This file photo provided by Samsung Heavy Industries Co. shows the company’s shipyard in Geoje, 331 kilometers south of Seoul. (Image courtesy of Yonhap)
SEOUL, June 18 (Korea Bizwire) — Samsung Heavy Industries Co. said Wednesday it has terminated ship equipment contracts worth 4.85 trillion won (US$3.54 billion) with Zvezda Shipbuilding Complex and plans to seek damages over what it called the Russian shipyard’s unilateral breach of contract.
The contracts, signed in 2020 and 2021, covered the supply of key ship parts and modules for 10 icebreaking liquefied natural gas (LNG) carriers and seven shuttle tankers.
Zvezda had notified Samsung Heavy of its decision to cancel the contracts in June 2024, citing U.S. and European sanctions that made it difficult to proceed with ship construction amid the prolonged Russia-Ukraine war.
The Russian shipyard also demanded the return of US$800 million in advance payments and related interest.
Samsung Heavy had claimed that the cancellation was unjustified and filed for arbitration with the Singapore International Arbitration Centre in July 2024. The company also pursued negotiations for a possible settlement.
The South Korean company said in a regulatory filing Wednesday that it ultimately decided to officially terminate the contracts and file for damages.
The company said it has informed Zvezda that it would withhold the $800 million already paid and seek compensation exceeding that amount.
“This issue stems fundamentally from the client’s unlawful contract termination,” a company official said. “We will fully commit to proving the illegality of the cancellation through arbitration and seek appropriate damages.”
(Yonhap)
