Unilateral Termination of Ship Equipment and Block Supply Contracts
for Ten Icebreaking LNG Carriers
Samsung Heavy Industries: "We Will Protect Our Rights Through International Arbitration"
Samsung Heavy Industries has initiated a claim for damages against the Russian shipbuilder Zvezda over the termination of contracts for the supply of ship equipment and blocks. The company has decided to withhold the approximately $800 million (about 1.1 trillion KRW) in advance payments it has already received and plans to claim compensation for losses exceeding this amount as well.
On June 18, Samsung Heavy Industries announced through a disclosure that it would terminate the supply contracts for equipment and blocks for ten icebreaking LNG carriers and seven shuttle tankers signed with Zvezda in 2020 and 2021, and would seek damages. Zvezda had unilaterally notified Samsung Heavy Industries of the contract termination and demanded the return of advance payments in June last year.
In July of the same year, Samsung Heavy Industries filed for arbitration with the Singapore arbitration court to confirm the illegality of Zvezda's contract termination, while also pursuing negotiations in parallel. However, due to increased uncertainty regarding contract fulfillment and business continuity caused by the prolonged Russia-Ukraine war, the company ultimately decided to take legal action.
A representative from Samsung Heavy Industries stated, "The fundamental cause is the shipowner's unilateral contract termination," and added, "We will do our utmost through international arbitration to prove the illegality of the contract termination and to receive fair compensation for damages."
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