Samsung Heavy Industries files a 390 billion KRW compensation claim against Korea Gas Corporation for 'Korean-style cargo hold'

Payment of Arbitration Award to SK Shipping
"Gas Corporation 100% Responsible... Recoverable"

Samsung Heavy Industries announced on the 23rd that it has paid an arbitration award to SK Shipping regarding the LNG carrier equipped with the 'Korean-type LNG cargo tank (KC-1)' found to have a design defect, and has filed a subrogation lawsuit against Korea Gas Corporation.

This LNG carrier experienced a 'cold spot (freezing phenomenon)' caused by the design defect of the KC-1 cargo tank, resulting in suspension of operations. Subsequently, a dispute over responsibility has continued among related companies, including Samsung Heavy Industries as the shipbuilder, Korea Gas Corporation (and its subsidiary KLT) as the cargo tank designer, and the shipowner SK Shipping.

In the first trial of the domestic lawsuit concerning the repair costs of the cargo tank and losses due to the ship's non-operation, Korea Gas Corporation was ruled against. In October last year, the Seoul Central District Court held Korea Gas Corporation responsible and ordered it to pay Samsung Heavy Industries 72.6 billion KRW for repair costs and SK Shipping, the shipowner, 115.4 billion KRW for the full amount of losses from the ship's non-operation.

Additionally, in December of the same year, the UK arbitration court recognized the depreciation in the ship's value due to the KC-1 defect and ruled that Samsung Heavy Industries pay SK Shipping 390 billion KRW. Accordingly, Samsung Heavy Industries paid SK Shipping the 390 billion KRW arbitration award earlier this month and plans to recover the amount through a subrogation claim lawsuit against Korea Gas Corporation.

A Samsung Heavy Industries official stated, "The arbitration award is compensation for the loss in ship value caused by the KC-1 defect," adding, "Since Korea Gas Corporation's responsibility was fully recognized in the domestic lawsuit on the same issue, we believe full recovery is possible through subrogation claims."

Meanwhile, KLT, the cargo tank designer, stated that after four repairs and test voyages of the vessel, the classification society judged that the ship could operate on routes with seawater temperatures above 6℃. Samsung Heavy Industries considered resuming operations by jointly acquiring the ship with Korea Gas Corporation from SK Shipping to continue developing the Korean-type LNG cargo tank, but discussions have been temporarily suspended due to significant disagreements with Korea Gas Corporation.

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