4/23/2013

Arrest/Attachment of Ships at Korean Ports: Maritime Liens in Korea

The arrest of vessels/ships in Korea is a common tool to satisfy judgements against debtors.  Korean courts allow the ex-parte arrest of ships.  The court, normally, does not request from the Korean counsel of the creditor/claimant evidence of how long the ship will remain in Korean waters, as is, sometimes, the case in other neighboring jurisdictions.

We find Korea to be a much easier destination for arresting vehicles than many other Asian nations, because of the efficiency focus of the Korean court system and the less than efficient other Asian jurisdictions.  Typically, the arrest action will take a few days to complete. 

The major ports in Korea that an arrest may be executed at are: Busan ,Jinhae, Incheon, Gunsan, Masan, Mokpo, Pohang, Donghae, Ulsan, Yeosu, and Jeju

ARREST OF FOREIGN VESSEL IN KOREAN WATERS
There are two different ways to arrest a vessel in Korean waters. 

1.  Preliminary Attachment
The Korean Civil Enforcement Act allows the arrest of a ship or attachment of an asset through a preliminary attachment.  The attachment, normally, requires the posting of a security.  The amount of the security is, normally 10% to 15% of the claimed amount.  Often the court allows the posting of the majority of the amount in the form of a bond.  Normally, the court will not grant a preliminary attachment if a maritime lien is available to the complainant.  Foreign parties, often, have a difficult time obtaining a bond in expedient fashion.  We have, even, failed to obtain bonds for some foreign creditors. 

2.  Maritime Lien
A creditor or claimant in Korea may exercise the right to arrest a vessel.   The Korean court, under Korea's Conflict of Laws Act, will look to the law of the nation of the vessel's flag.   Normally, the court in Korea will not grant a preliminary attachment if a maritime lien is available to the complainant.

A maritime lien, in Korea, is also available for time-chartered vessels, sister vessels and even when an arbitration clause exists.

ENFORCEMENT OF AN ARREST ORDER
The sheriff of the court, upon the disposition of the court, will arrest the vessel by serving on the ship master the notice of arrest and, also, attaching the order to the vessel.  It is, also, advisable to arrange with the sheriff to advise the port authorities to not allow the vessel to leave the port.

Upon arrest, in most cases in our experience, the owner of the vessel or charter party will provide a letter of undertaking from the the P & I club of the arresting party.  The arresting party is not required, under Korean law, to accept the letter of undertaking and many demand 100% of the claimed amount in cash before granting the release of the vessel.

In order to obtain information of the release of an arrested ship in Korea, please refer to our post entitled:  Release of an Arrested Vessel in Korean Waters.
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team for an international law firm. He is the only non-Korean to have worked as an attorney for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.