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Appendix 1

ABOUT THE AUTHORSThe

Aviation LawReview

Law Business Research

Second Edition

Editor

Sean Gates

The Aviation Law Review

The Aviation Law Review

Reproduced with permission from Law Business Research Ltd.This article was first published in The Aviation Law Review - Edition 2

(published in July 2014 – editor Sean Gates).

For further information please emailNick.Barette@lbresearch.com

TheAviation Law

Review

Second Edition

EditorSean Gates

Law Business Research Ltd

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PUBLISHER Gideon Roberton

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The publisher acknowledges and thanks the following law firms for their learned assistance throughout the preparation of this book:

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ACKNOWLEDGEMENTS

Acknowledgements

ii

KROMANN REUMERT

LAWIN LIDEIKA, PETRAUSKAS, VALIŪNAS IR PARTNERIAI

LAWOFFICE DR ANDREAS GRASSL

LS LEXJUS SINACTA

RAJA, DARRYL & LOH

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SQUIRE SANDERS MIKI YOSHIDA GAIKOKUHO KYODO JIGYO HORITSU TOKKYO JIMUSHO

STEVENSON, WONG & CO

URWANTSCHKY DANGEL BORST PARTMBB

YOMI OSHIKOYA & CO (LEGAL PRACTITIONERS)

iii

Editor’s Preface ..................................................................................................viiSean Gates

Chapter 1 ARGENTINA .............................................................................1Ana Luisa Gondar

Chapter 2 AUSTRIA .................................................................................12Andreas Grassl

Chapter 3 BELGIUM ................................................................................22Dimitri de Bournonville and Cyril-Igor Grigorieff

Chapter 4 BRAZIL ....................................................................................31Ricardo Bernardi

Chapter 5 CANADA .................................................................................48Laura M Safran, QC and Prasad Taksal

Chapter 6 CHINA .....................................................................................61Gao Feng

Chapter 7 DENMARK ..............................................................................74Jens Rostock-Jensen and Jakob Dahl Mikkelsen

Chapter 8 EUROPEAN UNION ..............................................................84Dimitri de Bournonville, Cyril-Igor Grigorieff and Charlotte Thijssen

Chapter 9 FRANCE ................................................................................100Vonnick le Guillou, Julie Catala-Marty, Marie Bresson, Jonathan Rubinstein, Loïc Poullain and Guilhem Argueyrolles

CONTENTS

iv

Contents

Chapter 10 GERMANY ............................................................................114Peter Urwantschky, Rainer Amann, Claudia Hess and Marco Abate

Chapter 11 HONG KONG ......................................................................134Neville Watkins and Simon Tong

Chapter 12 INDIA ....................................................................................146Vineet Aneja and Sumeet Lall

Chapter 13 ITALY .....................................................................................159Anna Masutti

Chapter 14 JAPAN ....................................................................................173Tomohiko Kamimura

Chapter 15 KENYA ...................................................................................188Sonal Sejpal and Karim M Lalji

Chapter 16 KOREA ...................................................................................202Choon-Won Lee

Chapter 17 LITHUANIA ..........................................................................213Vytautas Želvys

Chapter 18 MALAYSIA .............................................................................228Chew Phye Keat and Chong Kok Seng

Chapter 19 MALTA ...................................................................................240Anthony Galea

Chapter 20 NETHERLANDS ..................................................................250Hilde van der Baan

Chapter 21 NIGERIA ................................................................................266Otunba Yomi Oshikoya and Gbenga Oshikoya

v

Contents

Chapter 22 PORTUGAL ...........................................................................280Luís Soares de Sousa

Chapter 23 RUSSIA ...................................................................................291Alexandra Rodina

Chapter 24 SOUTH AFRICA ...................................................................301Chris Christodoulou

Chapter 25 SPAIN .....................................................................................316Diego Garrigues

Chapter 26 SWITZERLAND ...................................................................328Heinrich Hempel and Daniel Maritz

Chapter 27 TURKEY ................................................................................341M Ali Kartal

Chapter 28 UKRAINE ..............................................................................350Anna Tsirat

Chapter 29 UNITED ARAB EMIRATES .................................................363Oliver Tebbit

Chapter 30 UNITED KINGDOM ...........................................................377Mark Welbourn

Chapter 31 UNITED STATES .................................................................392Garrett J Fitzpatrick, James W Hunt and Mark R Irvine

Appendix 1 ABOUT THE AUTHORS .....................................................415

Appendix 2 CONTRIBUTING LAW FIRMS’ CONTACT DETAILS ...435

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EDITOR’S PREFACE

The first edition of The Aviation Law Review has been enthusiastically received around the world. Not only is aviation law global in its reach, but it is also in many respects unique, even in the field of transport, as this edition demonstrates. The second edition of The Aviation Law Review includes chapters from contributors to the first edition alongside a number of chapters from lawyers in additional jurisdictions, making this an even more vital tool for students, practitioners and in-house counsel.

Clients continue to demand a ‘one-stop shop’ approach from their lawyers in this field given the issues they face and the special nature of the subject. All the customary disciplines of a commercial practice come into play, but all must then be overlaid with an aviation perspective. This further emphasises the essential nature of specialisation in the industry and maintains the exclusivity of the practice of aviation law.

This year again, regulatory matters have been to the fore with more and more countries seeking to feather-bed consumers with protection from the vicissitudes of life, and at the expense of the industry. The global tendency towards the nanny state piles costs on operators, which can only be recovered from ticket prices, and therefore consumers, but since the link between regulation and cost is indirect, regulators can boast of their concern for consumers without having to deal with the backlash of increasing cost, or finding a  budget for their extravagance. Among others the US consumer protection laws represent a further imposition, though perhaps EC carriers will find comfort in the company of their peers!

Unmanned aerial vehicles are coming into the regulatory focus as aspirational operators look to adopt the technology for cost saving and additional services. BP has won the first licence from the FAA for use of UAVs to monitor the Alaskan pipeline. Amazon’s intentions in this area have been widely published and the plans of Jeff Bezos should not be dismissed lightly. Many jurisdictions are consulting on the shape of the regulatory framework, on whether UAV operators will fall to be regulated similarly to commercial operators and what airspace they will be permitted to occupy.

Last year I railed against the failure of the EC to institute a  truly first-class accident investigation body within Europe This year practitioners’ eyes should be

Editor’s Preface

viii

focused on a recent decision of the UK Court of Appeal in Rogers v. Hoyle, which has permitted the use of accident reports in civil liability trials contrary to the prohibition on this practice recommended by the draftsmen of the Chicago Convention 1944 in the accident investigation annex and by the draftsmen of the EU Regulation on accident investigations. The prospects for the EC revisiting the topic are remote, but perhaps the right approach in any event would be for a truly global accident investigation board to be established; the potential for cost saving would be significant, while providing the opportunity to eliminate those unable to attain a sufficiently high standard. Sadly the prospects of movement in the International Civil Aviation Organization (ICAO) within the next two decades seem remote, though in the past the Air Navigation Commission has acted as an investigatory appellate body!

Before closing, one must welcome the Montreal Protocol to the Tokyo Convention following the Diplomatic Conference at the ICAO in Montreal this year. This has been focused on the activities of disruptive passengers and the regulation of in-flight security officers. The Protocol, by extending jurisdiction to the state of next landing in relation to criminal offences committed on board aircraft make it much more probable that those offences will be prosecuted and that disruptive passengers will be brought to book. Sadly, states declined to take the short step of extending immunity to the commander of the aircraft beyond that extant in the original Convention. The actions of the commander and flight and cabin crew remain susceptible to examination by courts, which can review their actions with the full benefit of hindsight and a test of reasonableness the interpretation of which will vary widely from one country to another. Industry recommended that deference be given to the actions of the flight crew in situations where the safety of the aircraft could be jeopardised, but this was not taken up by the delegates. Nevertheless the Protocol is to be commended for what it does achieve more than criticised for that which delegates passed on, and hopefully it will be ratified without too much delay.

I would like to extend my thanks to the contributors to this volume, both those who contributed before and those who have joined the group. Their efforts are highly appreciated and represent a substantial contribution to the global aviation law library.

Sean GatesGates Aviation LtdLondonJuly 2014

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Chapter 16

KOREA

Choon-Won Lee1

I INTRODUCTION

The aviation market in Korea has been growing continuously. The report by the Ministry of Land, Infrastructure and Transport (MOLIT) in January 2013 shows that the air carriage of passengers in Korea has grown constantly by 10.9 per cent per year, and the air carriage of cargos by 7.4 per cent per year on average for the last 10 years. According to the relevant statistics, in 2013 there were 50,986,891 passengers on international flights and 22,353,370 on domestic flights, while there were 3,246,253 tons of air cargo carried on international flights and 252,686 tons carried on domestic flights.

There are eight Korean air carriers as of 2013: two major carriers (Korean Air and Asiana Airlines), five low-cost carriers (LCCs) (Jeju Air, Jin Air, Air Busan, Easter Jet and T’way Air) and one cargo-only carrier (Air Incheon). It is reported that Korean LCCs have successfully settled into the market since their first debut in 2005. According to a MOLIT press release, the above-mentioned Korean LCCs took 21.4 per cent of the market share (48 per cent of the domestic market and 9.6 per cent of the international market) in 2013.

As of 31 December 2013, 70 foreign air carriers from 31 countries operate international flights into and out of Korea, 1,102 times weekly (of which 972 flights are for passengers and 130 for cargo) with 188 routes. The market share of foreign air carriers for international passenger flights was 32.3 per cent as of April 2010.

Korea is a  party to the Convention on International Civil Aviation (1944, Chicago), the International Air Services Transit Agreement (1944, Chicago), the Protocol to Amend the Convention for the Unification of Certain Rules Relating to International Carriage by Air, Signed at Warsaw on 12 October 1929, done at The Hague

1 Choon-Won Lee is a partner at Jipyong.

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on 28 September 1955 (the Hague Protocol), and the Convention for the Unification of Certain Rules for International Carriage by Air (1999, Montreal, (MC 99)).

Aside from this, the Korea Commercial Code (KCC) has newly added ‘Part 6 – Carriage by Air’ (Part 6), which became effective as of 24 November 2011. It has for the most part adopted and incorporated the main contents of (1) the MC 99 (to which Korea is a party) and the Convention Supplementary to the Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air Performed by a Person other than the Contracting Carrier (1961, Guadalajara) (to which Korea is not a party); and (2) the Convention on Damage Caused by Foreign Aircraft to Third Parties on the Surface (1952, Rome) and its Protocol (1978, Montreal) (to neither of which is Korea a party).

On a separate note, the Korea Aviation Act (KAA) is the primary administrative law that regulates the aviation system in Korea. The goal of the KAA is to (1) set standards and measures for safe flights of aircraft, (2) effectively establish and maintain aviation facilities, and (3) establish and maintain order in the operation of air carriage business, according to the standards and measures as adopted in the Convention on International Civil Aviation and its protocols. Under the KAA, MOLIT works as the key regulator of the Korean aviation market, and it issues licences and permissions, and accepts registrations and reports with regard to the register of aircraft, the operation of aviation-related businesses, the airworthiness and safety of aircraft, and the qualifications of pilots, air-traffic controllers, aviation engineers, etc.

II LEGAL FRAMEWORK FOR LIABILITY

i International carriage

As of 24 November 2011, any liabilities of air carriers who conduct international carriage shall be decided pursuant to the KCC and the MC 99.

Part 6 provides (1) air carriers’ liabilities for the carriage of passengers and cargo, and (2) aircraft operators’ liabilities to third parties on the surface. It applies to all aircraft whether or not operated for commercial purposes or profit (Articles 896 and 897). However, it does not apply to aircraft for army or police use, or other public purposes (Article 897). The scope of application is not limited to domestic carriage and it will thus also apply to international carriage.

While Part 6 adopted the main contents of the MC 99, the liability limitation amounts initially provided in the KCC corresponded to those of the MC 99 before its increase in June 2009 (i.e., 100,000 special drawing rights (SDR) per passenger for death or injury of passengers, 4,150 SDR per passenger for delay of passengers, 1,000 SDR per passenger for delay, damage, and destruction of baggage, and 17 SDR per kilogram for delay, damage, and destruction of cargo). Therefore, the air carriers’ liability limitation amounts differ slightly subject to which law, the KCC or the MC 99, applies at this initial stage.

In this respect, a Korean case precedent (the first instance court’s judgment delivered by the Seoul Central District Court on 12 February 2014, Case No. 2013gadan131875) held that Part 6 will prevail and that for air carriers’ liabilities in international carriage the liability amount for cargo damage of 17 SDR per kilogram shall apply.

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However, Part 6 has been amended most recently as of 20 May 2014 so that the revised liability limitation amounts in the MC 99 of June 2009 are duly reflected. Consequently, liability limitation amounts for international carriage in the amended KCC now coincide with those in the revised MC 99 (i.e., 113,100 SDR per passenger for death or injury of passengers, 4,694 SDR per passenger for delay of passengers, 1,131 SDR per passenger for delay, damage, and destruction of baggage, and 19 SDR per kilogram for delay, damage, and destruction of cargo). Under the circumstances, it can be said that the discrepancies between the KCC and the MC 99 are now resolved by legislation.

ii Internal and other non-convention carriage

Before the addition of Part 6, which became effective as of 24 November 2011, there was no legislation that specifically provided for liability in respect of air carriage. Therefore, air carriers’ liabilities were governed according to the general principles of contract and tort under the Korea Civil Code and the KCC.

Now that Part 6 has come into effect, the same will apply with regard to air carriers’ liabilities in internal and other non-convention carriage.

While Part 6 provides for air carriers’ liabilities mostly without distinguishing between international and domestic flights, the liability limitation amounts for delay of passengers and delay, damage, and destruction of cargo in domestic flights are lower than those for international flights (e.g., 1,000 SDR per passenger for delay of passengers compared with 4,694 SDR per passenger for international flights, and 15  SDR per kilogram for delay, damage, and destruction of cargo compared with 19 SDR per kilogram for international flights).

iii General aviation regulation

Part 6 applies to all aircraft for operation, which encompasses aeroplanes, airships and rotorcraft or helicopters (Articles 896 and 897 of the KCC, Article 2 of the KAA).

However, microlights, light gliders, balloons, and microlight rotorcraft or helicopters are not included. Thus, for operation of such microlights, etc., the general principles of contract and tort under the Korea Civil Code and the KCC will apply.

iv Passenger rights

Compensation for damage will ultimately be decided under the applicable laws (i.e., Part 6, the MC 99 and the general principles of contract and tort under the Korea Civil Code and the KCC).

In this regard, air carriers are required to establish their procedures and plans with regard to remedies for damage for the users (Article 119-2 of the KAA), including default and delay in carriage and refund for cancellation of flights. Also, air carriers are required to provide their terms and conditions for carriage to the users (Article 119 of the KAA), and these usually include the air carriers’ policies on delay, cancellation of flights and carriage of disabled passengers.

A number of pieces of Korean legislation may be noted with regard to passenger rights. Firstly, under Article  16 of the Consumer Protection Act, the Fair Trade Commission (FTC) provides standards for the settlement of consumer disputes. Such

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standards are not legally binding but will serve as standards for the parties’ settlement or for recommendations by the Korea Consumer Agency in the event of consumer disputes. In practice, the Korean court refers to or at least takes into account these standards when calculating damages to be paid by the air carriers.

Secondly, the Regulation of Standardised Contracts Act regulates contracts made according to the general terms and conditions provided by one contracting party unilaterally, usually between a business and a consumer. According to the same, general terms and conditions that lack fairness, in breach of equity or good faith principles, will be deemed null and void, and will not be considered legally binding on the other contracting party (Article  6 of the Regulation of Standardised Contracts Act). In particular, the Regulation of Standardised Contracts Act provides that clauses that (1) exempt legal liabilities arising from intent or gross negligence, (2) limit the extent of compensation without due reason, (3) limit or mitigate compensation liabilities in the event of cancellation of contract without due reason, etc., will be null and void (Articles 7 and 9 of the Regulation of Standardised Contracts Act).

If a  company provides general terms and conditions that are unfair, the FTC may recommend or order such a company to amend the unfair terms and conditions. In practice, the FTC generally refers to the aforementioned standards for settlement of consumer disputes under the Consumer Protection Act when reviewing and deciding whether a company’s general terms and conditions are unfair. If the company does not comply with the FTC order, it may be subject to criminal punishment (Article 32 of the Regulation of Standardised Contracts Act).

In light of the above, a number of air carriers, both Korean and foreign, have received rectification recommendations from the FTC to amend their general terms and conditions with regard to refunds of airfares in cases of cancellation by passengers, because of the excessive cancellation fees charged by the air carriers. In particular, it has been reported that some foreign LCCs made amendments to their general terms and conditions following recommendations from the FTC in 2013 – the first such cases in the world.

Lastly, there are two pieces of Korean legislation relevant in relation to the carriage of disabled passengers: the Act on Prohibition of Discrimination against Persons with Disabilities and the Act on Promotion of the Transportation Convenience for Mobility Disadvantaged Persons. As these two laws fall under comparatively new areas of law in Korea the specific scope of air carriers’ obligations and the authorities’ regulations under these laws are yet to be established.

v Other legislation

The primary competition law in Korea is the Monopoly Regulation and Fair Trade Act, which prevents abuses of dominant market positions by enterprises and excessive concentrations of economic power, and regulates undue collaborative acts and unfair trade practices (for further details, see Section VI, infra).

The Product Liability Act stipulates compensation liabilities arising from defects in a product (for further details, see Section VII, infra).

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III LICENSING OF OPERATIONS

i Licensed activities

Any party that intends to conduct air carriage business is required to obtain a licence from MOLIT (Article  112 of the KAA). ‘Air carriage business’ means business transporting passengers or cargo using aircraft for remuneration upon the demand of others (Article 2 of the KAA).

Applicants for an air carriage business licence must complete the application form provided by MOLIT’s Ordinance for the KAA (the Ordinance) and submit required documents including a business plan (Article 278 of the Ordinance). The standards for an air carriage business licence are as follows (Article 113 of the KAA):a the commencement of such a business shall not impair air traffic safety;b the flight schedule included in the business plan shall be fit for the convenience

of users; andc the number of aircraft to be used for such a  business, the seating capacity of

each aircraft, the capital, etc., shall conform to the standards prescribed by the Ordinance (Article 278-3 of the KAA).

Further, if the air carrier that has obtained the air carriage business licence wants to operate regular flights, a separate permission from MOLIT is required for each route. A separate permission from MOLIT is also required if the air carrier that has obtained the air carriage business licence wants to operate irregular flights. (Article 112 of the KAA)

ii Ownership rules

Under Article 114 of the KAA, MOLIT will not grant an air carriage business licence if the applicant is one of the followings:a any person who is not of Korean nationality;b a foreign government or public organisation;c a foreign corporation or organisation;d a corporation not less than 50 per cent of whose shares are owned by any of the

above at (a), (b), or (c), or a corporation that is actually governed by any of the above at (a), (b), or (c);

e a  corporation whose registered representative is of foreign nationality, or a corporation not less than 50 per cent of whose registered directors or executives are of foreign nationality;

f any person who is incompetent, quasi-incompetent, or has not been discharged from bankruptcy;

g any person who was sentenced to imprisonment or a  heavier punishment in violation of the KAA, and either (1) two years have not passed since the execution of sentence was terminated or non-execution thereof became definite, or (2) execution of sentence is suspended;

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h any person whose licence for a domestic air carriage business, international air carriage business, small air carriage business or aircraft-using business has been revoked and two years have not passed from the day of revocation;

i a corporation any of the directors or executives of which fall under any of the above categories at (a) to (h).

On a separate note, aircraft owned by any of the above at (a) to (e), or aircraft of foreign nationality, cannot be registered in Korea (Article 6 of the KAA).

iii Foreign carriers

The party who is one of the following may conduct international air carriage business upon obtaining ‘foreign entity international air carriage business permission’ from MOLIT (Article 147 of the KAA):a any person who is not of Korean nationality;b a foreign government or public organisation;c a foreign corporation or organisation;d a corporation not less than 50 per cent of whose shares are owned by any of the

above at (a), (b), or (c), or a corporation that is actually governed by any of the above at (a), (b), or (c); or

e a  corporation whose registered representative is of foreign nationality, or a corporation not less than 50 per cent of whose registered directors or executives are of foreign nationality.

The applicant for ‘foreign entity international air carriage business permission’ must complete the application form provided by the Ordinance and submit required documents, including a business plan (Article 278 of the Ordinance), at least 60 days prior to the estimated date for the commencement of operations. MOLIT may grant ‘foreign entity international air carriage business permission’ if the following requirements are satisfied (Article 147 of the KAA):a the party is designated as an international air carriage business operator by the

pertinent state or country according to an aviation agreement made between Korea and such a state or country;

b the operational safety of the air carriage business conforms to the standards and measures stipulated in the Convention on International Civil Aviation and its Protocols;

c the contents of the air carriage business shall comply with an aviation agreement made between Korea and such a state or country; and

d its purpose shall be to promote smooth international carriage of passengers and cargo.

Except for aircraft operated on the basis of ‘foreign entity international air carriage business permission’, aircraft of foreign nationality are required to obtain permission from MOLIT to operate into or out of Korea (Article 144 of the KAA).

However, unless specifically permitted by MOLIT, aircraft of foreign nationality cannot operate domestic flights (Article 145 of the KAA).

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IV SAFETY

Under the KAA, air carriers with an air carriage business licence may commence operation only upon obtaining a ‘certification of operation’ after undergoing examination and inspection by MOLIT of systems for safe operation, including crew, equipment and facilities. When granting the ‘certification of operation’, MOLIT issues operation standards and conditions for air carriers on operation routes, airports and the maintaining and repairing of aircraft, etc. Air carriers must comply with the operation standards and conditions issued by MOLIT, and carry out and continuously maintain systems for safe operation (Article 115-2 of the KAA).

Further, air carriers with an air carriage business licence are required to establish operation and maintenance manuals, and submit reports of the same to MOLIT and obtain approval (Article 116 of the KAA).

After carrying out examinations and inspections, MOLIT grants a ‘certification for airworthiness’, without which aircraft cannot be used for aviation (Article  15 of the KAA).

In the event of an aircraft accident or aviation safety hindrance, the pilot, engineer or aircraft’s owner or operator (if the pilot is not able to submit a report) are required to submit a report to MOLIT (Article 49-3 of the KAA).

V INSURANCE

Article  7 of the Air Carriage Business Promotion Act provides that air carriers who conduct air carriage business according to the KAA may operate aircraft only upon having aviation insurance. Aviation insurance includes passenger insurance, fuselage insurance, cargo insurance, war risk insurance, third-party insurance and crew insurance. Air carriers in breach of Article 7 may be subject to criminal punishment (Article 12 of the Air Carriage Business Promotion Act).

Air carriers shall submit a report to MOLIT with details of their aviation insurance and copies of the insurance policies (Article 2 of the Air Carriage Business Promotion Act’s Ordinance).

The liability limitation amount for insurance will be either (1) liability limitation amounts as provided in various conventions for liabilities for air carriage to which Korea is a party, or (2) if the above is deemed inappropriate and unreasonable, liability limitation amounts as decided by MOLIT (Article  3 of the Air Carriage Business Promotion Act’s Ordinance).

VI COMPETITION

Under the Monopoly Regulation and Fair Trade Act, mainly, the following categories of actions are regulated:a the prohibition of abuse of dominant market positions;b the regulation of mergers or joint enterprises and the restraint or control of

excessive concentrations of economic power;

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c the restraint or control of undue collaborative acts; andd the prohibition of unfair trade practices.

Actions that are prohibited or restrained under the Monopoly Regulation and Fair Trade Act are subject to (1) rectification orders by the FTC, (2) administrative fines by the FTC or (3) criminal punishment.

The Monopoly Regulation and Fair Trade Act applies to the aviation market as well as to other industries. Of the above practices, undue collaborative acts between airline companies are often an issue in the aviation market.

In November 2011, the FTC imposed administrative fines on 15 airline companies (including both domestic and foreign) in the amount of about 120  billion  Korean won for fixing fuel surcharges in the air cargo carriage market. A number of foreign airline companies appealed arguing that the administrative fine imposed by the FTC should be revoked, but in May 2014 the Korean Supreme Court delivered its judgment dismissing such arguments (Case No. 2012Du13665). The Korean Supreme Court held that although undue collaborative acts (i.e., agreement to fix fuel surcharges) by foreign airline companies were conducted outside Korea, the Monopoly Regulation and Fair Trade Act may still apply insofar as such undue collaborative acts have an effect on the Korean market.

On the other hand, Article  121 of the KAA provides that if air carriers with an air carriage business licence (both international and domestic) make carriage agreements or cooperation agreements on operation schedules, airfare, promotions, sales, etc., with other air carriers (whether foreign or Korean), such agreements should be approved by MOLIT.

VII ESTABLISHING LIABILITY AND SETTLEMENT

i Procedure

Firstly, the forum for settlement of claims in relation to air carriage shall be decided subject to the underlying contract and the applicable laws including international conventions. Part 6 does not provide any specific clause regarding fora. Therefore, in international carriage, Article 33 of the MC 99 will apply in deciding fora.

On the other hand, in domestic carriage, the Korea Civil Procedures Act will apply in deciding fora. In principle, the court where the defendant holds residence or business will have jurisdiction.

Once the claimant files a written complaint before the court, the court will serve the same on the defendant. The defendant will then be required to submit an answer brief within 30 days from service of the written complaint. Upon submission of the answer brief by the defendant, the court will hold the preparatory hearing or the first hearing, generally within one to two months. The court will hold a number of hearings depending on the complexity of the case and the parties’ application for evidence (witness examination, etc.). When the court finds that parties have submitted all the arguments and supporting exhibits, the court will close the hearing and deliver judgment. In general, the first instance proceeding may take about eight months to one year or more from

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filing the written complaint until delivery of the judgment, depending on the underlying circumstances. The Korean legal system is comprised of a three-instance trial system.

ii Carriers’ liability towards passengers and third parties

Under Part 6, for death or bodily injury of a passenger, air carriers will be liable for damages only when an event that caused the damage took place on board the aircraft or in the course of any of the operations of embarking or disembarking (Article 904 of the KCC).

If the air carrier is held liable, the liability of the air carrier to compensate for such damage shall neither be discharged nor limited to the amount of 113,100 SDR per passenger (Article 905 of the KCC).

For damages exceeding 113,100 SDR per passenger, the air carrier will not be held liable if it proves any of the following (Article 905 of the KCC):a that the damage was not caused by the negligence or other wrongful act or

omission of the air carrier, its employees or agents; orb that the damage was caused solely by the negligence or other wrongful act or

omission of a third party.

The air carrier will be liable for damages in cases of delay of passengers. However, the carrier shall not be held liable for the damages if it proves that the carrier, its employees and agents have taken all measures reasonably required to prevent such damage or that taking such measures was impossible (Article 907 of the KCC).

The air carrier’s liability for delay of passengers shall be limited to the amount of 4,694 SDR per passenger in international carriage, and 1,000 SDR in domestic carriage. However, such limitation will not apply when it is proved that the damage was caused by the wilful misconduct or other reckless act or omission of the air carrier, its employees or agents while acknowledging the concern about the occurrence of delay (Article 907 of the KCC).

For loss of or damage to checked baggage, the air carrier will be liable for damages only when the facts underlying the cause of the damage occurred in an aircraft or while the checked baggage was in the custody of the air carrier. However, where the damage was caused by an inherent defect, extraordinary character or hidden defect of the checked baggage, the air carrier shall not be held liable to that extent (Article 908-1 of the KCC).

For loss of or damage to carry-on baggage, the air carrier will be liable for damages only when the damage was caused by intention or the negligence of the air carrier, its employees or agents (Article 908-2 of the KCC).

The air carrier will be liable for damages in cases of delay of baggage. However, the carrier shall not be held liable for the damage if it proves that the carrier, its employees and agents have taken all measures reasonably required to prevent such damage or that taking such measures was impossible (Article 909 of the KCC).

The air carrier’s liability for baggage shall be limited to the amount of 1,131 SDR per passenger. However, where a passenger in delivering baggage for consignment to the air carrier had reported in advance to the air carrier the estimated value of the baggage at the time of delivery to the destination, the air carrier’s liability shall be limited to the reported value unless the air carrier proves that the reported value exceeds the actual value of the baggage at the time of delivery to the destination. The above limitation will not

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apply when it is proved that the damage was caused by the wilful misconduct or other reckless act or omission of the air carrier, its employees or agents while acknowledging the concern about the occurrence of delay (Article 910 of the KCC).

The air carrier will be liable for damages resulting from the loss of or damage to cargo only when the damage was incurred during carriage by air (including the time while the cargo was in the custody of the carrier). However, the air carrier shall not be held liable when it proves that the loss of or damage to the cargo was caused by any of the following (Article 913 of the KCC):a an inherent defect, extraordinary character or hidden defect of the cargo;b inappropriate packaging or incomplete marking of the cargo done by a person

other than the carrier, its employees or agents;c war, riot, rebellion or armed conflict;d action taken by a  public organisation that is associated with the arrival and

departure of the cargo, quarantine or customs procedures; ande force majeure.

The air carrier will be held liable for damages in case of delay of cargo. However, the carrier shall not be held liable for the damage if it proves that the carrier, its employees and agents have taken all measures reasonably required to prevent such damage or that taking such measures was impossible (Article 914 of the KCC).

The air carrier’s liability for cargo shall be limited to the amount of 19 SDR per kilogram in international carriage, and 15 SDR per kilogram in domestic carriage. However, where a shipper in delivering cargo for carriage to the air carrier had reported in advance to the air carrier the estimated value of the cargo at the time of delivery to the destination, the air carrier’s liability shall be limited to the reported value unless the air carrier proves that the reported value exceeds the actual value of the cargo at the time of delivery to the destination (Article 915 of the KCC).

iii Product liability

Under the Korean Product Liability Law, in cases of a defect in a product (whether it is a manufacturing defect, design defect or label defect), a manufacturer shall be held strictly liable for damages that occurred because of a defect of the product, and the scope of ‘manufacturer’ covers anyone engaged in a  business of manufacturing, processing, importing and supplying the product.

The issues of product liability for defects of aircraft have not been widely discussed in Korea, and as there are only a few case precedents at present this issue may need to be considered over a longer period of time.

In a  case regarding an accident that occurred because of the crash of a  Black Hawk helicopter that Korean Airlines imported from United Technologies and sold to the Korean Air Force, the Korean Supreme Court dismissed the victim’s claim against Korean Airlines and United Technologies because the victim failed to prove that the aircraft had a  defect; the court also held that the victim’s burden of proof regarding the aircraft’s defect should not be shifted to Korean Airlines and United Technologies merely because the cause of the aircraft’s crash could not be

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investigated because no flight recorder was installed inside the aircraft (Korean Supreme Court judgment rendered on 5 September 2003, Case No. 2002Da17333).

iv Compensation

The types of damage under the KCC are similar to those under the MC 99, as noted above (i.e., damage resulting from the death or bodily injury of a passenger, delay, the loss or destruction of baggage, and the loss or destruction of cargo).

If the air carrier is considered liable for such damage, it is necessary to determine the extent of the damage. The Korea Civil Code sets the general principle regarding the damage to be compensated. For example, Article 393 provides that damage shall be compensated within the range where the damage is ordinary or common, which is foreseeable or could be reasonably expected to occur as a result of the incident. However, special or consequential damage that could not have been foreseen by the responsible party cannot be compensated.

In cases of death or bodily injury of a passenger, the damage, which shall include costs for medical treatment, funeral expenses, loss of earnings and condolence money, can be categorised under the item of costs to be spent for the incident.

In cases of damage or destruction of cargo, it is often the cargo insurance company that actually files the claim against the air carrier within the insurance amount paid to the assured upon subrogation. If the damage was caused while in the custody of the air carrier, the parties may refer to weight-based limitations under the MC 99 or the KCC to discuss the level of settlement.

VIII THE YEAR IN REVIEW

On 6 July 2013, the landing gear of an Asiana Airline aircraft (Flight No. OZ7214), which flew from Incheon to San Francisco, crashed onto the runway of the airport during landing. It was reported that a total of 291 passengers were on board the aircraft including 77 passengers of Korean nationality, and because of the accident, three passengers died and 180 passengers were injured. The accident was investigated in the United States and the public hearing will be held on 24 June 2014 in Washington, DC.

IX OUTLOOK

Various policies, legislation and regulations in the aviation field in Korea will continue to develop in accordance with the growth of the aviation market. In particular, it is expected that the issues of global limitation of air carriers’ liability and aircraft product liability will be actively reviewed and discussed in the near future.

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ABOUT THE AUTHORS

CHOON-WON LEEJipyongChoon-Won Lee started his profession at Lee & Ko and dedicated himself to excellence in the practice of maritime law as a long-time partner at Choi & Kim. In 2008, he joined Jipyong and launched a maritime team, which is one of the most respected maritime teams in Korea. His practice involves charter party disputes, cargo claims, collisions, fire, oil pollution, shipbuilding, and ship finance issues representing major P&I Clubs, ship owners including large-scale Korean ship owners, aviators and insurers worldwide and nationwide. Mr Lee has handled various noteworthy shipping and maritime matters such as the Hyundai Fortune case, which is recorded as one of the largest casualty cases in the shipping world with an estimated total claim amount of about $1.5 billion. Mr Lee has successfully obtained dismissal of all claims against the owners of Hyundai Fortune, and a nil assessment decision in the limitation proceeding, which is unprecedented in Korean judicial history. His recent practice focuses more on contract disputes in ship funds, shipbuilding and the rehabilitation or bankruptcy of domestic shipping companies, which are increasing after the 2008 crisis. He received his LLB from Seoul National University (1988) and his LLM from the University of Southampton (2003).

JIPYONG10th Floor, KT&G Seodaemun Tower60 Chungjeong-roSeodaemun-guSeoul 120-020KoreaTel: +82 2 6200 1910Fax: +82 2 6200 0802cwlee@jipyong.comwww.jipyong.com