[1] In a case where an export-import sales contract which provides the buyer with the goods as the consignee to deliver the goods by entrusting the goods to the air carrier, the time when the ownership of the goods is transferred to the buyer (i.e., when the goods arrive at the destination and the buyer acquires the right to claim delivery) and in such a case whether the insurable interest of the insurance contract concluded by the seller and the insurance company with the seller as to the goods subject to the contract

[2] The case holding that the air freight transport contract entered into between Company A and Company C provides that “A shall compensate for all damages incurred by the theft of freight, etc. and third parties,” and that “B shall pay to Company A in cash within 15 days from the date of notice,” and that the air freight transport contract entered into between Company B and Company C provides that “A shall compensate for all damages incurred by the theft of freight, etc..; the amount of compensation shall be calculated and notified in writing, and the Company B shall pay in cash within 15 days from the date of notice,” on the back of the air waybill bill issued by Company B and consignee B as the corporation, “A shall raise an objection in writing by the carrier by the person entitled to receive the cargo from the date of the issuance or acceptance of the air waybill,” provided that “A may not exercise the right to claim against the carrier in writing within the limit of 120 days from the date of the issuance or acceptance of the cargo,” provided that “A shall not exercise the right to claim for part of the air freight transport contract.”

[1] Where an export-import sales contract entered into with the buyer as the consignee to deliver the goods by entrusting them to the air freight forwarder on condition that the goods are to be delivered, barring any special circumstance, the seller takes delivery of the goods to the buyer when the buyer acquired the right to claim the delivery of the goods to the carrier upon arrival of the goods at the destination, and the buyer takes delivery of the goods from the buyer. In this case, the seller cannot be deemed to have no economic interest including the expected profit as to the delivery of the goods which are the subject of the contract of carriage to the other party without prejudice to the destination, and thus, there is no insurable interest in the insurance contract entered into between the seller and the insurance company.

[2] If Gap corporation entered into an export contract with Eul corporation, including freight and insurance premium, under the condition that Eul corporation and Eul corporation are located, and sent Byung corporation documents stating that "the stolen cargo would have no possibility of recovery," after three days thereafter, Byung corporation shall compensate for all losses of Gap corporation and third party. The contract of carriage concluded by Byung corporation shall be calculated and notified in writing and Byung corporation shall pay Gap corporation in cash within 15 days from the date of notification, and the contract of carriage of the air waybill issued by Byung corporation as consignee and consignee shall not be executed within the meaning of "the terms and conditions of carriage of the air waybill" which are "the owner of Gap corporation and consignee who did not have the right to claim delivery of the cargo within the meaning of 10 days from the date of arrival of the contract of carriage of the air waybill issued by Byung corporation and consignee as consignee Gap corporation," and shall not be done within the meaning of 10 days from the date of arrival of the contract of carriage of the cargo."

[1] Article 18(1) of the Civil Act; Articles 693, 698, and 918 of the Commercial Act; Article 13(1) of the Convention on the Unification of Certain Rules for International Carriage by Air / [2] Articles 1, 11(1), 12(1), (4), and 13 of the Convention on the Unification of Certain Rules for International Carriage by Air; Article 105 of the Civil Act

[1] Supreme Court Decision 98Do2526 Decided November 10, 1998 (Gong1998Ha, 2903) Supreme Court Decision 201Da99061 Decided March 29, 2012

Korea Non-Life Insurance Co., Ltd. (Attorneys Kim Hong-Gyeong et al., Counsel for the defendant-appellant)

B. Vi. S. P. S. P. P. (Law Firm Jeong, Attorney Park Gyeong-sung, Counsel for the defendant-appellant)

Seoul Southern District Court Decision 2016Na63352 decided May 26, 2017

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Case summary

A. The Plaintiff entered into a maritime cargo insurance contract (hereinafter “instant insurance contract”) with the ELE Co., Ltd. (hereinafter “ELE”) with respect to all products, the insured period of which was from April 1, 2015 to April 1, 2016, where an insured event, such as the loss or damage, occurred with respect to all products, which are transported by ELE upon entering into a transportation contract.

B. ELI entered into a contract for selling 2,50 smartphones (hereinafter “the export contract of this case”) with LIIE under the terms of Creriage and Inc. Pa, CIP, including freight and insurance premium.

C. (1) On January 1, 2015, ELE entered into an air freight transport contract (hereinafter “instant transport contract”) with the Defendant to transport the goods designated by the Defendant on consignment, and on April 17, 2015, entrusted the Defendant with the transport of 2,50 smartphones under the instant export contract (hereinafter “instant smartphone”).

Article 5 (Indemnification, etc.) of the Transport Contract of this case is as follows. The Defendant shall compensate for all damages arising in connection with the performance of transport business, including damages arising from the theft, loss, damage, delay, etc. of cargo, and third parties, such as personal and material damage. The amount of damages shall be calculated by the reasonable method and notified to the Defendant in writing, and the Defendant shall pay the full amount to the ELD within 15 days from the date of notification to the Defendant.

(2) On April 18, 2015, the Defendant, while shipping the instant smartphone into Asia or aircraft, issued the air waybill with the consignor LWC and the consignee as LWC. The content of the terms and conditions on the back of the air waybill of this case (hereinafter “instant terms and conditions”) is as follows. A written objection shall be raised against the carrier by the person entitled to receive cargo if the cargo is destroyed, damaged, or delayed. If the cargo is not delivered within 120 days from the date on which the air waybill was issued, or if the air waybill is not issued, the carrier shall raise an objection within 120 days from the date on which the air waybill was taken over for the carriage. If an objection is not raised in writing within the said period, the carrier may not file a lawsuit against the carrier.

D. The instant smartphone, starting from the Incheon International Airport on April 18, 2015, entered the Incheon International Airport as a Asian or aircraft, and entered into the warehouse on April 19, 2015, and then entered into the warehouse. On April 20, 2015, the instant smartphone was stolen in which the truck engineer was placed in the parking lot at the time of locking the truck and carried the truck onto the truck on a truck (hereinafter “instant theft”). Of the instant smartphone, 300 out of the instant smartphones were recovered and returned to El electronic, and the remainder 2,200 were not recovered.

E. On April 23, 2015, ELE sent to the Defendant a written statement stating that “The Defendant was subject to the instant theft accident on April 20, 2015 while transporting the instant smartphone, which is exported to ELE, with the Defendant’s request for carriage of the instant smartphone. It appears that the stolen freight is unlikely to be recovered, and the Defendant is liable for damages due to the nonperformance of the contract regarding the instant theft accident. Accordingly, the Defendant is liable for damages corresponding to the amount of the commercial invoice.” The Defendant received it.

F. According to the export contract of this case, ELE supplied an alternative mobile phone in the same specifications, and the Plaintiff paid insurance proceeds to ELE in accordance with the insurance contract of this case.

2. The judgment of the court below

A. The terms and conditions of this case including freight and insurance premium are merely setting forth the principle of cost or risk burden between the parties to the export and import sales contract, and the insurance contract can be freely concluded by the insurer and the policyholder’s will, insofar as there are insurable interests. The insurance contract of this case is insurable interests of the insurance contract of this case where damage is to be incurred due to theft, etc. while the smartphone is being transported. Since the seller, who is the insured, has economic interests including desired interests, the insurance contract of this case is valid. Accordingly, by paying insurance money equivalent to the amount of damage for smartphones due to the theft of this case, the Plaintiff acquired the claim for damages against the Defendant of ELB pursuant to the insurer’s subrogation doctrine, the Defendant is liable to pay damages to the Plaintiff.

B. In light of the fact that the ELE is the only party with the authority to claim damages against the Defendant in a contract of carriage with the Defendant and pay the damages therefrom, it is reasonable to interpret that the ELE constitutes a person who is entitled to file an objection in writing with the Defendant pursuant to the provisions of the terms and conditions of this case. Therefore, the Defendant’s main safety defense that the Defendant cannot file a lawsuit against the Defendant, the carrier, according to the non-establishment agreement of the air waybill clause of this case, is groundless

3. Judgment of the Supreme Court

A. Where a contract of export and import sales was concluded, on condition that the buyer is the consignee, to deliver the goods by the method of entrusting the delivery of the goods to the air carrier, barring any special circumstance, the seller takes delivery of the goods from the seller when the goods arrive at the place of destination and the buyer acquires a claim for delivery of the goods to the carrier, and the ownership thereof is transferred to the buyer (see Supreme Court Decision 98Do2526, Nov. 10, 1998, etc.). In this case, the seller cannot be deemed to have no economic benefits including the expected profit as to the delivery of the goods, which are the subject of the contract of carriage, to the other party, without any damage to the destination. Thus, there is no insurable interest in the insurance contract concluded between the seller and the insurance company (see Supreme Court Decision 2011Da99061, Mar. 29, 2012, etc.).

(b) With respect to legal relations concerning international carriage by air which are parties to the Montreal Convention on the Unification of Certain Rules Relating to International Carriage by Air (hereinafter referred to as the “ Montreal Convention”), the Montreal Convention shall prevail over the Civil Code or the Commercial Code.

According to Article 12(1) and (4) of the Montreal Convention, the consignor has the right to dispose of the cargo by recovering the cargo at the airport or air port of departure, by attracting the cargo at the time of arrival, by demanding a person other than the first designated consignee to deliver the cargo at the destination or during the course of carriage, or by returning the cargo to the departure airport, on condition that he/she is liable for the performance of all obligations under the carriage contract, and by demanding that the consignee dispose of the cargo at the departure airport or air port of destination, by requesting a person other than the first designated consignee to deliver the cargo at the destination or during the course of carriage, and (2) the consignee’s right to be granted to the consignor is extinguished at the time of occurrence of the consignee’s right in accordance with Article 13 of the Montreal Convention, except in cases where the consignor exercises his/her right in accordance with Article 12 of the Montreal Convention. (2) Unless otherwise agreed, the consignee has the right to demand delivery of the cargo upon arrival of the cargo at the destination, and (3) unless the carrier fails to arrive after seven days after the arrival of the cargo.

In full view of the structure and contents of the above provisions, when the carrier loses the cargo or fails to arrive of the cargo in air transport, the consignee is entitled to exercise the right arising from the carriage contract against the carrier and the right granted to the consignor is extinguished at the time of the consignee’s occurrence. Thus, in the event the cargo is lost or damaged under the terms and conditions of this case, “the person who has the right to receive delivery” that can raise an objection in writing to the carrier within a certain period of time should be deemed to mean the consignee unless the consignor exercises the right to disposition as provided in Article 12(1) of the Montreal Convention during carriage.

C. We examine the judgment of the court below in light of the above legal principles.

First of all, since the instant smartphone exported by ELB was lost during transport prior to arrival at the place of destination and was not delivered to the buyer, it did not have acquired ownership as the buyer. ELB, a seller, has economic benefits to properly carry out the instant export contract for the implementation of the instant export contract, the insured interest of the instant insurance contract cannot be deemed null and void. Therefore, as alleged in the grounds of appeal, the lower court did not err in its judgment by misapprehending the legal doctrine on trade conditions and cargo insurance, exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or failing to exhaust all necessary deliberations, etc.

Next, barring any other special circumstance, the “person entitled to receive delivery” stipulated in the terms and conditions of this case is a consignee, and thus, the court below erred in holding that the Defendant is entitled to raise an objection in writing to the Defendant pursuant to the terms and conditions of this case. However, the effect of the terms and conditions of this case shall be deemed null and void to the extent contrary to the provisions of Article 5 of the contract of this case. Thus, inasmuch as ELE sent the Defendant a written claim for damages arising from nonperformance of the contract of this case in accordance with the provisions of Article 5 of the contract of this case, the Defendant cannot assert the assertion of the non-assignment agreement as long as the provisions of the contract of this case are stipulated in the contract of this case. In this regard, the above judgment of the court below is not erroneous as affecting the conclusion of the judgment, and the Defendant’s appeal on this point is not accepted.

4. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Ko Young-han (Presiding Justice)