Complex shipping contracts and the Serious Accidents Punishment Act in Korea

Complex contractual arrangements can obscure responsibility for safety in shipping, port construction and offshore wind projects. Under Korea’s Serious Accidents Punishment Act, actual control, operation and management are central to identifying those responsible. This article examines shipowners, project owners and EPC contractors, the need for effective safety systems, and the limits of appointing a chief safety officer to assume responsibility.

This blog post is an English translation of a Korean-language column the author contributed to the Korea Shipping Gazette on 19 January 2026. The translation is the author’s own; in the event of any discrepancy, the Korean original prevails.

Safety responsibility across complex shipping contracts

A worker recently died after falling at a wind turbine installation site. While removing rainwater that had collected on a tarpaulin after the rain had stopped, the worker lost their balance and fell. No fall arrest ropes, safety nets, anti-slip equipment or other such equipment were identified, and the investigative authorities are reportedly investigating whether the Serious Accidents Punishment Act was breached.

In 2025, the Ministry of Employment and Labour published a list of 15 workplaces where sentences had become final since the Serious Accidents Punishment Act came into force. What merits attention is that all 15 cases resulted in convictions. The responsible management officers received one immediate custodial sentence and 14 suspended sentences, while corporations were fined up to KRW 100 million. This is evidence that the Serious Accidents Punishment Act is operating as an effective law.

Korea’s shipping industry is expanding beyond conventional shipping into new areas, including port infrastructure, offshore wind power and subsea cables. Shipping companies, ship management companies, port companies, offshore wind businesses and EPC main contractors are bound together in complex contractual relationships and structures, extending through multiple layers of subcontracting. The problem is that the more complex these contractual structures become, the less clear it becomes where responsibility for safety lies.

Actual control and effective safety measures

The Serious Accidents Punishment Act, which came into force on 27 January 2022, focuses on substantive authority and responsibility rather than the formal structure of contracts. It imposes on business owners and responsible management officers a duty to ensure the safety and health of workers at workplaces over which the business owner or corporation exercises actual control, operation and management. Even where work has been contracted out, services commissioned or operations entrusted to others, business owners and responsible management officers also owe that duty to the contractor’s workers if they are responsible for exercising actual control, operation and management over facilities, equipment, premises and other such matters.

According to the information published by the Ministry of Employment and Labour, the principal breaches of the Serious Accidents Punishment Act concerned “measures to ensure that safety and health managers and other relevant personnel faithfully perform their duties” and “checks on the identification of hazards and risks and the measures taken to address them”. The key here is “substance”. The specific inquiry is whether procedures existed only on paper or actually operated in practice.

The following questions therefore become important. Were the risks assessed before work began? Was sufficient safety training provided?

Who issued work instructions and controlled the schedule? Did the safety and health manager inspect the site? Who drew up the budget for purchasing safety equipment? The answers to these questions will determine where responsibility lies.

Shipowners and seafarer management

Let us consider the particular circumstances of the shipping industry. In conventional shipping, shipowners often entrust vessel operation and maintenance to specialist ship management companies under ship management agreements, and similar arrangements apply to crew management. Even so, the substance of the seafarers’ employment relationship remains important.

In other words, even where a shipowner entrusts vessel and crew management to a ship management company or crew management company, the shipowner must, as a basic obligation, ensure the safety and health of seafarers who are its own workers. The Serious Accidents Punishment Act also applies when a vessel is on the high seas or in a foreign port, and the position is the same where the seafarers are foreign nationals.

Project owners and EPC contractors

Marine construction projects are more complex still. How far does the responsibility of the project owner or the EPC main contractor extend in the construction of offshore wind farms or port facilities? Such projects generally proceed through a layered structure: the project owner contracts the works to an EPC main contractor, which in turn subcontracts them to a specialist marine contractor.

Although vessels are the principal workplaces for marine construction, the work is, in substance, construction work. The project owner therefore enters into a contract with the EPC main contractor for completion of the works and ordinarily does not exercise actual control, operation or management over the construction site where the EPC main contractor directly provides labour. Accordingly, as a general rule, the project owner is unlikely to bear liability under the Serious Accidents Punishment Act.

There is, however, an exception. Where the project owner takes the lead in executing the works and exercises overall supervision and management, the arrangement constitutes contracting under the Occupational Safety and Health Act, and the project owner can properly be regarded as exercising actual control, operation and management over the construction site. In that event, the project owner, too, would need to fulfil the duty to ensure safety and health.

Safety and health manuals must reflect maritime risks

The Serious Accidents Punishment Act requires safety and health management to take account of the particular characteristics and scale of the workplace. It is therefore insufficient merely to keep a generic safety and health manual of the kind used across industries or to prepare documents as a formality. Shipping requires its own risk assessment and analysis reflecting the particular characteristics of the sea, vessels and other maritime factors, and safety and health manuals must be revised accordingly.

The limits of appointing a chief safety officer

Some companies also consider appointing a chief safety officer (CSO) to avoid liability on the part of the representative director. However, it is necessary to bear in mind that this is recognised only in highly exceptional cases. Under the Serious Accidents Punishment Act, a responsible management officer is defined as a person with the authority and responsibility to represent the business and oversee its overall management, or a person in charge of safety and health matters in an equivalent capacity. For a chief safety officer to be recognised as the responsible management officer, that person therefore needs to be vested with complete authority over the company’s safety and health matters, with the representative director’s involvement wholly excluded.

Conclusion

Shipping presents harsher working conditions, more variables and greater difficulties in controlling risks than work on land. Even so, gaps in safety protection should not be allowed to arise within the industry’s complex contractual structures. The key strategy for navigating the era of the Serious Accidents Punishment Act lies solely in each party preparing for and faithfully fulfilling the safety and health obligations and responsibilities appropriate to its role.

K. M. Choi is a partner at Law Offices Choi & Kim, qualified in the Republic of Korea, with over ten years in shipping disputes, marine insurance and major casualties in Korean waters. He can be reached at kmchoi@choikim.com or on LinkedIn.

This article describes Korean law and practice in general terms and is not advice on the law of any other jurisdiction. The law is stated as at the date of the original Korean publication and may since have changed, and nothing here creates a lawyer–client relationship.