Cambodia (Law Firm Pacific, Attorneys Gangnam-gu et al., Counsel for the plaintiff-appellant)

Gaun Shipping Co., Ltd. (Law Firm Samyang, Attorneys Noh Jeong-soo et al., Counsel for the defendant-appellant)

Escopd Raz ELC

Busan District Court Order 2007Ma414 dated July 10, 2008

1. Revocation of a decision of the first instance;

2. On January 18, 2007, concerning the case of auction of vessel at this Court No. 2007, 2946, the above court's decision to commence auction of vessel on January 18, 2007 is revoked.

3. The creditor's request for auction of the ship of this case is dismissed.

4. This Court approves the stay of execution on December 22, 2008 with respect to other motion cases No. 2008.508 (Suspension of Execution)

1. Basic facts

According to the records, the following facts are recognized in this court:

A. The creditor (the other party; hereinafter referred to as the "creditor") is a domestic corporation operating the ship agency business, the appellant (the owner; hereinafter referred to as the "appellant") is the owner of the ship listed in the attached Table (hereinafter referred to as the "ship of this case"). The debtor is the time charterer of the ship of this case, and the ship of this case is the port of registry.

B. From February 28, 2006 to September 30, 2006, the creditor paid the sum of KRW 19,905,497 (hereinafter “instant navigation expenses, etc.”) such as the entrance and departure fees, anchorage fees, pilotage fees, pilotage fees, tugboat charges, towing charges, pollution response expenses, and lecture charges, etc. (hereinafter “instant navigation expenses, etc.”) to the creditors, such as Busan Port Corporation, etc., on behalf of the debtor who is the time charterer of the instant vessel under the vessel agency contract.

C. On January 17, 2007, the obligee filed an application for voluntary auction against the instant vessel by asserting that the instant port expenses, etc. are claims secured by maritime lien (hereinafter “application for voluntary auction of the instant vessel”). On January 18, 2007, the said court rendered a decision of the first instance that dismissed the appellant’s objection on July 10, 208, while the appellant filed an objection against the decision of voluntary auction of the instant vessel (hereinafter “decision of commencement of auction of the instant vessel”). On January 18, 2007, the Plaintiff filed an objection against the decision of commencement of auction of the instant vessel (hereinafter “decision of commencement of auction of the instant vessel”). However, the first instance court rendered a decision of dismissal of the appellant’s objection on July 10, 2008.

2. Claims of the parties and the gist of grounds of appeal;

A. Creditor's assertion

On the premise that the obligee’s claim, such as the instant port expenses, is a secured claim for maritime lien under the Russia Act, the obligee asserts that the obligee’s decision to commence the instant vessel auction in subrogation of the obligee’s claim, such as the instant port expenses, by paying the instant port expenses, etc. to the obligee, including Busan Port Corporation, on behalf of the obligor, was lawful.

B. Appellant's assertion

On the following grounds, the appellant asserts that the decision to commence the auction of the ship of this case should be revoked.

1) The governing law of the maritime lien on the instant vessel is a Russian corporation, which is the country of registry, and the instant claims, such as navigation expenses, are not claims secured by maritime lien under the Russia Act, and thus, the obligee is not the maritime lien holder.

2) Even if the instant claims, such as navigation expenses, are claims secured by maritime lien under the Russia Act, the obligee’s obligee’s reimbursement of the instant navigation expenses, etc. on behalf of the obligor, and at the same time the instant navigation expenses, etc. claims and maritime lien thereon are extinguished. Therefore, the obligee cannot be transferred by legal subrogation, etc., and thus, the obligee is not the maritime lien holder.

3) Even if the obligee is a maritime lien holder of the instant vessel, the obligee’s claim for reimbursement against the obligor due to subrogation, such as the instant port expenses, was extinguished by the obligor’s repayment.

3. Determination

(a) The governing law of maritime lien;

First, the governing law to determine whether the instant claims, such as the instant port expenses, constitute the secured claim of a maritime lien, the establishment of a maritime lien, whether a certain claim is secured by a maritime lien, and the scope of the subject matter of a maritime lien under Article 60 Subparag. 1 of the Act on Private International Law (see, e.g., Supreme Court Decision 2005Da39617, Jul. 12, 2007). As seen earlier, the fact that the country of registry of the instant vessel is a child is determined by the Russian law, and therefore, whether the instant claims, such as the instant port expenses, constitute the secured claim of a maritime lien ought to be determined by the Russian law.

B. Whether claims, such as the instant port expenses, are claims secured by maritime lien under the Russia Act

1) According to the records, on March 4, 1999, Russia subscribed to the 1993 International Convention on Maritime Lien and Mortgages (193, Convention on 1993, hereinafter “193 Convention”). The 1993 Convention can be acknowledged as having entered into force on September 5, 2004.

On the other hand, according to Article 15 of the Russian Constitution, the international convention, a Contracting State of Russia, is a part of the Russian legal system, and the provisions of the international convention should be applied when the provisions of the international convention are different from or contradictory to the laws of Russia. Thus, the 1993 Convention takes precedence over Article 367 of the Russian Code, which provides for maritime lien.

Ultimately, whether a claim, such as the instant port expenses, becomes a secured claim for a maritime lien under the Russia Act ought to be determined depending on whether a claim, such as the instant port expenses, is determined as a secured claim for a maritime lien under the 1993 Convention.

2) Therefore, as to whether the instant navigation expenses, etc. claims are claims secured by maritime lien under the 1993 Convention, and the instant navigation expenses, etc. claims against the obligor, the time charterer, are claims against the obligor, the time charterer, and thus, whether the claims against the time charterer are included in the claims secured by maritime lien under the 1993 Convention.

Article 4 of the 1993 Convention provides for claims secured by a maritime lien, and Article 4 provides that claims against shipowner, shipowner, shipowner, manager, and operator shall be secured by a maritime lien (Article 3).

Article 7 of the 1967 International Convention on Maritime Lien and Mortgage (hereinafter “the 1967 Convention”) provides for the following circumstances, i.e., “the 1967 Convention on Maritime Lien and Mortgage,” provides that “the 196-year period for the establishment of the 1967 Convention on Maritime Lien and the 1967 Convention on Maritime Lien shall be deemed as the debtor of the claims arising from maritime lien,” “the 196-year period for the establishment of the 197 Convention on Maritime Lien and the 196-year period for the establishment of the 197 Convention on Maritime Lien.” The 1993 Convention provides that “the 9-year period for the establishment of the 196-year period for maritime lien and the 197-year period for the establishment of the 196-year period for maritime lien shall be excluded from the scope of the 196-year period for the establishment of the 196-year period for maritime lien.”

Therefore, the obligee’s assertion on the premise that the claim, such as the instant port expenses, is the secured claim for maritime lien under the Russia Act is without merit (On the other hand, as long as the appellant’s assertion is accepted, the appellant’s other assertion should not be separately determined).

4. Conclusion

Therefore, the appellant's objection is justified, and the decision of the court of first instance is unfair, so it is revoked, and the court of this case has cancelled the decision to commence the auction of the ship of this case as of January 18, 2007 with respect to the ship of this case, and the creditor has dismissed the application for auction of the ship of this case, and the court of this case has decided to authorize the stay of execution as of December 22, 2008 with respect to other cases of application for the suspension of execution as of December 22, 2008.

[Attachment Form Omission of Display of Ships]

Judges Jeon Ho-ho (Presiding Judge)

Note 1) The phrase “gregment fee” stated in the instant application for auction, etc. appears to be a clerical error in the “Greging room fee (hereinafter “Greging room fee,line hingarge, and work fee connected to the wharf when a ship enters a wharf, which connects the wire line to the wharf).”

Note 2) The term “ship lessee” or “Na charterer” is also called “ship lessee.”

Note 3) 4 - The publication of the public order 4- The Each 1. Eachation 1. Eacher ner, defis chier,manger or operator ner: a marime life hall

4) 71. The publication of the public notice of Articles 71. 4. Marri liens in the public notice of Articles 4.1. 3. 9. 3. 9. 9. 1. 3. 9. 1. 1. 3. 1. 3. 3. 4. 1. 1. 3. 4. 1. 1. 3. 3. 4. 4