Hyundai Heavy Industries (HHI) lost a compensation suit with the state over a defect in the 1,800-ton submarine "SonweonIl-ham," which was ordered by the Defense Acquisition Program Administration (DAPA). HHI is required to pay about 5.8 billion won (some $4.8 million) in compensation following the Supreme Court's final ruling.
The Supreme Court upheld the original ruling on June 11 in an appeal against Korea Shipbuilding & Marine Engineering, an interim holding company of HHI. The original court ruled that HHI should pay 5.8 billion won out of 20 billion won in compensation.
Since 2000, the Defense Ministry has invested 1.27 trillion won to implement the next KSS-II submarine project to introduce new submarines. In the course of the project, the German company ThyssenKrupp's model was selected, and HHI was in charge of the construction in Korea.
Submarine, which was later delivered to the Navy, caused noise from a device called a propulsion motor manufactured by German company Siemens in 2011, and the military and the DAPA filed a lawsuit against HHI to claim the cost incurred from the defect investigation and maintenance.
The government claimed that HHI should take full responsibility because it is the party that signed a contract with ThyssenKrupp that provided the parts. HHI, on the other hand, responded by saying, "The motor in question corresponds to the so-called government-supplied goods brought in by the government from foreign companies, so they are not responsible for the defects."
The court ruled in favor of the government, saying that HHI, the party to the contract, was responsible. The Supreme Court also acknowledged HHI's responsibility for compensation.