Supreme Court: "No right of indemnity when parties share the same risk"

The Financial News: The Supreme Court of Korea has ruled that the Korea Workers' Compensation and Welfare Service (COMWEL) cannot seek reimbursement of workers’ compensation benefits already paid out for an industrial accident caused by a forklift driver and the forklift’s owner at a construction site. Under the Industrial Accident Compensation Insurance Act, COMWEL may claim reimbursement when an industrial accident is caused by "a third party." However, the Court held that if the parties at the same site "share the same risk," they cannot be regarded as third parties.
The Supreme Court Grand Bench, with Tae-ak Rho, Justice of the Supreme Court of Korea, as the presiding justice, on the afternoon of the 22nd overturned a lower court ruling that had partially upheld COMWEL’s indemnity claim against forklift driver A and the forklift lessor B. The Grand Bench set aside the judgment and rendered a final decision dismissing COMWEL’s claim.
In February 2017, at a construction site, A was moving rebar with a forklift when an accident occurred, injuring C, an employee of a subcontractor. C suffered a cervical spine fracture and spinal cord injury and began receiving workers’ compensation benefits in June of that year. After C was later found to have a permanent disability, COMWEL paid a total of 636 million won in workers’ compensation benefits.
COMWEL then filed a lawsuit against A, the forklift driver, and B, the owner of the forklift, seeking reimbursement of the benefits it had paid. The key legal issue was whether the driver and the owner qualified as "third parties" under Article 87 (Claim for Indemnification to Third Persons) of the Industrial Accident Compensation Insurance Act. Article 87 provides that when an industrial accident is caused by a third party and COMWEL has paid benefits, COMWEL may exercise the injured worker’s claim for damages against that third party.
Both the trial court and the appellate court accepted COMWEL’s argument. They held that A and B were liable to reimburse COMWEL for the benefits paid, minus a portion reflecting C’s contributory negligence. The Supreme Court of Korea, however, found that A and B were in a "risk-sharing relationship" with the injured worker and therefore could not be regarded as third parties. It consequently overturned both the first-instance and appellate decisions and entered judgment against COMWEL.
In April 2008, the Supreme Court of Korea had recognized COMWEL’s right of indemnity in a similar case. With this new ruling, the Court has effectively established a different precedent.
Chief Justice Cho Hee-dae stated, "Even when the tortfeasor is not an employee who has entered into an employment contract with the injured worker’s employer, if the tortfeasor was performing work under the direction and supervision of the same employer as the injured worker at the time of the accident, they can be regarded as having shared the workplace risk." He explained, "This is because the work in question is incorporated into, and forms part of, the business conducted by the employer."

hwlee@fnnews.com Lee Hwan-joo Reporter