The first defendant was a shipping agent delegated by the second defendant carrier, China Marine Korea Co Ltd, with tasks related to storage and delivery of imported cargo at the port of arrival. The first defendant delivered the goods to Keumchun Inc, a bonded warehouse operator. Both defendants secured from Keumchun Inc a letter of commitment saying that the latter would not release the cargo without a delivery instruction issued by the defendants. However, the de facto importer, Gold Textile Inc, obtained the goods from Keumchun Inc without the defendants' authorisation.

The Court below held that Keumchun Inc had a duty to store the cargo and then deliver it to the defendants or the person designated by them according to the defendant's instructions. In relation to the consignee, Keumchun Inc's storage and delivery of the cargo in this case was performed in its capacity as an assistant or employee to the defendants. Therefore, at least in regard of the storage and delivery of the cargo in this case, Keumchun Inc must carry out its business under the defendants' instruction and supervision, although it has the status of an independent contractor. Accordingly, where Keumchun Inc delivered the cargo to someone other than the consignee without the legitimate consignee's instruction, the defendants are liable for tort, as Keumchun Inc's employers, to the legitimate holder of the bill of lading, for infringing upon its ownership of the cargo. The defendants appealed.

Held: The judgment of the Court below is reversed and the case is remanded to the Court below for a new trial and determination.

In carriage of goods by sea for which a bill of lading was issued, the cargo must be delivered to the bill of lading holder in exchange for the bill of lading. Therefore, if the carrier or its domestic shipping agent caused the cargo to be lost by delivering it to someone other than the bill of lading holder, the carrier shall be liable to pay damages to the bill of lading holder for tort. However, if the carrier's domestic shipping agent stored the cargo in a commercial bonded warehouse chosen by the de facto importer as per its request, the domestic shipping agent should be deemed to have continued its control over the cargo and therefore cannot be said to have delivered the cargo to someone other than the bill of lading holder or stored the cargo in a place exposed to substantial risks of unauthorised removal. Thus, the bill of lading holder's ownership to the cargo cannot be said to have been infringed upon due to the defendants' gross negligence, even though the operator of the commercial bonded warehouse, in collaboration with the de facto importer, removed the cargo without authorisation and thereby caused its disappearance.

Where a commercial bonded warehouse operator stores imported cargo under a bailment contract with the de facto importer, the commercial bonded warehouse operator should be deemed to have the status of assisting the carrier or its domestic shipping agent in performing their duties of storing the imported cargo until the completion of customs clearance procedure and its delivery to the legitimate recipient. Nevertheless, the carrier or its domestic shipping agent cannot be regarded as having lost control over the imported cargo to be delivered to the consignee, but should be deemed to have continued control through the commercial bonded warehouse operator. Therefore, a commercial bonded warehouse operator, in general, is an independent business operator, performing the business of storing and delivering the cargo on its own responsibility and judgement, and therefore cannot be viewed as performing the business of storing and delivering imported goods under the supervision and control of a carrier or its domestic shipping agent. Therefore, a carrier or its domestic shipping agent cannot be regarded as having the status of an employer of the commercial bonded warehouse operator as a matter of civil law.

Even though the defendants secured a letter of commitment from Keumchun Inc that it would not release the cargo without an instruction for delivery issued by the defendants, in order to prevent an unauthorised removal of the cargo, it is nothing more than calling an attention to Keumchun Inc, the bonded warehouse operator, that if it delivers the cargo without a letter of delivery instruction, it, as bailee of the cargo, is liable to the bill of lading holder for tort, and therefore it does not put Keumchun Inc in the status of carrying out the business of storing, delivering, etc of the cargo under the defendants' instruction and supervision.

However, the Court below ruled that where Keumchun Inc delivered the cargo to a person other than the legitimate holder of the bill of lading, the defendants, as Keumchun Inc's employers, are liable for tort. The decision of the Court below is erroneous in the misapplication of legal principle as to the employer-employee relationship in employer's liability, which affected the conclusion of the judgment.