SEOUL, March 8 (Yonhap) — Samsung Heavy Industries Co. said Monday that it plans to appeal a British arbitration ruling that ordered the South Korean shipbuilder to return money received from Swedish company Stena for a shipbuilding deal.
The London Court of International Arbitration (LCIA), one of the world’s leading arbitral institutions, ruled Friday that Samsung Heavy should refund prepaid money and accrued interest worth 463.2 billion (US$409.7 million) to Stena, Samsung Heavy said in an emailed statement.
The court said Stena’s action to cancel the deal with Samsung Heavy in 2017 was legal, as the ship was not built within a certain period, Samsung Heavy said.
The South Korean shipbuilder said it will appeal the ruling with the British appellate court.
The court decision set a bad precedent for the intentional delay of ship construction by buyers when the market condition worsens after placing their orders for ships.
In June 2013, Samsung Heavy signed a $720 million deal with the Swedish company to build a semi-submersible drilling rig and started constructing the ship after receiving 30 percent of the amount of the deal in advance, the shipbuilder said in an emailed statement.
But the vessel construction had been delayed due to Stena’s frequent and excessive demands for changes of the design, Samsung Heavy said.
In response, Samsung Heavy called for the extension of the construction period and expense caused by the extension.
Stena informed Samsung Heavy of the cancellation of the deal, citing the failure to deliver the ship on time.
Both sides referred the dispute to the British arbitration court.
In relation with the legal dispute, Samsung Heavy reflected allowance for expected losses worth 192.5 billion won in its 2020 balance and plans to set aside an additional 287.7 billion won in allowance.
Samsung Shipbuilder sold the drilling ship in April 2018 for $500 million, the company said.