Where the carrier’s shield begins: Korea’s Supreme Court on the period of responsibility

A refrigerated container set to minus 18°C instead of plus 18°C turned a shipment of robotic arms into a dispute over the reach of a sea carrier’s package limitation: roughly KRW 11 million on one side of the line, KRW 700 million on the other. For Korea’s Supreme Court, the difference between providing a container and receiving the cargo decided whether the carrier could invoke the limitation for damage on the preceding inland leg.

This blog post is an English translation of a Korean-language column the author contributed to the Korea Shipping Gazette on 2 March 2026. The translation is the author’s own; in the event of any discrepancy, the Korean original prevails.

A temperature error before the sea voyage

Where does a sea carrier’s period of responsibility begin? This apparently simple question became the central issue in a dispute worth hundreds of millions of won and went all the way to the Supreme Court, which ruled on it on 13 November 2025.

The dispute began with an incorrect temperature setting on a refrigerated container. The cargo owner, exporting 20 robotic arms to the United States, asked the sea carrier to transport them at “plus” 18°C, but an employee of the sea carrier mistakenly asked an employee of the container depot to set the temperature to “minus” 18°C. The robotic arms were packed into the refrigerated container without the error being noticed, and the freezing damage was discovered only after the container arrived at the terminal at Busan Port, following approximately five days of inland carriage from Incheon to Busan.

The claim and the limitation defence

The proceedings began when the plaintiff cargo insurer paid the insurance claim and sued the carriers — the multimodal carrier, the inland carrier and the sea carrier — but the central issue emerged from an unexpected quarter. The defendant that was the sea carrier (“the Defendant”) sought to limit its liability for damages to approximately KRW 11 million by relying on the package limitation available to sea carriers under the Korean Commercial Act (the per-package or per-kilogram limit that Korean law calls the carrier’s ‘individual’ limitation, as distinct from global limitation). If that statutory limitation were unavailable, the damages would amount to approximately KRW 700 million: a difference of more than sixtyfold.

Why the lower courts differed

The court of first instance considered that, because the damage had occurred during inland carriage, it fell outside the scope of the sea carrier’s package limitation. Its reasoning was that limitation of a sea carrier’s liability presupposes liability as a sea carrier, whereas the inland leg lay outside the sea carrier’s period of responsibility. The appellate court took the opposite view. It reasoned that the Commercial Act defines the sea carrier’s period of responsibility as extending from receipt to delivery of the goods without imposing a geographical restriction, so the sea carrier’s provision of the container and setting of its temperature formed part of receiving and storing the cargo.

Quite how radical that ruling was becomes clear when it is set against shipping practice. Sea carriers had long and consistently maintained, on the basis of that same provision of the Commercial Act, that their period of responsibility ran from actual receipt of the cargo until delivery. When a cargo damage claim was made, their first defence was likewise that it was unclear whether the damage had occurred within that period.

Yet, by accepting the submissions of the Defendant, which carried on a sea carriage business, and treating the provision of the container as the starting point, the appellate court had brought forward and expanded the entire period of responsibility that sea carriers themselves had asserted in practice. I was considerably surprised and shocked by the appellate judgment.

The Supreme Court removes the shield

The Supreme Court set aside the appellate judgment and remitted the case. It drew a clear line: the package limitation under the Commercial Act applies only where loss of, damage to or delay in delivery of goods occurs during sea carriage, or during a stage so closely and inseparably connected with sea carriage that it is effectively regarded as part of it.

Applying that test, the damage had occurred during inland carriage from Incheon to Busan and could not readily be regarded as having occurred as part of sea carriage. The Defendant’s provision of the container before the inland carriage could not be regarded as receipt or storage of the goods, and the incorrect temperature setting was not a risk inherent in sea carriage. Accordingly, the Defendant could not be regarded as having commenced sea carriage or breached a duty of care relating to sea carriage.

The result was that the sea carrier’s package limitation could not apply. To be clear, the Supreme Court did not absolve the Defendant of liability for damages. It removed only the shield of package limitation.

Reaffirming the sea carrier’s period of responsibility

The Supreme Court’s test — a stage “so closely and inseparably connected with sea carriage that it is effectively regarded as part of it” — did not appear out of nowhere. It adopted at Supreme Court level an approach developed in some lower court decisions, and I consider that this judgment reaffirmed the sea carrier’s period of responsibility.

In other words, providing a container to the shipper and setting its temperature do not amount to receipt of the goods in the capacity of a sea carrier, are not activities governed by the maritime provisions of the Commercial Act, and do not satisfy the requirement of a close and inseparable connection with sea carriage. Accordingly, consistently with established practice, the sea carrier’s period of responsibility can properly be regarded as beginning at the time of receipt of the goods under the Commercial Act — for example, when the laden container enters the container terminal (CY).

The wider consequences for sea carriers

In this case, the Defendant, which carried on a sea carriage business, nearly laid the foundations for a precedent that could extend the period of responsibility, in future similar cases, to the inland leg for which the carrier had provided a container — in exchange for a right to limit its liability to approximately KRW 11 million. Conversely, by confining the start of the sea carrier’s period of responsibility to actual receipt of the cargo, the Supreme Court’s decision can also be seen as having had the paradoxical effect of protecting the boundaries of sea carriers’ responsibility.

Conclusion

From beginning to end, this was a case of fine margins. The difference between a plus sign and a minus sign produced a temperature gap of 36°C, while the legal distinction between a period of responsibility beginning with the provision of a container and one beginning with receipt of the cargo separated approximately KRW 11 million from KRW 700 million — a sixtyfold gap.

The difference between the appellate court’s conclusion and that of the Supreme Court also turned on an analysis of why the limitation of sea carriers’ liability exists and where the justification for that protection lies. The more delicate the legal relationship, the closer the answer lies. Identifying the fine distinctions accurately is the first step towards unravelling complex legal relationships.

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.