[Featured Stock] Samsung Heavy Industries Falls 6% Following 378.1 Billion KRW Compensation Ruling

Samsung Heavy Industries is on a decline following news of a damage compensation ruling amounting to 380 billion KRW.

As of 10:15 AM on the 18th, Samsung Heavy Industries was trading at 7,500 KRW, down 5.78% compared to the previous trading day.

On this day, Samsung Heavy Industries announced that the arbitration tribunal of the UK Maritime Arbitration Association issued an arbitration ruling on the 15th ordering the shipowner SK Shipping's SPC (Special Purpose Company) to pay 378.1 billion KRW in compensation. This amount corresponds to 10.6% of Samsung Heavy Industries' equity capital.

Samsung Heavy Industries applied the KC-1 technology, developed by Korea Gas Corporation and others, for the first time to build two vessels (SK Serenity and SK Spica).

The KC-1 technology is part of a Korean LNG carrier cargo tank development project, initiated in 2004 as a national project to solve the problem of relying on overseas technology for manufacturing LNG storage tanks called cargo tanks. At that time, Korea Gas Corporation and KCL NG Tech participated as technology developers, domestic shipbuilders including Samsung Heavy Industries handled shipbuilding, and SK Shipping was responsible for transportation. A total of 19.7 billion KRW was invested over 10 years.

Samsung Heavy Industries delivered the built vessels to SK Shipping in 2018, but defects such as the 'cold spot' phenomenon, where the hull temperature drops below the minimum temperature, occurred, causing operations to be suspended and repairs to be carried out.

However, SK Shipping's SPCs, SHIKC1 SHIPHOLDING S.A and SHIKC2 SHIPHOLDING S.A, claimed damages for the decline in vessel value, stating that repairs were not completed even after a reasonable repair period. The court recently recognized part of Samsung Heavy Industries' liability for compensation.

Samsung Heavy Industries stated, "The arbitration tribunal dismissed the plaintiffs' claims for loss of non-operation and decided to pay 290 million USD as damages for the decline in vessel value," adding, "We are currently in discussions with SK Shipping and Korea Gas Corporation to resolve the lawsuit and arbitration." Furthermore, they said, "If the tripartite negotiations fail, we plan to recover the compensation amount from this arbitration through a subrogation lawsuit against Korea Gas Corporation."