HANJIN HEAVY INDUSTRIES

- Greek shipowner’s KRW 10.2 billion claim fully dismissed, while the shipowner is ordered to pay HJSC KRW 816 million in damages
- Court recognizes shipowner’s responsibility for engine operation, resolving HJSC’s contingent liability risk

- A Panoramic View of HJSC’s Yeongdo Shipyard

HJ Shipbuilding & Construction (HJSC) has won a court ruling in a damages lawsuit filed by a foreign shipowner, with the shipowner’s KRW 10.2 billion claim against HJSC fully dismissed. The court also ordered the shipowner to pay HJSC approximately KRW 800 million in damages.

The ruling came in connection with an accident involving a foreign vessel that collided successively with surrounding facilities and other vessels after its engine failed while undocking following repairs. The court found that inadequate repairs to the engine performed by the shipowner were the primary cause of the accident.

The 46th Civil Division of the Seoul Central District Court ruled on August 12 that it dismissed in its entirety the damages claim filed by Greenwich Shipping S.A., the shipowner of the vessel Poseidon Hellas, against HJSC, and ordered the shipowner to bear all litigation costs.

Meanwhile, in a separate damages lawsuit filed by HJSC against the shipowner, the court ordered the shipowner to pay KRW 816.01 million of the KRW 1.44228 billion claimed by HJSC.

The incident occurred on December 30, 2020, while Poseidon Hellas was being undocked after completing repairs in a dry dock. The shipowner was responsible for the engine repairs, while HJSC handled the remaining vessel repairs. After both parties completed their respective work, the vessel’s main engine failed during undocking, causing the vessel to drift in strong winds and successively collide with the quay, a workboat, a tugboat, and the SK Dolphin Pier.

Following the accident, the shipowner claimed that the accident was caused by insufficient measures at HJSC’s dry dock and inadequate deployment of tugboats, and sought approximately USD 6.26 million plus KRW 1.05 billion in damages.

The key issue in the case was who was responsible for the engine failure. HJSC’s legal counsel, SNK, argued that “the vessel repairs had been completed, and the engine repaired by the shipowner had been confirmed by the shipowner as fully operational in the dock before undocking,” adding that “the engine failure at the location where it was scheduled to be operated fell within the shipowner’s responsibility.”

The court found HJSC not liable for the accident and dismissed the shipowner’s claim in its entirety. The ruling enables HJSC to resolve a major contingent liability risk involving tens of billions of KRW that had been a source of management uncertainty for several years, while also putting an end to the legal dispute over its liability for the vessel repair accident.

An HJSC official stated, “This ruling brings a long-running dispute to an end and allows us to eliminate the management uncertainty and contingent liability risk that have persisted for years.” He continued, “We expect this to provide an opportunity to establish an even more stable foundation for management.”