Unfair Loss Compensation for Submarine Delayed Delivery... Hanwha Ocean Wins Partial Victory in First Trial

Hanwha Ocean (formerly Daewoo Shipbuilding & Marine Engineering) will recover 28.8 billion KRW in damages it had to pay the government due to the delayed delivery of the Yulgoksooni ship (Jangbogo-II No. 6 ship).

According to the legal community on the 6th, the Seoul Central District Court Civil Division 20 (Presiding Judge Lee Sera) ruled on the 1st that in the unjust enrichment lawsuit filed by Hanwha Ocean against the state, "The defendant shall pay the plaintiff 28.80541 billion KRW and delay damages," partially ruling in favor of the plaintiff.

Yu Gwansun Ship

Hanwha Ocean signed a contract with the Defense Acquisition Program Administration in 2010 to deliver the Jangbogo-II No. 6 ship by November 2016 for a contract amount of 118.8 billion KRW.

However, the submarine delivery was delayed by about 8 months (237 days) and was completed in July 2017. Hanwha Ocean had to pay the government approximately 30.8 billion KRW after deducting the government’s unpaid payment claim of about 12 billion KRW from the delay penalty of about 42.8 billion KRW.

Hanwha Ocean later requested exemption from the delay penalty, arguing that the delivery delay was due to bad weather conditions, lack of support from the Defense Acquisition Program Administration for safety support ships, and defective government-supplied materials, making it difficult to hold the company responsible.

The Defense Acquisition Program Administration partially accepted Hanwha Ocean’s claim and returned about 8.1 billion KRW in delay penalties for 45 days and about 200 million KRW in interest. They maintained that Hanwha Ocean was responsible for 34.7 billion KRW for the 192 days of delay.

However, Hanwha Ocean filed a lawsuit, claiming that the responsibility for the delivery delay lay with the Defense Acquisition Program Administration.

The court ruled that Hanwha Ocean was only responsible for delay penalties for 63 days, amounting to 8.5 billion KRW. Considering the Defense Acquisition Program Administration’s unpaid payment claim of 12 billion KRW, the state should actually pay Hanwha Ocean 3.5 billion KRW.

However, since the Defense Acquisition Program Administration initially received 30.8 billion KRW more, the total unjust enrichment amounts to 34.3 billion KRW. Adding delay damages of 2.8 billion KRW to this amount (37.1 billion KRW) and subtracting the previously returned 8.1 billion KRW and interest, the court concluded that the Defense Acquisition Program Administration’s unjust enrichment was 28.8 billion KRW.

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