[1] Where the imported goods are oil cargo and the distance of carriage is short and the goods arrive within 2 through 3 days, whether the issuing bank which issued the letter of credit under the four prohibition clause constitutes a ground for comparative negligence for failing to confirm the arrival of the goods or their whereabouts (affirmative)

[2] Whether the issuing bank can be deemed to have consented to the delivery of the cargo not redeemed with the bill of lading solely on the ground that the letter of credit stipulated under the negative clause is issued (negative), and in such cases, whether the issuing bank is against the good faith principle to seek liability for damages against the carrier for the unauthorized delivery of the cargo as the holder

[3] Where the applicant has paid the export price or substitute payment of the credit after the L/C issuing bank acquired the bill of lading, whether the carrier may oppose the carrier on the ground that the issuing bank is a secured party or the right on the bill of lading is extinguished (negative)

[1] Articles 396 and 763 of the Civil Act, Articles 129 and 861 of the Commercial Act / [2] Articles 2 and 750 of the Civil Act, Articles 129 and 861 of the Commercial Act / [3] Article 750 of the Civil Act, Articles 129, 132, 133 and 861 of the Commercial Act

Korea Bank (Law Firm Gyeong & Yang, Attorneys Shin Young-soo et al., Counsel for the defendant-appellant)

Defendant Co., Ltd. (Attorney Jeong Byung-hee et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2005Na90348 decided Feb. 15, 2007

All appeals are dismissed. The costs of appeal are assessed against each party.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Plaintiff’s ground of appeal

The L/C stipulated under the four-day L/C clause is established in order to obtain the same effect of postponement if the importer is unable to issue the L/C at a normal time due to low credit rating. In light of the terms and conditions of the L/C clause, a special clause prohibiting the rejection of the shipping documents for a certain period of time is added to the Switzerland bill of lading at the expiration of 21 days from the date of issuance of the bill of lading. If the imported goods subject to the above L/C transaction are oil cargo and the distance from the port of loading to the port of arrival is short, and the importer arrives within 2-3 days from the port of arrival, the importer is bound to bear many expenses, such as anchorage and staying on board, if the carrier stores the oil at the port of arrival after the lapse of four-year period, and the carrier is not obliged to deliver the cargo without the bill of lading from the importer. Thus, considering the circumstance that the L/C applicant is unable to establish the L/C's duty of care to ensure the payment of the cargo after the expiration of four-day period, the L/C issuing bank is unable to present.

The court below's finding the plaintiff's negligence and offsetting negligence based on the facts as stated in its holding are acceptable in light of the above legal principles, and there is no error of law by misunderstanding legal principles as to comparative negligence as

2. As to the defendant's second ground for appeal

Contributory negligence in tort is to consider the fault of the victim in determining the amount of compensation in accordance with the principle of equity or good faith. The scope of compensation is to be set in consideration of all the circumstances such as the tortfeasor and victim's intentional or negligent degree, occurrence of illegal act, and expansion of damages. However, fact finding or determining the ratio thereof as to the reason for offsetting negligence is within the exclusive authority of a fact-finding court unless it is recognized that it is considerably unreasonable in light of the principle of equity (see Supreme Court Decisions 98Da54397, Jun. 9, 200; 2005Da11954, Feb. 28, 2008, etc.).

The court below limited the defendant's liability to 70% by taking full account of all the circumstances as stated in its reasoning. In light of the above legal principles and records, the judgment of the court below on the grounds for comparative negligence cannot be deemed to be remarkably unreasonable in light of the principle of equity, and there is no error of law by misapprehending the legal principles as to comparative negligence ratio

3. As to the Defendant’s first ground of appeal

If a carrier has issued a bill of lading in marine cargo transport, the carrier is obligated to deliver the cargo in exchange for the bill of lading to the holder of the bill of lading, and even if the issuing bank conditioned a four-off special agreement that prohibits the exporter from requesting the negotiation of shipping documents, such as the bill of lading, at the time of issuance of the letter of credit, it is a condition of payment under the letter of credit, and thus, it is only effective for the parties related to the payment of the price through the letter of credit, such as the issuing bank, importer, and exporter

Therefore, it cannot be deemed that the issuing bank accepted or accepted the delivery of the cargo not redeemed with the bill of lading, and the issuing bank's claim for damages against the carrier as the holder of the bill of lading does not violate the principle of good faith or the principle of good faith. Therefore, the judgment of the court below to the same purport is just and there is no violation of the principle of good faith as otherwise alleged in the ground of appeal.

4. As to the Defendant’s third ground of appeal

In concluding a foreign exchange transaction agreement between the applicant and the issuing bank in connection with the import transaction, the applicant stipulated that the applicant transfer the goods accompanying the transaction, such as the issuance of the letter of credit and delivery and settlement of the bill of exchange, and the relevant documents to the issuing bank as collateral for the obligation owed by the issuing bank. Accordingly, when the issuing bank pays the letter of credit to the negotiating bank and acquires the bill of lading, the issuing bank acquires the right to collateral for the shipping documents and the imported cargo. In addition, when the bill of lading is transferred, the contractual effect between the carrier and the holder of the bill of lading takes place according to the statement of the security, as well as the right to claim damages due to the loss or damage of the cargo, etc., as well as the right to claim damages due to the unlawful act is transferred to the bill of lading holder as a legitimate holder of the right represented by the bill of lading, and the issuing bank that acquired the bill of lading can exercise the right to claim damages on the bill of lading against the carrier's unauthorized delivery of the cargo. On the other hand, even if the applicant pays the export price or substitute payment to the issuing bank, the applicant cannot naturally terminate the right.

Therefore, the applicant cannot exercise the right under the bill of lading against the carrier unless the applicant obtains the right under the bill of lading from the issuing bank, and the issuing bank can still exercise the right as a legitimate holder of a complete bill of lading externally. Thus, barring special circumstances, the carrier cannot oppose the claim for damages based on the bill of lading by the legitimate holder of the bill of lading on the ground that the Plaintiff is a secured party or the Plaintiff’s right under the bill

Therefore, the judgment of the court below to the same purport is just and it is not erroneous in the misapprehension of legal principles as to rights under bill of lading.

5. Conclusion

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

Justices Park Si-hwan (Presiding Justice)