Samsung Heavy Industries has announced the cancellation of two major contracts with Russia’s Zvezda Shipbuilding Complex, collectively valued at 4.85 trillion won (approximately US$3.54 billion), citing what it describes as an “illegal termination” by the Russian shipowner.
The South Korean shipbuilder disclosed in regulatory filings that it was formally notified by Zvezda in June 2024 of the unilateral cancellation of the agreements, with a demand for the return of advance payments already made. The contracts, awarded in 2020 and 2021, related to the supply of parts and blocks for 10 icebreaking LNG carriers and seven icebreaking shuttle tankers.
In response to the termination, Samsung Heavy initiated arbitration proceedings in Singapore in July to contest the legality of the move, while simultaneously entering into discussions with Zvezda in an effort to resolve the dispute.
Amid protracted geopolitical instability due to the ongoing Russia-Ukraine conflict, the outlook for contract fulfilment and broader business operations became increasingly uncertain. In light of these conditions, Samsung Heavy ultimately opted to terminate the contracts and pursue a claim for damages, a decision taken to safeguard its legal and financial interests.
The company did not disclose the specific timeline or estimated financial impact of the damage claims, but emphasised its commitment to protecting shareholder value and maintaining legal integrity throughout the arbitration process.
-Business Times
