Kwang Hyun SUK, Matters Governed by the Law Applicable to Ship Insurance Contracts (Issue of Inclusion or Exclusion of Deposit into Court and of Agency and the Law Applicable to Bareboat Charter and Unjust Enrichment, Kyung Hee Law Journal, Vol. 56(1) (2021), pp. 145-189.
<Abstract>
The plaintiff (a Korean company)(“Plaintiff”), the charterer under the charter party in question (“Charter Party”), filed an action against the defendant (a Panamanian company)(“Defendant”), the shipowner, seeking confirmation that the Plaintiff had the right to claim for payment of the deposit into court made by the insurer (Hyundai Merchant & Marine Corp.)(“Hyundai”) and requested restitution for unjust enrichment as a secondary claim. In this review of the Supreme Court decision, the author will deal with the following three governing law issues that other reviewers have neglected. First, the law governing the insurance contract in this case. While the law governing the insurance contract (“Insurance Contract”) which Suseung (a Korean company) entrusted with ship management by the Plaintiff entered with Hyundai is English law, there are two issues here. First, while English law does not know the concept of deposit into court (consignation), Hyundai has deposited insurance proceeds with Korean courts because it was unsure whether the Plaintiff or the Defendant was entitled to claim said insurance proceeds under the Insurance Contract. Does this deposit have the effect of extinguishing Hyundai’s obligations? The author denies this. Second, the Insurance Contract was concluded by Suseung as agent. After characterizing the issue as a matter of interpretation of the Insurance Contract, the Supreme Court and the court of second instance held that the Plaintiff, which was not described as an insured in the insurance policy, could not be treated as such under English law on agency. However, in the author’s view, this issue should be characterized as a matter of attribution of the agency effect, and consequently be governed by the law applicable to voluntary agency, which is Korean law. Second, the law governing the Charter Party. The Charter Party did not include any governing law clause, but the court of second instance held that Korean law was the governing law by express or implied designation or implied change during the course of court hearing. However, not only was there no explicit designation of the governing law, but also it is difficult to say that there had been any implied designation of the governing law from the beginning. Although there is room for admitting that there had been an implied change based upon the parties’ pleading before the court, this is difficult to admit considering the Supreme Court precedent which held that the lawyers representing the parties must have been authorized by the parties for such change of governing law. Accordingly, in the author’s view, the governing law of the Charter Party should be determined by way of objective connection and it should be the law of Panama under Article 26 of the Private International Law Act of Korea, as the Defendant was the party who was to effect the characteristic performance under the Charter Party. Third, the law governing the Plaintiff’s claim for unjust enrichment against the Defendant (the person entitled to the right to claim for payment of the deposit into court). The court of second instance assumed that the Defendant had become unable to transfer ownership to the Plaintiff, and since it had received the charter hire from the Plaintiff and had also received the full amount of the insurance proceeds from the insurer (Hyundai), the amount equivalent to the ship delivery fee was an unjust enrichment. The court of second instance held, without offering any legal basis, that the law applicable to unjust enrichment was Korean law. However, its determination in the present case is not easy since the unjust enrichment is the result of the cumulation of the Plaintiff’s payment of charter hire and Hyundai’s deposit into court for payment (consignation).
<Keywords>
tacit designation of the law applicable to contract , objective law applicable to contract , law applicable to deposit into court (consignation) , lex loci solutionis , law applicable to agency , law applicable to bareboat charter , law applicable to unjust enrichment
Kwang Hyun SUK, Matters Governed by the Law Applicable to Ship Insurance Contracts (Issue of Inclusion or Exclusion of Deposit into Court and of Agency and the Law Applicable to Bareboat Charter and Unjust Enrichment, Kyung Hee Law Journal, Vol. 56(1) (2021), pp. 145-189.
<Abstract>
The plaintiff (a Korean company)(“Plaintiff”), the charterer under the charter party in question (“Charter Party”), filed an action against the defendant (a Panamanian company)(“Defendant”), the shipowner, seeking confirmation that the Plaintiff had the right to claim for payment of the deposit into court made by the insurer (Hyundai Merchant & Marine Corp.)(“Hyundai”) and requested restitution for unjust enrichment as a secondary claim. In this review of the Supreme Court decision, the author will deal with the following three governing law issues that other reviewers have neglected. First, the law governing the insurance contract in this case. While the law governing the insurance contract (“Insurance Contract”) which Suseung (a Korean company) entrusted with ship management by the Plaintiff entered with Hyundai is English law, there are two issues here. First, while English law does not know the concept of deposit into court (consignation), Hyundai has deposited insurance proceeds with Korean courts because it was unsure whether the Plaintiff or the Defendant was entitled to claim said insurance proceeds under the Insurance Contract. Does this deposit have the effect of extinguishing Hyundai’s obligations? The author denies this. Second, the Insurance Contract was concluded by Suseung as agent. After characterizing the issue as a matter of interpretation of the Insurance Contract, the Supreme Court and the court of second instance held that the Plaintiff, which was not described as an insured in the insurance policy, could not be treated as such under English law on agency. However, in the author’s view, this issue should be characterized as a matter of attribution of the agency effect, and consequently be governed by the law applicable to voluntary agency, which is Korean law. Second, the law governing the Charter Party. The Charter Party did not include any governing law clause, but the court of second instance held that Korean law was the governing law by express or implied designation or implied change during the course of court hearing. However, not only was there no explicit designation of the governing law, but also it is difficult to say that there had been any implied designation of the governing law from the beginning. Although there is room for admitting that there had been an implied change based upon the parties’ pleading before the court, this is difficult to admit considering the Supreme Court precedent which held that the lawyers representing the parties must have been authorized by the parties for such change of governing law. Accordingly, in the author’s view, the governing law of the Charter Party should be determined by way of objective connection and it should be the law of Panama under Article 26 of the Private International Law Act of Korea, as the Defendant was the party who was to effect the characteristic performance under the Charter Party. Third, the law governing the Plaintiff’s claim for unjust enrichment against the Defendant (the person entitled to the right to claim for payment of the deposit into court). The court of second instance assumed that the Defendant had become unable to transfer ownership to the Plaintiff, and since it had received the charter hire from the Plaintiff and had also received the full amount of the insurance proceeds from the insurer (Hyundai), the amount equivalent to the ship delivery fee was an unjust enrichment. The court of second instance held, without offering any legal basis, that the law applicable to unjust enrichment was Korean law. However, its determination in the present case is not easy since the unjust enrichment is the result of the cumulation of the Plaintiff’s payment of charter hire and Hyundai’s deposit into court for payment (consignation).
<Keywords>
tacit designation of the law applicable to contract , objective law applicable to contract , law applicable to deposit into court (consignation) , lex loci solutionis , law applicable to agency , law applicable to bareboat charter , law applicable to unjust enrichment