loss of profits is thus not accepted.

The plaintiffs further assert that compensation is necessary for their mental suffering caused by the oil pollution incident. Article 1.6 of the CLC 1992 provides the core definition of 'loss or damage caused outside the ship by contamination resulting from the escape or discharge of oil from the ship' and 'costs of preventive measures and further loss or damage caused by preventive measures', and art 4 of the Fund Convention 1992 stipulates the liability for compensation under certain conditions only for the above damages. Article 23 of the Act stipulates that compensation may be claimed from the defendant for oil pollution only for damage as stipulated in the Fund Convention 1992.

There is no unified jurisprudence between the Common Law and the Civil Law legal systems regarding compensation for mental damage, and there is no international standard or scope for such compensation. Considering these factors collectively, the interpretation of the scope of compensation for oil pollution should seek to cause the least imbalance in legal application between the contracting States of the CLC 1992 and the Fund Convention 1992. Considering the international specificity of the establishment of the Fund, this Court finds that pollution damage in the Act includes only economic and property damage as enumerated in the statute, and that the person who has suffered the loss is limited to this claim against the defendant Fund. It seems a reasonable interpretation that the concept of oil pollution damage that can be compensated and must be compensated by the defendant as an international Fund does not include damage caused by mental suffering.

In respect of some of the plaintiffs, it is true that oil contaminated their fishing grounds, but the fishing grounds in which those plaintiffs were engaged did not have the prescribed licences, permits, and registrations prescribed by the Fisheries Act. It was argued that this was illegal income from an act prohibited by the Fisheries Act and was thus not subject to compensation for damages. In light of the special status of the defendant Fund in this case and the fact that a restrictive interpretation of the concept of oil pollution damage must be adopted to adhere to international standards, the claims of the plaintiffs engaged in aquaculture and clam fishing without a prescribed licence should not be included in the calculation of loss and loss as illegal income unless there are special circumstances. There is no evidence here that there was a significant causal relationship with the oil pollution accident in this case, so the plaintiffs' claim for property damage has no basis in this regard as well.