Does a Freight Forwarder Need to Satisfy the Financial Responsibility Requirement to Achieve the Legal Status as a Carrier?

For a shipper a freight forwarder performs all the services such as arranging for picking-up, consolidating, warehousing, loading, carrying, insuring and delivering the cargo. In theory a freight forwarder may be a mere conventional forwarding agent or achieve the legal status as a carrier. It should be determined on a case by case basis by interpreting the intent of parties. In dong so due consideration is to be given to totality of relevant circumstances of the case. In practice the freight forwarder mostly assumes the legal status as a carrier. Reflecting this reality the Goods Distribution Promotion Act stipulates a comprehensive status of a freight forwarder beyond the conventional status of a forwarding agent under the Korean Commercial Code. The Act requires a freight forwarder to establish and maintain evidence of financial responsibility as a precondition for engaging in his business. This financial responsibility requirement is intended to ensure the minimum financial capability of a freight forwarder for the administrative purpose of maintaining the financial reliability of the freight forwarder. The financial responsibility requirement should not be a legal requirement for a freight forwarder to achieve the legal status as a carrier. However, if a freight forwarder satisfies the financial responsibility requirement, it will be considered as an essential one of all relevant circumstances in determining whether the freight forwarder achieves the legal status as a carrier in the case. Corresponding to the business reality of a freight forwarder and the provisions of the Act reflecting it, it is time for the Korean Commercial Code to incorporate provisions in this respect. This combined policy format of the Act on the one hand and the Korean Commercial Code on the other could create synergetic effects. Financial responsibility requirement selectively forces out financially unsound freight forwarders and plays a crucial role in restructuring their industry. Also it will result in a stabilized legal relationship between parties.