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Hanwha Ocean’s Geoje shipyard. (Photo: Hanwha Ocean) |
[Alpha Biz= Kim Jisun] Hanwha Ocean has won its second court victory in a legal dispute with South Korea’s Defense Acquisition Program Administration (DAPA) over hundreds of billions of won in late delivery penalties related to a submarine project.
On Friday, the Seoul High Court’s Civil Division 19-2 ruled partially in favor of Hanwha Ocean, ordering the state to pay KRW 22.67 billion plus delay interest in an unjust enrichment lawsuit filed by the company.
The amount recognized by the appellate court was reduced from KRW 28.8 billion awarded in the first ruling.
The dispute stems from a 2010 contract between Hanwha Ocean and DAPA for the construction of the sixth vessel of the Jangbogo-Ⅱ (Type 214) submarine program. Under the contract, Hanwha Ocean was required to deliver the KRW 118.8 billion submarine by November 2016. However, the vessel was delivered approximately eight months later, in July 2017.
As a result, Hanwha Ocean was required to pay roughly KRW 308 billion in late penalties after offsetting unpaid government receivables of approximately KRW 120 billion from total penalties of about KRW 428 billion.
Hanwha Ocean argued that the delivery delay was caused by factors beyond its control, including adverse weather conditions, DAPA’s failure to provide safety support vessels, and defects in government-furnished equipment. The company requested an exemption from the late fees, claiming there was no attributable fault on its part.
DAPA partially accepted the claim, returning late fees of approximately KRW 8.1 billion covering 45 days, along with about KRW 200 million in interest. However, it maintained that the remaining 192 days of delay were attributable to Hanwha Ocean and that late fees totaling KRW 34.7 billion were justified.
Hanwha Ocean subsequently filed a lawsuit, arguing that DAPA bore responsibility for the delivery delay.
In the first trial, the court limited the delay period attributable to Hanwha Ocean to 63 days, corresponding to late fees of approximately KRW 8.5 billion. Taking into account unpaid government receivables of KRW 12 billion, the court concluded that the state should instead pay KRW 3.5 billion to Hanwha Ocean.
However, because the government had already collected KRW 30.8 billion in excess payments, the court determined that the total unjust enrichment amounted to KRW 34.3 billion. After adding KRW 2.8 billion in delay interest and deducting the previously returned amount, the court ruled that DAPA had unjustly gained KRW 28.8 billion.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
