Samsung Heavy "Sweden Stena Trial Leaves Precedent of Shipowner's Unfair Delay and Contract Termination"

[Asia Economy Reporter Hwang Yoon-joo] Samsung Heavy Industries, which is engaged in arbitration proceedings over the termination of a contract with Sweden's Stena for a semi-submersible drilling rig (one unit), has been ordered to return the advance payments and other funds. Samsung Heavy Industries has decided to appeal to the UK High Court.

On the 5th (local time), the arbitration panel in London, UK, ruled that Stena's termination of the drilling rig contract was appropriate and ordered Samsung Heavy Industries to return a total of 463.2 billion KRW, including the advance payments already received and accrued interest, to Stena.

In June 2013, Samsung Heavy Industries received an order from Stena for a drilling rig worth 720 million USD, received a 30% advance payment, and began construction. However, frequent design changes and excessive demands from the shipping company caused delays in the schedule.

In response, in June 2017, Samsung Heavy Industries requested an extension of the construction period and claimed related costs due to the delays. Stena then notified the termination of the contract citing delivery failure as the reason, leading to arbitration proceedings over the advance payments and accrued interest.

A Samsung Heavy Industries official stated, "This arbitration ruling sets a bad precedent that shipowners can intentionally delay progress and terminate contracts during market downturns," adding, "We plan to proceed with the appeal process at the UK High Court."

Meanwhile, Samsung Heavy Industries plans to additionally reflect a provision of 287.7 billion KRW in its 2020 financial statements due to this arbitration decision.

This content was produced with the assistance of AI translation services.