'LNG ship cargo hold defect' KOGAS 2nd trial compensation amount increases... “Payment of 260 billion won”

The amount of compensation that Korea Gas Corporation must pay to Samsung Heavy Industries and SK Shipping due to a defect in the cargo hold of a Korean-type liquefied natural gas (LNG) ship increased to 260 billion won in the appeal trial, about 80 billion won more than the first trial.

According to the legal community on the 13th, Civil Division 37-1 of the Seoul High Court (Judge Kim Jong-gi, Min Jeong-seok, and Park Eun-young) ruled on the 11th that SK Shipping should pay 220.39 billion won in the damages lawsuit against Korea Gas Corporation.

On the same day, the lawsuit filed by Samsung Heavy Industries ruled that it should pay 48.07 billion won.

Accordingly, the amount of compensation to the two companies increased to 268.4 billion won compared to the first trial.

Previously, the first trial ruled that Korea Gas Corporation must pay 115.4 billion won to SK Shipping and 72.6 billion won to Samsung Heavy Industries.

The court accepted SK Shipping's argument that the claim amount was adjusted in the appellate trial and increased the amount of compensation to nearly twice that of the first trial.

The court acknowledged Korea Gas Corporation's responsibility as in the first trial, saying, "A cold spot defect, a serious defect that can lead to brittle failure in which the ship structure suddenly breaks, occurred."

He then pointed out, "The ship in this case is unable to operate as an LNG carrier according to the transportation contract due to a cold spot defect," and "Due to the defendant's violation of duty of care, defects such as moisture and plywood cracks occurred in the cargo hold, and the resulting damage is also obligated to compensate."

Meanwhile, on the same day, the court ruled that the plaintiff lost in the damages lawsuit filed by Korea Gas Corporation against SK Shipping, the same as in the first trial.

The court ruled that since KOGAS was negligent in making the ship impossible to operate, SK Shipping could not be held liable for damages due to its violation of its obligation to deploy a replacement ship.

'KC-1', a Korean-style LNG ship cargo hold, was developed as a national project starting in 2004 to localize LNG storage tank manufacturing technology, which had previously been dependent on foreign technology.

Korea Gas Corporation and KCLNG Tech participated in technology development, domestic shipbuilders such as Samsung Heavy Industries took charge of ship construction, and SK Shipping took care of transportation. A total of 19.7 billion won was invested in development over 10 years.

Samsung Heavy Industries built two LNG carriers (SK Serenity and SK Spica) using KC-1 technology for the first time and delivered them to SK Shipping in 2018.

However, due to defects such as the 'cold spot' phenomenon where the temperature of some parts of the hull fell below the allowable minimum temperature, operations were suspended five months after delivery.

Accordingly, Samsung Heavy Industries and SK Shipping filed a lawsuit against Korea Gas Corporation in 2019, demanding compensation for ship repair costs and losses resulting from the suspension of operations, respectively.