Taihan Electric Wire Cleared of Liability
Ongoing Dispute Between LS Cable & System and Taihan Electric Wire
Potential for Management Rights Dispute as Conflict Spreads to Parent Companies
As tensions continue to escalate between LS Cable & System and Taihan Electric Wire, two leading companies in the Korean cable industry, the Supreme Court has finalized a ruling that recognizes LS Cable & System's liability for damages in a lawsuit filed by Kia Motors against both companies six years ago.
According to industry sources on April 29, the Supreme Court's Civil Division 1 recently confirmed a partial victory for Kia in its damages lawsuit against LS Cable & System, Taihan Electric Wire, and Mpower by dismissing the defendants' appeal without deliberation.
Previously, in 2012, Kia Motors agreed to cooperate in relocating transmission lines to secure the construction site for the Sinpyeongtaek Combined Cycle Power Plant, commissioning LS Cable & System and Mpower for construction and Taihan Electric Wire for material supply. In September 2018, a large-scale blackout occurred at Kia's Hwaseong plant. The production of six vehicle assembly lines was halted for six days, and Kia estimated the damages at 18.2 billion won.
Kia Motors identified defects and negligence during the relocation of the underground transmission lines as the cause of the blackout and filed a damages lawsuit against LS Cable & System, Taihan Electric Wire, and Mpower.
The court held LS Cable & System, which was responsible for the construction, solely liable and ordered it to compensate for part of the damages. The first trial set the compensation at 7,284 million won, approximately 40% of the total damages, while the second trial reduced the amount to 5,463.51 million won.
LS Cable & System argued that defects in the cable materials had caused the blackout. However, the court, considering the opinions and appraisal results of the Korea Electrical Safety Research Institute, determined that Taihan Electric Wire bore no liability for compensation.
LS Cable & System appealed the second trial ruling, but with the Supreme Court's dismissal of the appeal without deliberation, the decision became final, setting LS Cable & System's compensation at 5,463.51 million won.
LS Cable & System stated, "Although there were sufficient grounds for legal dispute, we regret and are disappointed by the Supreme Court's dismissal."
With this ruling, the dispute over Kia's damages liability has come to a close for now. However, the conflict between the two companies continues. Taihan Electric Wire is currently under police investigation over allegations of submarine cable technology leakage from LS Cable & System. The patent infringement lawsuit between the two companies over bus duct technology, which lasted five years and eight months, was finally resolved last month in favor of LS Cable & System. During the proceedings, it was revealed that Hoban Group, the parent company of Taihan Electric Wire, had acquired shares in LS, further intensifying the conflict.
Hoban Group stated that this was a simple investment, but some observers do not rule out the possibility of a future management rights dispute. Recently, LS Group signed a memorandum of understanding (MOU) to strengthen cooperation with Hanjin Group, which is also in conflict with Hoban Group, leading to interpretations that LS is preparing for potential management disputes.
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