Esther Marguerita v. Majestic Blue Fisheries

Esther Marguerita Lima Suarez de VDA de Yang, individually and as personal representative of the estate of Chang Cheol Yang, deceased, and on behalf Ji Hea Yang Lima, minor child, joined by Brandon Cheol Young Lima and Camila Romina Yang Lima, children and former dependent of deceased v. Majestic Blue Fisheries, LLC, KCAB Case No. 19113-0013
Type d'affaire :
Arbitrage commercial
Date d'introduction :
25 mars 2019
Statut de l'affaire :
Achevée (autre que ISDS)
Pays d'origine de l'investisseur :
Pérou
Pays d'origine du défendeur:
États-Unis
Institution:
KCAB (Conseil d'arbitrage commercial de Corée)
Siège de l’arbitrage :
Séoul

Documents de l'affaire

Kyung Han Sohn Co-Arbitre
Young Seok Lee Co-Arbitre
Sung Won Kwon Co-Arbitre

Avocats, autres représentants, expert(s), secrétaire du tribunal

Final Award

I. THE PARTIES

1. Claimants

[1].
Claimants are the family members of the deceased Mr. Chang Cheol Yang (hereinafter "Mr. Yang") who was a national of Republic of Korea (hereinafter "Korea"). Among Claimants, Mrs. Esther Margarita Lima Suarez Vda de Yang (hereinafter "Mrs. Yang") is the spouse of Mr. Yang and Ji Hea Yang Lima, Brandon Cheol Yang Lima, and Camila Romina Yang Lima are the children of Mr. Yang. Mrs. Yang, as the parent, represents Ji Hea Yang Lima who is a minor in this case. Mr. Yang perished on board the Vessel, to be defined below, by a marine accident in June 2010.

2. Respondent

[2].
Respondent is a Delaware limited liability company and at all relevant times was the record owner of a U.S. flagged purse seiner fishing vessel, Majestic Blue (hereinafter "F/V Majestic Blue" or the "Vessel"). Respondent delegated to Dongwon Industries Co., Ltd. (hereinafter "Dongwon"), a Korean corporation, full authority to act for and on its behalf and to manage crew manning and maintenance of the Vessel. On or about May 2008, Respondent and Dongwon entered into two service contracts: (1) "a Ship’s Maintenance, Supply and Insurance Service Agreement" for Dongwon to arrange and supervise dry docking and repairs, maintain the Vessel, and supply equipment and parts upon the Respondent’s request; and (2) "a Crew Manning Agreement" for Dongwon to supply the crew to man the Vessel. Based upon the foregoing, the Tribunal finds that Dongwon was the operator and de facto owner of the Vessel.

II. DETERMINATION OF THE RELEVANT FACTS

[3].
The Tribunal reviewed the Parties’ contentions made and evidence submitted in this proceeding and determines the relevant facts of the case as follows:

1. Execution of the Employment Agreement

[4].
On March 23, 2010, Mr. Yang executed the Contract for Employment as Crew Member with Respondent to serve as the Chief Engineer on board the Vessel for a term of eighteen (18) months (hereinafter the "Employment Agreement"). Dongwon signed the Employment Agreement with Mr. Yang as the Respondent’s representative.
[5].
Pursuant to Clauses 9.2 and 9.3 of the Employment Agreement, Mr. Yang’s wage consisted of "Monthly Cash Advance: Korean Won equivalent to US Dollars 1,963,000." and "Catch Allowance: Standard: USD 15.5". All Korean crew of the Vessel including Mr. Yang were paid catch allowance, a percentage of the catch of fish.
[6].
As to the governing law and dispute resolution of the Employment Agreement, Paragraph 8 of the Employment Agreement provides as follows:

"8. Arbitration/Choice of Law.

It is specifically agreed that any and all disputes or claims of any nature arising out of, or relating to, this employment agreement or the employee’s employment aboard this Vessel shall be subject to mandatory binding arbitration. Any such arbitration shall occur in, and be subject to the rules of arbitration of, the country of the Crew Member’s nationality as established by his/her current passport. It is intended that this arbitration clause be construed broadly to incorporate any and all claims that can conceivably be arbitrated, including claims for death, personal injury, wages, discrimination, or harassment. Any claims subject to this clause will be governed by the substantive law of the country of the crew member’s nationality.

Any and all claims or lawsuits of any nature arising out of, or relating to, this employment agreement or the employee’s employment aboard this Vessel shall be brought within six (6) months’ time. This provision is intended to be all inclusive and includes claims for wages, personal injury, death, discrimination, harassment, or any such claims that employee may have arising out of, or related to, his employment and this employment agreement."

2. History of the Vessel’s Repair

[7].
Respondent purchased the Vessel, which was built in 1972 in Gijon, Spain, from Dongwon at the price of US$10.00 in April 2008. Based on her age, the Vessel was subject to a biannual dry dock schedule. After completion of the Vessel’s biannual dry dock repair on May 2, 2008, at the Port of Subic Bay in the Philippines, she had gone through a dry dock repair at the Longshan Shipyard, China from March 2010. Dongwon initially anticipated that the repair would take about 23 days, but the repair actually took 40 days because additional repairs were necessary. The additional repairs included whole plate renewal as well as renewal of the plates inside the tank. The Vessel had to leave the shipyard because it had to make room for another ship even though the scheduled repairs were not complete. The Vessel departed China for Guam on May 7, 2010 and arrived at Guam port on May 13, 2010. There, several more repairs to the Vessel including welding work were underwent while it was afloat.
[8].
From May 17 to May 20, 2010, the Coast Guard in Guam conducted a dockside examination and found that the rudder packing gland of the watertight door by the steering room was leaking excessively and this leaking problem was not corrected before the Vessel left Guam for fishing site. Mr. David Hill (hereinafter "Captain Hill"), the Captain of the Vessel, was ordered by the US Coast Guard to personally monitor the rudder shaft packing gland on a daily basis as part of his daily noon reports. The noon report dated of May 24, 2010 stated that the rudder packing was still leaking.

3. The Marine Accident and the Cause Thereof

[9].
On May 21, 2010, the Vessel started sailing from Guam to fish tuna and a total of twenty-three (23) crewmembers including Captain Hill and Mr. Yang and one (1) observer were onboard the Vessel. On June 14, 2010, the Vessel sank in the West Pacific Ocean and both Mr. Yang and Captain Hill died (hereinafter the "Marine Accident"), but 22 persons other than Captain Hill and Mr. Yang were rescued. The watertight door to the steering gear room was left open at the onset of the Marine Accident.
[10].
At around 13:30 on the day when the Marine Accident happened, the steering machine suddenly stopped accompanied with a steering trouble alarm. It was confirmed through the CCTV located in the steering gear room that there was a leakage of water in the steering gear room. The second engineer who had been working in that area about ten minutes before the steering gear alarm came on found that a lot of sea water was flowing in the steering gear room and six (6) rudder posts were damaged, however he does not appear to have attempted to close the watertight door before other crew members came. The crewmembers tried to take measures to stop seawater from ingressing inside the Vessel from the steering gear room through the tunnel to the engine room, however their attempts failed. Subsequently the Vessel was abandoned and twenty-two (22) crews got onboard the skiff and were rescued. However, Mr. Yang and Captain Hill remained in the Vessel and went down with the Vessel.
[11].
As we will have seen below, the Guam court found that the excessive leaking of the packing gland was not resolved before the Vessel left Guam, it was the reason for the water ingress into the steering gear room, and its failure was a contributing factor in the sinking of the ship. With respect to the cause of the Marine Accident, the Guam court concluded that the Vessel was unseaworthy and Respondent and Dongwon had knowledge of the condition based on the following factors.
[12].
First, despite the repairs to the Vessel during its dry docking at a shipyard in China and while afloat in Guam, the Vessel was in bad condition so additional welds were required for meeting ABS standards for ships and the Vessel and the rudder packing gland’s excessive leakage was not resolved and even got worse at sea. Secondly, the crewmembers onboard were neither trained in safety procedures nor directed to keep the watertight doors closed below sea level at all times except when being used. They also had communication problems in English. Thirdly, as seen earlier, the second engineer’s failure to initially close the watertight door immediately after his inspection of the steering gear room, his subsequent failure to close the watertight door when he heard the alarm, and failure to close the other watertight door in-between the entrance to the engine room and the shaft alley were some of the contributing factors to the sinking of the Vessel. Fourthly, Captain Hill was a mere figurehead-a ship master with no authority.
[13].
As a result of our taking into consideration all evidences submitted, the Tribunal has reached the same conclusion as the Guam Court. In our view, the Vessel was in bad and unseaworthy condition, which caused the Marine Accident and Respondent knew or could have known the aforementioned facts before or when the Vessel left Guam.

4. The 2010 Settlement Agreement

[14].
On or about June 17, 2010, Mrs. Yang was informed of Mr. Yang’s death and was requested to travel to Korea with her children if she wanted to claim the benefits that were related to the death of Mr. Yang. On or about July 12, 2010, Mrs. Yang and her children arrived in Pusan, Korea and met with one (1) of the survivors of the Vessel and a representative of Respondent. Mrs. Yang was asked to sign a settlement agreement being told that the amount the representative offered was, in their words, fair and just. However, despite her asking for explanation, Respondent did not provide her with an explanation as to how the Vessel had sunk and information about any life insurance that Mr. Yang may have had. Between July 19 and 22, 2010, the representative of Respondent had discussed the documents required for settlement with Mrs. Yang. On July 23, 2010, Mrs. Yang entered into an out-of-court settlement agreement with Respondent, agreeing to receive KRW 230,846,227, which was equivalent to US$191,214.00 (hereinafter the "2010 Settlement Agreement"). Only afterwards, Mrs. Yang and the children could travel to Jeju Island, Korea to attend Mr. Yang’s burial ceremony. Mrs. Yang’s statement seemed to be true that she had received no formal education beyond secondary school and had no chance to consult with lawyers before signing the settlement agreement.

5. Litigations in the US and the Dongwon Settlement Agreement

[15].
On December 9, 2010, the Respondent filed a complaint with the District Court of Guam (hereinafter "Guam Court", Civil Case No. 10-00032) to limit its liability seeking a court order granting its limitation of liability under 46 U.S.C.A. 30505 for all damages occasioned by the Marine Accident. However, on July 25, 2014, the Guam Court rendered a decision that the Vessel was not seaworthy when it sailed from Guam on her final voyage on May 21, 2010, and Respondent knew constructively and actually all unseaworthy conditions of the Vessel, which caused and resulted in the Marine Accident and, therefore, Respondent was not eligible to limit its liability under the Limitations Act of the US.
[16].
On June 11, 2013, Claimants filed a Complaint against Respondent and Dongwon for: (i) Survival Action for Negligence for Pre-Death Pain and Suffering Under the Jones Act; (ii) Wrongful Death Under the General Maritime Law of the US; (iii) Wrongful Death Under the Death on the High Seas Act (hereinafter the "DOHSA"); and (iv) Wrongful Death Under the Jones Act. On November 2, 2013, Dongwon filed its Motion to Dismiss and Compel Arbitration and Respondent filed its joinder to Dongwon’s Motion on August 25, 2014. On August 24, 2015, the Guam Court ordered arbitration of the dispute between Claimants and Respondent, finding that there was a valid arbitration agreement between them which meets the requirements of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. However, the Guam Court denied Dongwon’s Motion.
[17].
In the litigation between Claimants and Dongwon, they negotiated for a settlement and entered into the Settlement Agreement in December 2018 (hereinafter the "Dongwon SettlementAgreement") in the amount of US$1.5 million. On November 12, 2018, Claimants filed the Notice of Settlement with Dongwon with the Guam Court, and on January 11, 2019, Claimants filed for entry of an order to approve the Dongwon Settlement Agreement.

III. THE PROCEDURE OF THE ARBITRATION PROCEEDINGS

1. Request for Arbitration

[18].
On March 25, 2019, Claimants filed the Request for Arbitration with the Korean Commercial Arbitration Board (hereinafter the "KCAB"). Claimants claimed that due to Respondent’s negligence in maintaining and/or operating and/or managing and/or crewing the Vessel, the Vessel was unseaworthy at the time of the Marine Accident and resulted in Mr. Yang’s death. Claimants suffered and will suffer in the future: loss of earning of Mr. Yang and loss of support and services of Mr. Yang; loss of nurture, guidance, care, and instruction; and loss of inheritance. Thus, Claimants are entitled to claim for compensations based on the cause of actions in US laws. Their requested award is summarized as follows:

(1) Declaring that Respondent breached its obligations to provide Mr. Yang with a seaworthy vessel;

(2) Ordering Respondent to pay Claimants all compensatory damages, including loss of future earnings, direct loss and damages in the actual disbursement, pre-death pain and suffering, pre-judgment interest as permitted, attorney’s fees as permitted, costs as permitted, arbitration costs as permitted, and any other relief that the Tribunal deems proper; and

(3) Ordering Respondent to pay Claimants interest on any amount awarded to Claimants at the rate of 15% per annum, from the day following the service of this Request for Arbitration until final payment of any awarded amount.

[19].
In response to the Request for Arbitration, Respondent submitted the Answer demanding for dismissal of the Claimants’ request based on irrelevancy of the US law, the Dongwon Settlement Agreement and the 2010 Settlement Agreement.

2. Case Management Conference and Pleadings

[20].
On November 18, 2019, the case management conference among the Parties and the Tribunal was held via telephone conference to discuss procedural matters and to set a timetable for the Case. On November 25, 2019, the Tribunal issued the Procedural Order No. 1, setting out the timetable and the procedural matters for the case including the place of arbitration, rules of arbitration procedure and the arbitration language. Prior to the evidentiary hearing, the Parties exchanged briefs and submitted evidence to support their arguments. The Parties also produced the documents as ordered by the Tribunal.

3. Evidentiary Hearing and Post-Hearing Submissions

[21].
An evidentiary hearing was held via videoconferencing on April 21, 2020. On April 28, 2020, the Tribunal issued the Procedural Order No. 2, setting out the date for simultaneous submissions by Claimants and Respondent of the post-hearing briefs as May 19, 2020, and the date for making cost submission as June 2, 2020, respectively.
[22].
On May 18, 2020, the Tribunal issued the Procedural Order No. 3 by which it extended the deadline for the post-hearing briefs by May 26, 2020 and the deadline for cost submission by June 9, 2020, respectively. After the hearing, Claimants clarified that the causes of action of Claimants are breach of the Employment Agreement and/or tort for Mr. Yang’s wrongful death under Korean law, and/or tort liability for Mr. Yang’s wrongful death under US law. Afterwards, on May 26, 2020, Claimants submitted its final supplementary brief together with the Master Statements of Claim while the Respondent filed its final supplementary brief on the same day.
[23].
The Tribunal declared the closure of the proceedings on July 1, 2020.

IV. DETERMINATION OF THE GOVERNING LAWS

1. Choice of Law Rules and the Issues of Which Governing Laws Shall Be Determined

[24].
Prior to discussing whether Respondent is liable for the alleged damages, the Tribunal first considers which law shall be the governing laws over the following various legal issues that the parties raised in this arbitral proceeding:

(i) The existence and extent of Respondent’s liability to the death of Mr. Yang;

(ii) Validity of the 2010 Settlement Agreement;

(iii) Inheritance of Mr. Yang’s estate due to his death;

(iv) Legal effect of the Dongwon Settlement Agreement and its impact on Respondent’s liability; and

(v) The existence and scope of Respondent’s obligation to reimburse the attorneys’ fees and legal costs incurred by Claimants in the United States, if any.

[25].
In determining appropriate substantive laws or rules of law on the above issues, the Tribunal refers to the detailed provisions of the Korean Private International Law Act (hereinafter the "KPILA") and the legal theories of conflict of laws rule thereunder, as the seat of this arbitration is Seoul, the Republic of Korea. Further, the Tribunal also refers to the Korean Arbitration Act (hereinafter the "KAA") and the KCAB International Arbitration Rules (hereinafter the "KCAB Rules").
[26].
As to the principle of party autonomy and the basic principle in choice of law rules, Article 29 of the KAA provides as follows:

(1) The arbitral tribunal shall decide the dispute in accordance with such rules chosen by the parties. Any designation of the law or legal system of a given state shall be construed, unless otherwise expressed, as referring to the substantive law of that state and not to its conflict of laws rules.

(2) Failing the designation referred to in paragraph (1), the arbitral tribunal shall apply the law of the state which it considers having the closest connection with the subject-matter of the dispute.

[27].
Also, Article 25(1) of the KPILA provides as follows:

A contract shall be governed by the law which the parties choose explicitly or implicitly: provided, that the implicit choice shall be limited to the case which the implicit choice can be reasonably recognized by the terms and conditions of the contract and all other circumstances.

[28].
Further, Article 29(1) of the KCAB Rules refers as follows:

The parties shall be free to agree upon the substantive laws or rules of law to be applied by the Arbitral Tribunal to the merits of the dispute. In the absence of any such agreement, the Arbitral Tribunal shall apply the substantive laws or rules of law which it deems appropriate.

[29].
Below are determinations of the governing laws of the above legal issues that the Tribunal deems appropriate under the choice of law rules as mentioned above.

2. Governing Laws of the Liabilities for the Alleged Mr. Yang’s Wrongful Death

a. Governing Law of the Breach of the Employment Agreement

[30].
As seen above, Article 8 of the Employment Agreement sets forth that "any claims subject to this clause will be governed by the substantive law of the country of the crew member’s nationality" and Mr. Yang having Korean nationality was in no dispute. Under these circumstances and in consideration of Article 29 of the KAA, Article 25(1) of the KPILA and Article 29(1) of the KCAB Rules as mentioned above, the Tribunal unanimously holds that the governing law over any claims inclusive of Respondent’s liability to Mr. Yang’s death arising out of the Employment Agreement shall be Korean law.1

b. Governing Law of Tort Liability

[31].
Claimants also resort to a tort claim against Respondent and insisted that their tort claim shall be subject to US law. Thus, the Tribunal examines the governing law of tort liabilities in respect to the Marine Accident of this case.
[32].
Article 32(1) and Article 32(3) of the KPILA provide for the governing law of a tort as follows:

(1) A tort shall be governed by the law of the place where it occurred.

(3) In case the legal relations existing between the tortfeasor and the injured party are infringed by the tort, the applicable law of such legal relations shall govern irrespective of the provisions of paragraphs (1) and (2).

[33].
From this provision, it is clear that the law of the place where the tort was committed (lex loci delicti commissi) shall be the governing law of the tort in question. However, a question arises what the term of "place of tort" means in the event that the place of a tortious act and the place where the tortious act results in damage or loss does not happen at the same place like in this case. In the Tribunal’s view, if Mr. Yang’s death was caused by the fault of Respondent constituting tort, the tort took place in the US territory based on the following factors; Guam was the home port of the Vessel; the Vessel is admitted to have departed from Guam in an unseaworthy condition; the location where Mr. Yang died is not far from Guam; Respondent was incorporated in the United States; and the Vessel was registered with the United States and flew the US flag. Considering these factors, the Tribunal finds that US law is the governing law on tort pursuant to Article 32(1) of the KPILA.
[34].
Notwithstanding the foregoing, the Tribunal understands that there was a contractual relationship, i.e., the Employment Agreement, between Mr. Yang and Respondent, and that Respondent’s failure to provide a seaworthy vessel to Mr. Yang also constitutes a breach of the shipowners’ duty of providing a safe vessel under the contract. The Tribunal finds that this is where the legal relations existing between the tortfeasor and the victim are infringed by the alleged tort, and therefore that pursuant to Article 32(3) of the KPILA, Korean law by which the Employment Agreement is governed shall be the governing law of the tort as well.

c. Overview of Substantive Korean Laws on Liability to Seafarers’ Injury or Death

[35].
Under Korean law, breach of a contract can be the basis of a contractual claim as well as a tort claim when the breach of a contract satisfies the legal requirements for tort. In a contractual claim, it is sufficient for the claimant to prove that the defendant breached any terms of the contract indicating specific facts of breach of the contract, and then the defendant may defend the claim by proving that any loss or damage was not caused by its fault.2 By contrast, in a tort claim, the burden of proof is on the person who raised the claim. In other words, the claimant must successfully show that the tortfeasor caused the damage intentionally or negligently and his or her act is deemed illegal. In this context, burden of proof in a tort claim is generally more onerous than that in a contractual claim
[36].
The Korean Seafarers’ Act imposes on shipowners who enter into an employment agreement with a seafarer the duty of care for safety of the seafarer. Under Korean law, the shipowners’ duty to provide a seaworthy vessel is included within the said duty of care for safety of seafarers.
[37].
Korean law on damages payable in a person’s injury or death case is well established. The injured person or the bereaved family in the case of death is entitled to three kinds of damages, i.e., "passive loss" which means loss of earning, "active loss" which means expenditure spent by the victim due to the tort, and "compensation for pain and suffering" which means consolation money. Each of the three kinds of claims are regarded to constitute a separate cause of action.3 The claim of compensation for pain and suffering is accepted without examining whether the deceased had actually felt the pain and suffering when he or she died.4
[38].
Under Korean law, the bereaved family members inherit all claims of the deceased including damages for the pain and suffering, and have the claims of damages for their own "pain and suffering" separately.5

d. Whether the DOHSA, the Jones Act, and General Maritime Law of the US shall Mandatorily Apply to the Claims

[39].
Despite the choice of law clause of the Employment Agreement, Claimants assert that the DOHSA, the Jones Act, and the General Maritime Law of the United States shall apply to this case as mandatory provisions, pursuant to Article 28(1) of the KPILA. Thus, the Tribunal examines whether Claimants’ assertion is accepted.

(1) The KPILA Provisions on Application of Mandatory Rules

[40].
Article 28(2) of the KPILA provides as to the governing law of employment agreements as follows:

(2) In case the parties do not choose the applicable law, irrespective of the provisions of Article 26, the employment agreement concerned shall be governed by the law of the country where the employee habitually provides his/her service. In case the employee does not habitually provide his/her service within one country, the law of the country, where the business office of the employer who hires the employee is located, shall govern.

[41].
Furthermore, Article 28(1) of the KPILA provides for the application of mandatory provisions concerning the protection of employees as follows:

(1) In case of an employment agreement, even if the parties choose the applicable law, the protection, given to the employee under the mandatory provisions of the country of the applicable laws designated under paragraph (2), shall not be deprived.

[42].
The mandatory provisions of the above Paragraph refer to statutory provisions that cannot be varied and derogated from by agreement between the parties. It is understood that the governing law agreed upon by the parties still applies to the other relationships between the parties other than the area in which the mandatory provisions for the protection of employees applies.

(2) Whether the Mandatory Rules of the US Apply to This Case

[43].
In this case, it is first necessary to determine whether there was a country in which Mr. Yang habitually provided his services, or, if Mr. Yang did not provide his services in any one country, a business place where Respondent employed Mr. Yang.
[44].
Although Mr. Yang worked as the Vessel's crew member, it is difficult to specify the country where Mr. Yang habitually provided his labor, as the Vessel had been fishing in and out of various countries, including the high seas, without operating in a particular country. On the other hand, it can be determined that the business office where the Respondent hired Mr. Yang was located in Guam. Therefore, the mandatory provisions of the law of the United States, which includes the territory of Guam, where Respondent employed Mr. Yang, apply for the protection of Mr. Yang. Even with the view that law of the country where the employee habitually provides his service is deemed to be the law of the country of ship registry, US law applies for protection of Mr. Yang, since the Vessel’s registry was the United States. For this reason, the Tribunal agrees that the mandatory provisions of US law shall be applied to this case.

(3) Mandatory Provisions of the DOHSA, the Jones Act, and General Maritime Law of the US

[45].
The Tribunal then examines whether any provisions of the DOHSA6, the Jones Act7 and the General Maritime Law of the United States apply to this case as mandatory provisions for protection of Mr. Yang.
[46].
It has been recognized that the DOHSA was originally intended to permit "recovery of damages against a ship owner by a spouse, child, or dependent family member of a seaman killed in international waters." The DOHSA provides as follows as to the cause of action8:

"When the death of an individual is caused by wrongful act, neglect, or default occurring on the high seas beyond 3 nautical miles from the shore of the United States, the personal representative of the decedent may bring a civil action in admiralty against the person or vessel responsible. The action shall be for the exclusive benefit of the decedent’s spouse, parent, child, or dependent relative."

[47].
The Tribunal agrees that the above provision of the DOHSA is a mandatory provision and accordingly, any agreement of the parties which deprives the rights of Mrs. Yang to bring a civil action in admiralty against Respondent is null and void.
[48].
The Jones Act further provides as follows:

"A seaman injured in the course of employment or, if the seaman dies from the injury, the personal representative of the seaman may elect to bring a civil action at law, with the right of trial by jury, against the employer. Laws of the United States regulating recovery for personal injury to, or death of, a railway employee apply to an action under this section."9

[49].
The United States Supreme Court held that, [The Jones Act], which establishes a uniform federal law that state as well as federal courts must apply to the determination of employer liability to seaman, incorporates by reference, "all statutes of the United States modifying or extending the common law right or remedy in cases of personal injury to railway employees."10 The US Supreme Court went on to elaborate that the Jones Act adopts "the entire judicially developed doctrine of liability" under the Federal Employers’ Liability Act (FELA), 35 Stat. 65, as amended, 45 U.S.C. § 51 et seq."11
[50].
The FELA provides that, "(a)ny contract, rule, regulation, or device whatsoever, the purpose or intent of which shall be to enable any common carrier to exempt itself from any liability created by this chapter, shall to that extent be void."12
[51].
The Tribunal agrees that the above FELA provision as incorporated in the Jones Act is a mandatory provision and accordingly, any attempt by Respondent to exempt itself from the liability that it is legally obligated under US law to provide its employee, Mr. Yang, is void.
[52].
It is also understood to be established US case law that, "(u)nder the General Maritime Law a vessel owner has an absolute non-delegable duty to provide a seaworthy vessel to crew members. This duty is irrespective of fault or the use of due care".13 It is also true that the vessel owner has a duty to provide its seafarers with a seaworthy vessel and such duty is an absolute duty under the Jones Act.14
[53].
A ship owner is bound by law to provide a seaworthy vessel to its crew member employee and this is "non-delegable", or in other words, it is an absolute obligation. This is irrespective of whether or not an operator, manager, or any agreement is drafted to remove the duty. The duty as established by the General Maritime Law, as affirmed by United States courts, is understood to be mandatory.
[54].
In conclusion, the Tribunal determines that the provision of the DOHSA, 46 U.S.C. § 30302, 46 U.S.C. §55, which is cited in the Jones Act, and the absolute duty of shipowners to provide a seaworthy vessel to crew members under the General Maritime Law of the United States are mandatory provisions to be applied to this case.15 Under the Korean Seafarers’ Act, shipowners bear the same duties for safety of crew members including the duty to provide a seaworthy vessel to its crew members as pursuant to the above US mandatory provisions. The provisions of the Korean Seafarers’ Act are mandatory provisions which cannot be excluded nor derogated by the parties.

(4) To What Extent the US Mandatory Provisions Apply to This Case

[55].
As stated previously, "the mandatory provisions of the country of the applicable laws designated under paragraph (2)" as provided in Article 28(1) of the KPILA does not mean that the mandatory provisions entirely exclude and substitute the governing law agreed upon by the parties, but rather it intends to preclude only such a provision of the agreed governing law that is not consistent with the mandatory provisions of the applicable jurisdiction (in this case US law).
[56].
Unlike the Korean Seafarers’ Act which provides for minimum amount of compensation for seafarers at the time of an accident, it does not seem that US law provides for any requirements for minimum damages to be paid to injured crew or his bereaved family by ship owners. There is no evidence to otherwise acknowledge that the US laws cited by Claimants provide for guaranteed minimum compensation to seafarers or his bereaved family. For this reason, the Tribunal in its majority does not accept the Claimants’ assertion that the US laws must apply in determining the extent of the damages. Therefore, except for applying the US mandatory provisions on ship owners’ duty to provide a seaworthy vessel to crew members including Mr. Yang, Korean law, the governing law agreed upon by the parties for the Employment Agreement, shall still apply to the issues of Respondent's liabilities, such as the duty to pay damages and the extent thereof.

e. Dissenting Opinion and Comments Thereon

(1) I, Young Seok Lee, a co-arbitrator of this case, respectfully dissent to the majority opinion of the Tribunal on this issue as follows:

[57].
Claimants are seeking damages from Respondent on the grounds that Respondent breached the Employment Agreement and that Respondent also committed tort, by failing to provide a seaworthy vessel to the Respondent’s employee, Mr. Yang, who died in the Marine Accident.
[58].
The majority opinion of the Tribunal is that for the two (2) causes of action, i.e., breach of contract and tort, the governing law is Korean law in accordance with Article 28(2) and Article 32(1) and (3) of the KPILA, subject to US law applying as mandatory provisions in respect of the Respondent’s duty or obligation to provide a seaworthy vessel. I agree to this position. However, the majority opinion then limits the scope of the application of such mandatory provisions only to the issue of what is such a duty or obligation under US law, and determines that Korean law rather than US law governs on how damages for the contractual breach or tort should be assessed. This is the part in which I strongly dissent.
[59].
Once a governing law is determined in respect of a certain legal relationship such as based on contract or tort, that governing law should uniformly govern all aspects of that legal relationship including but not limited to contract interpretation, performance and damages, unless there is a compelling reason not to apply that governing law in respect of a part of the legal relationship. It does not make sense to determine the governing law for every issue by piecemeal. In my view, the scope of the application of the "mandatory provisions" in Article 28(1) of the KPILA should be interpreted in accordance with this principle. In this vein, if the mandatory provisions under US law are not complied with, the corresponding remedies including assessment of damages should also be governed by US law. Otherwise, it will be useless and ineffective to apply a higher standard to comply with under US law, if substantially less burdensome remedies for non-compliance of such requirement under another jurisdiction than the remedies under US law are to be imposed.
[60].
Moreover, from my review of the US law provisions and the US Supreme Court holding, as cited in the majority opinion, the mandatory nature of those provisions includes not only the obligation to provide a seaworthy vessel but also the liability for not complying with the obligation. For example, the Jones Act provides in 46 U.S.C. §30104 "Laws of the United States regulating recovery for personal injury to, or death of, a railway employee apply to an action under this section."
[61].
Another example is the US Supreme Court’s holding on the Jones Act, which says "[The Jones Act], which establishes a uniform federal law that state as well as federal courts must apply to the determination of employer liability to seaman, incorporates by reference "all statutes of the United States modifying or extending the common law right or remedy in cases of personal injury to railway employees" and "[The Jones Act adopts] the entire judicially developed doctrine of liability" under the Federal Employers’ Liability Act (FELA), 35 stat. 65, as amended, 45 U.S.C. §51 et seq."
[62].
Although the majority opinion might take the position that the damages under US law were not sufficiently pleaded and proved, since there is already a final and conclusive judgment from the US court on one of the two deceased who died in the Marine Accident (Captain Hill) other than Mr. Yang, it would not be too difficult to assess damages suffered by Mr. Yang and the Claimants from the Marine Accident.
[63].
Furthermore, the wording used in the above KPILA provision is not just "mandatory provisions" but the "protection granted to employees by the mandatory provisions." [underline added] In my opinion, such "protection" is broader than the mandatory provisions themselves, and includes not only the requirement of the standard of seaworthiness but also the remedies (including damages) for non-compliance with that standard. Therefore, even in a case where the mandatory provisions are interpreted to be applicable only to the extent of the US law setting out the obligation to provide a seaworthy vessel (rather than the remedies for failure to comply with the obligation), because of this wording of the above KPILA provision, it is my view that US law should govern not only the standard of seaworthiness but also the assessment of damages when seaworthiness requirement is not satisfied.
[64].
For the reasons stated above, I respectfully dissent to the majority opinion of the Tribunal on the scope of the mandatory provisions of Article 28(1) of the KPILA.

(2) The Tribunal in its majority comments on the above dissenting opinion as follows:

[65].
Like many other jurisdictions, Korean law realizes that governing law, whether it is chosen by the parties’ agreement or determined by the conflict of law rules, means a whole legal system of a country in terms of substantive law, not a particular statute or a particular case law. In other words, governing law is to select and indicate a legal system that governs legal relationships or a case pending before a tribunal. It is "connecting factors (in German, Anknüpfungspunkt)" which provide a connection between a legal or factual matter (for example a thing, a transaction, a person, and so on) and a particular legal system of a country. The KPILA provides for the connecting factors such as nationality, habitual residence, closest connection, and so on. In fact, connecting factors vary with circumstances, but in no event any factors other than those being prepared for in the KPILA play a role as a connecting factor. However, there is an exception that a particular law applies mandatorily to a specific legal relationship regardless of the connecting factors. In order to explain this exception, a theory called "special connection theory (in German, "Sonderanknüpfungslehre")" of mandatory rules is introduced and broadly supported by scholars in Korea. The theory says that in light of application of mandatory provisions being an exception to the principle of private autonomy and choice of law rules, which always determines the governing law in consideration of the connecting factors, mandatory provisions are strictly and restrictively applied to a particular matter. Namely, a mandatory provision must apply to a particular matter or issue only as the KPILA provides, and other matters of the case are still governed by the law chosen or determined. It means that a mandatory rule does not substitute the governing law chosen or determined for a foreign law inclusive of the mandatory rule. Along those lines, Article 28 (1) of the KPILA limits the scope of application of the mandatory rules by providing that "the protection given to employees under the mandatory provisions shall not be deprived." In this context, the Tribunal in its majority respectfully disagrees with the dissenting opinion which attempts to expand application of the US law to all aspects of the legal relationship of a contract or tort including assessment of damages beyond its mandatory provisions.
[66].
Next, it is certain to the Tribunal in its majority that the phrase "protection given to employees by the mandatory provisions" of Article 28 (1) of the KPILA may be applicable only in cases where the following two conditions are met concurrently in its wording; (i) a substantive law at issue falls within a mandatory rule of the governing law which could have applied, should not the parties choose another country’s law as the governing law (hereinafter "objective governing law") and, if that is the case, (ii) the mandatory rule is designed for protection of employees. Even in such a circumstance, protection is meant to be as specific as the mandatory rule of the objective governing law prepares for. The dissenting opinion stated that the concept of "protection" is broader than mandatory provisions themselves. The Tribunal in its majority understands that the concept of protection mentioned by the dissenting opinion embraces protection not only given by the mandatory rule but also given by other parts of the objective governing law. In our view, the dissenting opinion in this respect is in contrast with the principle that any mandatory rule must apply strictly and narrowly and, therefore, in no event replace the governing law itself chosen by the parties with the objective governing law. Such protection is available only in cases where the mandatory provisions provide for it concretely or the case law admits such protection is mandatory. This is the second reason why the Tribunal in its majority respectfully disagrees with the dissenting opinion that broader protection under the objective governing law is applicable in addition to its mandatory provisions.
[67].
Thirdly, the Tribunal in its majority also disagrees with the view of the dissenting opinion that the whole provisions of the Jones Act, the DOHSA, or the US General Maritime Law are mandatory provisions. For example, the Jones Act 46 U.S.C. §30104 providing that "Laws of the United States regulating recovery for personal injury to, or death of, a railway employee apply to an action under this section." does not make the whole provision of the Jones Act and other laws of the United States mandatory provisions as opined by the dissenting opinion, since it is not understood to prohibit the parties from varying and derogating their liabilities from those under the Jones Act by agreement between them.
[68].
The dissenting opinion further sets out that the Jones Act is a mandatory provision as a uniform federal law that state as well as federal courts must apply to the determination of employer’s liability to seaman. It is true that the Jones Act intended to establish a uniform federal law and preempts state law including the common law on damages for crew members. However, it does not mean the Jones Act, including the provisions on payment of damages thereunder, becomes a mandatory provision in its entirety. The reason why the Jones Act preempts the common law, as we understand, is not because all the provisions of the federal statute are mandatory provisions but because they are subject to the principle of federal preemption under the US Constitution.
[69].
Finally, the Tribunal in its majority notes that, even if the governing law for assessment of damages is US law as opined by the dissenting opinion, certain amount of damages to be awarded under US law may not be admitted by the Tribunal. The KPILA in its article 32(4) declares that "the right to claim for damages caused by the tort shall not be recognized when the character of such right is not clearly for appropriate compensation for the injured party or when the scope of such right is substantially beyond the necessary extent of appropriate compensation for the injured party." In consideration of the fact that Claimants have received about US$ 1.7 million in total from the Respondent and Dongwon and additionally seek for substantial amount of damages under US law, the amount of damages to be awarded under US law could fall in the category of damages of clearly inappropriate compensation or substantially beyond the necessary extent of appropriate compensation under Korean law and therefore there is a possibility of not being recognized by the Tribunal.

f. Sub-conclusion on Governing Law of Respondent’s Liabilities

[70].
In conclusion, the Tribunal in its majority will determine the existence and extent of Respondent's liabilities for damages in tort as well as breach of contract in accordance with Korean law, except for when the above-mentioned mandatory provisions of US law apply.

3. Governing Law of the 2010 Settlement Agreement

[71].
Since the 2010 Settlement Agreement does not contain any clause on its governing law, the issue on which law to apply to the agreement is to be determined pursuant to Article 29 of the KAA and Article 26 of the KPILA as mentioned above. That is, "the law of the country which is most closely connected" with the Agreement. Taking into consideration the facts that the 2010 Settlement Agreement was signed in Korea and that Mr. Yang, the deceased, who left the bequest being the subject matter of the Agreement, is a national of Korea, the Tribunal reached a conclusion that the country that is most closely connected to said Agreement is Korea and it is governed by Korean law. Moreover, in light of the fact that both Claimants and Respondent have been disputing the validity of said Agreement under Article 104 of the Korean Civil Code as discussed below, the Parties may be deemed to have agreed Korean law as the governing law of the 2010 Settlement Agreement.

4. Governing Law of the Inheritance of Mr. Yang’s Estate

[72].
With regard to the governing law of inheritance, Article 49(1) of the KPILA stipulates as follows:

(1) Inheritance shall be governed by the law of nationality of the decedent at the time of death.

[73].
Therefore, the governing law of the eligibility of heirs and their share of inheritance is understood to be Korean law which is the law of the nationality of Mr. Yang.

5. Governing Law of the Effect of Payment by Dongwon on Respondent’s Liability

[74].
The question is which law governs the issue of whether and to what extent Claimants’ receipt of the payment under the Dongwon Settlement Agreement would release Respondent from its liabilities for the Marine Accident. As discussed earlier, Korean law, the governing law of Respondent’s liability, will also determine the issue as to whether and to what extent Respondent's liability is discharged by the payment of Dongwon to Claimants. Although the governing law of the Dongwon Settlement Agreement was agreed by the Parties to be US law, US law does not govern the issue as to whether payment under the Dongwon Settlement Agreement may release Respondent from its liability owed to Claimants. Since it is a matter of the legal effect of payment made by Dongwon on Respondent’s liabilities, insofar as the governing law of Respondent’s liability to Claimants is Korean law, the Tribunal in its majority reaches a conclusion that the issues of discharge thereof are also subject to Korean law.

6. Governing Law of Claim for Reimbursement of Attorneys’ Fees and Costs Incurred in Related Litigation

[75].
Claimants alleged that they are entitled to claim for damages or reimbursement of attorney’s fees and costs incurred in the US federal actions in accordance with the General Maritime Law of the United States. The Tribunal first determines which law governs this issue. It is understood that the claim for attorneys’ fee and costs incurred in the US is a matter of procedure. On that basis, Korean law shall be the governing law of the claim since the seat of this arbitration is in Korea and the conflict of law rules in Korea follows the doctrine of Forum Regit Processum, which means that "the matter of procedures is determined by lex fori", and the procedural law of the forum applies. Even if the nature of Claimants’ claim is not a procedural claim but a substantive claim, it is subject to Korean law as the Tribunal already determined the Claimants’ claims for damages is substantively governed by Korean law. The Tribunal in its majority finds that the issue is governed by Korean law regardless of whether the nature of the claim is regarded as procedural or substantive.16

V. RESPONDENT'S LIABILITY FOR THE MARINE ACCIDENT

1. Respondent’s Liabilities for Breach of the Employment Agreement and Tort

a. Respondent’s Contractual Liability

[76].
The Employment Agreement has no clause stating that the Respondent, as the employer, bears the duty of care for safety of Mr. Yang, the employee. However, this duty has been recognized by case law of Korea. In this respect, the Supreme Court of Korea ruled as follows17:

The employer, as an ancillary duty concomitant to an employment contract based on the principle of good faith, bears a duty of care for safety to take necessary measures such as maintaining human and physical environment so as not to harm life, body, health of the employee in the course of providing labor, and shall be liable for any damages suffered by the employee as a result of a violation of such duty of protection.18

[77].
It is understood that the duty of care for safety is applicable to all employment agreements including the Employment Agreement. If an employer breaches the duty, it is deemed a breach of employment agreement and the employer is liable for damages suffered by the employee due to the breach.
[78].
To comply with the duty of care for the safety of employees, an employer shall take all reasonable steps to protect the employees’ life and body and health from any potential and real dangers in the workplace. From the duty recognized based on the established case law, it is admitted that ship owners, as an employer, are obliged to provide the crew members with a seaworthy and safe vessel so that they are not exposed to danger and are able to work safely. If the employer fails to provide a seaworthy vessel, this constitutes a breach of contract for employment and the employer shall be liable for damages. The duty of care for the safety of employees is mandatory and any attempt to avoid and invalidate the duty is void and ineffective.
[79].
As discussed earlier, it is found that the Vessel was in an unseaworthy condition when she left the Guam Port but she was forced to sail to the fishing area instead of being repaired. Also, the crew members were not properly trained to maintain the Vessel, which resulted in the Vessel’s sinking in the high sea. In conclusion, it is admitted that the Marine Accident was due to Respondent’s fault and negligence, and this constitutes Respondent’s breach of the Employment Agreement. For this, Respondent is held liable for damages to Mr. Yang and his bereaved family.

b. Respondent’s Liability in Tort

[80].
In the event that an employer breached the duty of care for the safety of employees, under Korean law, the same employer can be liable for tort if requirements of tort liabilities are met. This law has been affirmed and supported by the Supreme Court of Korea.
[81].
Article 750 of the Korean Civil Code provides for liability of torts as follows:

Any person who causes losses to or inflicts injuries on another person by an unlawful act, intentionally or negligently, shall be liable to pay the damages arising therefrom.

[82].
The Tribunal already found that the Marine Accident was caused by Respondent’s fault and negligence (failing to provide a seaworthy vessel) and that this constituted Respondent’s breach of the Employment Agreement. The Tribunal finds that Respondent shall be liable for tort as well with respect to the Marine Accident.
[83].
Based on the foregoing, the Tribunal finds that the Respondent shall take responsibility for damages to Mr. Yang and his bereaved family for tort as well as breach of contract.19 Therefore, Claimants, heirs to Mr. Yang, are entitled to damages Mr. Yang sustained by the Marine Accident based on the two causes of action, and Claimants are also entitled to compensation for their own pain and suffering.

2. Damages to Be Awarded

a. Details of Claimants’ Claimed Damages

[84].
Claimants claimed the following items to be paid for damages if Korean law is the governing law of Respondent’s liability:

• Direct loss and damages (Actual Disbursement): US$29,323.63

• Lost future earnings: US$2,576,681.50

• Pre-death pain and suffering: US$1,000,000.00

• Condolence payments for Claimants: US$400,000.00

• Attorneys’ fees and costs incurred in the US Actions: US$344,652.22

• Subtotal: US$4,321,333.72

• Deduction of Credit of 2010 Settlement Agreement: US$132,035.00

• Net Amount Payable: US$4,189,298.72

[85].
After reviewing the above claims, the Tribunal determines the amount of damages as follows:

b. Passive Loss

(1) Retirement Age

[86].
The Korean Supreme Court recognizes the retirement age of an urban daily laborer as 65 years old20 and it is not uncommon in Korea that crew members are found to be working until the age of 65. Thus, Mr. Yang, who was bom on September 20, 1969, would have been able to work as a crew member for 25 years, until 65 years old, if he did not die in the Marine Accident.

(2) Income

[87].
The evidence submitted by the Parties to the Tribunal shows that the annual revenue that Mr. Yang was able to earn under the Employment Agreement, including a percentage of fish catch, is US$104,147.85. While Claimants stated that this figure was derived from the invoices produced by Dongwon in the discovery procedure during the US litigation, Respondent did not raise any objection nor produced information as to the method of calculating the amount of the fish catch, notwithstanding the Tribunal’ order to produce. Therefore, the Tribunal takes the above figure as Mr. Yang’s income.

(3) Conversion into Present Value and Deduction of Living Expenses

[88].
Pursuant to the Korean judicial practice, courts generally adopt the so-called Hoffmanian calculation method, which deducts five (5) percent interest per annum to convert the future income into the present value at the time of death. Also, Korean courts deduct one-third of the income of the deceased in assessing loss of earning of the deceased, on the assumption that one-third of the income would in any way be spent on living expenses if he or she did not die.21

(4) Calculation

[89].
Net annual income after deducting the living expenses is US$69,431.90 ($104,147.85 x 2/3) and the present value calculated at the time of death by multiplying the Hoffman coefficient of 15.9441, which reflects reduction by the intermediate interest for 25 years, is US$1,107,029.15 ($69,431.90 x 15.9441).

c. Active Loss and Disbursements

[90].
The amount of expenses incurred by Claimants attending the funeral of Mr. Yang, and direct loss and damage which was actually disbursed by Respondent due to the death of Mr. Yang are as follows, according to the evidences such as Exhibit CD-11 Sworn Statement of Mrs. Yang and Exhibit CD-14 Breakdown of Compensation and so on.

• Funeral Expenses: (KRW12,170,600) equivalent to US$10,154.86

• Travel from Peru to Pusan (Flights): (KRW16,773,760) equivalent to US$13,995.63

• Hotel Stay in and Meals Korea: (KRW2,600,000) equivalent to US$2,169.38

• Transportation (within Korea): (KRW600,000) equivalent to US$500.63

• Interpreter’s fee: (KRW3,000,000) equivalent to US$2,503.13

• Total: US$29,323.63

d. Compensation for Pain and Suffering

[91].
As seen above, Claimants inherit not only Mr. Yang's claim for damages including damages for pain and suffering but also are entitled to seek compensation for their own mental pain and suffering caused by the death of Mr. Yang. In assessing the compensation for the mental pain and suffering, the victim's age, occupation, social status, financial and living conditions, the extent of pain and suffering, the extent and degree of the victim's negligence, the motive of the offender's act, the cause, the offender's financial conditions, social status, age, and the attitude of the offender after the accident should be taken into account in order to satisfactorily accord with the principle of fair distribution of damages among the parties.22 Mr. Yang is presumed to have felt extreme pain at the time of his death due to the Marine Accident, and should have lost non-pecuniary benefits such as the relationship with his family members by his death, so it is necessary to comfort these mental damages with money. Taking into account the above circumstances, the appropriate compensation for his pain and suffering would be US$200,000.00.
[92].
In addition, Claimants, as spouse or children of Mr. Yang, have been traumatized and deeply saddened by the unexpected death of Mr. Yang, and they may have lost all sorts of nurturance that Mr. Yang could have provided his family as the head of the family. Such non-pecuniary damages suffered by Claimants will need to be compensated with money, separate from the non-pecuniary damages suffered by Mr. Yang himself. Taking into account the above circumstances, the appropriate compensation for the mental pain would be US$50,000.00 for each Claimant respectively. Thus, the total sum of compensation for the mental pain and suffering to be paid by Respondent to Claimants is US$400,000.00.

e. Total Sum

[93].
In the end, the total damages that Respondent shall pay to Claimants are as follows:

• Lost Income: US$1,107,029.15
• Active Loss: US$29,323.63
• Compensation for Mental Pain: US$400,000.00
• Total:US$1,536,352.78

3. Claimants’ Inheritance of Claims

[94].
According to Article 1000(1)(i)23 and Article 1003(1)24 of the Korean Civil Code, the lineal descendants of the deceased shall be the first rank heirs in succession, and the spouse of the inheritee shall also be the first rank heir in succession and becomes a co-heir. Article 1009(1) and (2) of the Korean Civil Code25 provides that when there exist two or more heirs of the same rank, their shares of inheritance shall be equally divided, while the spouse’s share of inheritance is increased by 50 percent of the other heir's inheritance share.
[95].
In this case, all Claimants, who are either spouses or children of Mr. Yang, are qualified to be the heirs of Mr. Yang. Mrs. Yang's inheritance share will be 3/9, and the inheritance share of the three children will be 2/9 respectively under Korean law.

4. Defenses of Respondent

a. Contributory Negligence

[96].
Respondent alleged that the steering room was flooded by a leak in the packing gland and Mr. Yang, the Chief Engineer, should have checked leakage rate of the packing gland and took proper measures to prevent the leaking. Respondent argued that, Mr. Yang’s negligence must have contributed to the Marine Accident so that his contributory negligence shall be considered in assessing damages payable by Respondent. However, the Tribunal could not find any evidence supporting that Mr. Yang had such a duty to check the leakage of packing gland and take proper measures to the leakage. Therefore, the Tribunal rejects Respondent’s defense of Mr. Yang’s contributory negligence to the Marine Accident.

b. The 2010 Settlement Agreement

[97].
Respondent asserted that since Claimants agreed that they would not file civil or criminal suits against Respondent under any circumstances in the 2010 Settlement Agreement, Claimants’ actions for damages, including a wrongful death claim like this case, against Respondent should be barred and Claimants’ claim shall be dismissed. In response to this assertion, Claimants refuted that the 2010 Settlement Agreement was null and void because it was an unfair juristic act prescribed by Article 104 of the Korean Civil Code. Claimants also argued that the 2010 Settlement Agreement constitutes a mistake prescribed by Article 109 of the Korean Civil Code or a fraud or duress prescribed by Article 110 of the Korean Civil Code, and therefore the 2010 Settlement Agreement should be rescinded.
[98].
Article 104 of the Korean Civil Code (Unfair Juristic Act) states:

A juristic act26 which has severely lost fairness through strained circumstances, rashness, or inexperience of a party shall be null and void.

[99].
The Supreme Court of Korea has dealt with the requirements for an "unfair juristic act" as follows27:

The unfair juristic act provided in Article 104 of the Korean Civil Code purports to regulate profiteering by the stronger party using strained circumstances, rashness, or inexperience of the weaker party. A juristic act is found unfair when objectively there exists a severe imbalance between the payment by one party and the consideration therefor, and subjectively such imbalanced transaction was made using strained circumstances, rashness, or inexperience of the victimized party. Not all of strained circumstances, rashness, and inexperience, which are the requirements for an unfair juristic act, need to be fulfilled, and existence of a few of them will suffice for an unfair juristic act. "Strained circumstance" used herein means "urgent necessity," which may be due to economic, mental, or psychological causes. Whether the party was in a strained circumstance shall be determined by taking into consideration all relevant factors, including the party’s social status, financial status, and degree of urgency of the circumstance he or she was in.

[100].
With these in mind, the Tribunal considers whether the 2010 Settlement Agreement is valid and enforceable under the Korean law.
[101].
As seen in the above, Claimants were entitled to receive US$1,536,352.78 for damages suffered due to Mr. Yang’s death as shown in our above calculation. However, Respondent paid Claimants only KRW230,846,227 (equivalent to US$191,214.00). The Tribunal finds a severe imbalance between the settlement amount in the 2010 Settlement Agreement and the amount that Claimants are entitled to. The Tribunal is persuaded by Claimants’ assertion that Mrs. Yang, the spouse of Mr. Yang, traveled to Korea from Peru, with her three children for the first time while she does not speak Korean and adequate translation was not provided; she had no knowledge or prior experience related to legal matters, and, furthermore, Respondent did not inform her of her and her children’s rights; she was required to sign by Respondent without any lawyer’s assistance under the situation where her husband's sudden death left her speechless and in sorrow. Based on these facts, the Tribunal finds that Mrs. Yang and her children were in rashness and strained circumstances and they were inexperienced when the 2010 Settlement Agreement was entered into. Therefore, the Tribunal declares the 2010 Settlement Agreement null and void, as it falls under Article 104 of the Korean Civil Code.

c. The Dongwon Settlement Agreement

[102].
With respect to the Dongwon Settlement Agreement between the Claimants and Dongwon in December 2018, Respondent contended that it should be exempt from liability to Claimants to the extent of Dongwon’s payment to Claimants under Korean law. Claimants refuted that the Dongwon Settlement Agreement should not be allowed to affect the non-settling party (Respondent) and Respondent should be held responsible for its proportion of fault under US law. Claimants add that there is no room for exemption or reduction in this case because Respondent is fully liable for the Marine Accident.
[103].
As we previously discussed, this issue is subject to Korean law. Under Korean law, the fact that the Dongwon Settlement Agreement was entered into does not mean that Respondent is exempt from all of its liability to Claimants. Furthermore, the amount under the Dongwon Settlement Agreement is below the amount which Respondent is liable for. The Tribunal does not accept Respondent’s contention that the Dongwon Settlement Agreement has released Respondent from all of its liabilities owed to Claimants.
[104].
However, under Korean law, Dongwon and Respondent are the "joint tortfeasors" to Mr. Yang, and they shall be jointly and severally liable to pay damages to Claimants. Article 413 of the Korean Civil Code stipulates:

If each of the several obligors has the responsibility to perform the entire obligation, and the performance by one of the obligors discharges the other's obligation, the obligation shall be a joint and several obligation.

[105].
This law is applicable to Respondent’s liability. Under the circumstance that Dongwon and Respondent are jointly and severally liable for damages to Claimants, Dongwon’s payment had Respondent discharged from its liability to the extent of the amount paid. Therefore, the Tribunal accepts Respondent’s defense to that extent.

d. Deductions to be Made

(1) Amount Deducted under the 2010 Settlement Agreement

[106].
As stated earlier, the 2010 Settlement Agreement shall be null and void, but it is reasonable to deduct the amount received by Claimants under the Agreement, which is KRW230,846,227 (equivalent to US$191,214.00) from the amount that Claimants will receive.

(2) Amount Deducted under the Dongwon Settlement Agreement

[107].
As seen in the foregoing discussion, Respondent was discharged from its liability to Claimants to the extent of Dongwon's payment to Claimants. Thus, US$1,500,000.00 that Dongwon paid to Claimants will have to be deducted from the amount payable by Respondent. Since the payment under the Dongwon Settlement Agreement was made only in 2018, about 8 years after the Marine Accident, the Tribunal finds it reasonable that the interest for the 8 years be deducted from the settlement amount. After deduction of such interest, the settlement amount would be US$1,013,513.51 at the interest rate of 6% per annum (US$1,500,000.00/ (1+0.06 x 8).

5. Claim for Reimbursement of Attorneys’ Fees & Costs for US Litigation

[108].
Claimants claim US$344,652.22 for attorneys’ fees and costs incurred from the litigation which took place in the United States in connection with this case, pursuant to the General Maritime Law of the United States. As examined above, the law governing this issue is Korean law. Regarding the reimbursement of attorneys’ fees and costs, the Korean Code of Civil Procedure only allows the reimbursement of attorneys’ fees and costs within the scope prescribed by the law to the party who prevailed in the proceeding. In this case, Claimants neither prevailed in the case in the United States, nor did the attorneys’ fees and costs incur in this arbitration procedure. In addition, even if the governing law of this issue were US law, the Tribunal does not find any conclusive ground or evidence to support Respondent's duty to reimburse such costs to Claimants. Therefore, Claimants’ claim for reimbursement of the attorney’s fees and costs incurred in the US litigation is rejected.

6. Net Damages to be Paid by Respondent

[109].
Once the items set forth above are deducted from the damages payable by Respondent to Claimants, the following amount remains:

• Debt owed by Respondent: US$1,536,352.78
• Sum received from the 2010 Settlement Agreement: (-) US$191,214.00
• Amount Deducted by Dongwon Settlement Agreement:(-) US$1,013,513.51
• Balance to be Paid by Respondent:US$331,625.27

7. Amount Payable to Each Claimant According to Inheritance Share

[110].
Net damages that Claimants inherited from Mr. Yang are US$131,625.27 since US$200,000.00 is compensation for Claimants’ own mental pain and suffering and should be deducted from the aforementioned balance of US$331,625.27. The amount inherited to Claimants shall be calculated by applying the shares of inheritance as stated above. The figures are US$43,875.09 for Mrs. Yang and US$29,250.06 for each of the other Claimants, respectively. The amounts that each Claimants are entitled to receive are as follows:

• Mrs. Yang: US$93,875.09 (= US$43,875.09+US$50,000.00)

• Each of the remaining Claimants: US$79,250.06 (= US$29,250.06 + US$50,000.00)

[111].
The Tribunal is aware of the fact that Camila Romina Yang Lima was not a party to the 2010 Settlement Agreement. However, the Tribunal believes that the effect of Camila Romina Yang Lima not being a party to the 2010 Settlement Agreement is not serious enough to be reflected in the above calculation.

VI. CONCLUSION AND DISPOSITION

[112].
As to the arbitration costs of this case, the KCAB Secretariat confirms that the total amount of the arbitration cost is KRW164,833,000 (hereinafter the "Arbitration Cost"), for which Claimants paid in advance KRW82,187,250 and Respondent paid in advance KRW82,645,750.
[113].
Now, the Tribunal, after having carefully and conscientiously considered the pleadings and evidence placed before us DOES MAKE, ISSUE, AND PUBLISH this ARBITRAL AWARD as follows:

1. Declaring that Respondent breached its obligation to provide Mr. Yang with a seaworthy vessel.

2. Respondent shall pay US$93,875.09 to Claimant Mrs. Yang, and US$79,250.06 to the other Claimants respectively, which is US$331,625.27 in total, together with interest thereon at 6% per annum under the Korean Commercial Code28 from June 15, 2010, the following date of the Marine Accident, until the date of completion of the payment.

3. All other claims of Claimants than the above claims admitted shall be dismissed.

4. Pursuant to Article 52 of the KCAB Rules, the Arbitration Costs shall be equally divided and borne by Claimants for one side and Respondent for the other side. Accordingly, Claimants shall jointly and severally reimburse Respondent for the Arbitration Costs in the amount of KRW229,250 (KRW164,833,000/2 - KRW82,187,250).

5. Pursuant to Article 53 of the KCAB Rules, each party shall bear the legal costs and other expenses including the attorneys’ fees incurred by itself during the arbitration proceedings.

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