Initiation of Recovery of Delay Penalties for Seoul Subway Electric Vehicles Worth 100 Billion Won

Seoul Metro, Strong Will to Recover 100 Billion KRW Worth of 532 Electric Train Cars Including 336 by Woojin Industrial Systems and 196 by Dawonsys Due to Missed Delivery Deadlines, Additional Response by Major Law Firm Taepyungyang

Perspective view of Line 5 train car

Seoul Metro (President Baek Ho) is drawing attention for its strong efforts to recover delay penalties amounting to over 100 billion won related to electric train vehicles.

The corporation signed contracts for the manufacture and purchase of 196 new electric train cars for subway lines 2 and 3 (Dawonsys) and 336 new electric train cars for lines 5 and 7 (Woojin Industrial Systems), with deliveries scheduled for March 2022 and November 2022 respectively, but failed to receive them due to the responsibility of the two manufacturers.

However, Dawonsys and Woojin Industrial Systems claim that the delivery delays were due to reasons beyond the manufacturers' control, such as COVID-19 and design changes, and have filed lawsuits to claim payment for the goods; the first trial is currently underway.

The corporation believes that these two companies recklessly won the bids beyond their manufacturing capabilities and caused significant damage by failing to meet the delivery deadlines.

In response, the corporation noted that the lawsuit amounts for the two cases approach 100 billion won, which has a significant financial impact on the corporation, and that the court's decision could set a precedent for future delay penalties. Since there are no prior rulings on the recognition of unavoidable delivery delays due to COVID-19, the corporation decided to strengthen its legal representation by adding the law firm Bae, Kim & Lee in June this year, in addition to the existing KCL.

The corporation announced that the two electric train manufacturers have appointed the law firms Kwangjang and Hwawoo as their legal representatives and are proceeding with the lawsuits, prompting Seoul Metro to additionally appoint the major law firm Bae, Kim & Lee to respond.

In particular, the corporation stated that the delivery delays of the electric train vehicles were caused by a combination of factors, including design delays by the manufacturers and delivery delays by parts suppliers, and pledged to do its utmost to secure a victory.

Despite its poor financial condition with financial liabilities reaching 3.5 trillion won and ongoing management normalization efforts such as real estate sales, the corporation is accelerating efforts to recover delay penalties related to electric train vehicles.

A senior official of the corporation said, “There can be no concession regarding the failure of the two companies, which won the bids through competitive bidding, to deliver the electric train vehicles on time,” and added, “We will take appropriate measures through legal judgment.”

He also expressed the intention to strongly respond to any future complacent behavior by electric train manufacturers who win bids by the lowest price method but fail to deliver on time.

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