Ship Arrests And Maritime Liens In South Korea

• Published date: 06 July 2021
• Subject Matter: Transport, Marine/ Shipping
• Law Firm: DR & AJU LLC
• Author: Mr Woo Rin Sung

1. Introduction

Foreign shipowners and their creditors often ask whether ship arrests are possible or whether maritime liens are enforceable in the Republic of Korea ("Korea"). Due to the nature of the maritime shipping business, both privately-owned and chartered vessels inevitably enter foreign ports around the world, including that of Korea. When debtor-owned vessels are provisionally seized or maritime liens are invoked at Korean ports of entry, shipowners and their creditors have come to consider Korean law as an option to enforce their rights.

Ironically, while most countries, including Korea, grant creditors a powerful priority right that is senior to other security interests, the laws on exercising such maritime liens, including ship arrest, differ by country. This undoubtedly causes considerable inconvenience and difficulty when exercising maritime liens. This article will address some of the important points to note when a foreign party intends to initiate a ship arrest or enforce the maritime lien on a vessel in Korea.

2. Is ship arrest limited to the ships actually owned by the shipowner (debtor)?

As Korea is a civil law jurisdiction, Korea has a different position on ship arrests from that under Anglo-American common law jurisdictions. Korean law provides that the subject of any provisional attachment is limited to the debtor's own property. With regard to ship arrests, it is possible to apply ship arrest on all ships owned by the debtor-shipowner. Thus, the general rule is that all ships owned (registered) by the debtor-shipowner may be subject to ship arrest. This means that the creditor may enforce its right of provisional attachment on all vessels owned by the debtor-shipowner at the time of the attachment.

Korea is not a party to either the International Convention on Arrest of Ships (1952) or the International Convention on Arrest of Ships (1999). In other words, the common law countries and the International Convention on Arrest of Ships allow ship arrest only for a maritime claim'which is based on the direct relationship between the ship and the claim. On the contrary, Korean laws apply the regular requirements for a provisional attachment to all types of claims, i.e., (1) the existence of preserved rights or claims protected by a provisional attachment, and (2) the necessity of preservation of the property. As long as these requirements are satisfied, Korean laws allow for provisional attachment on any debtor-owned property...