Samsung Heavy Industries Co., a major shipbuilder in South Korea, is likely to receive US$318 million in compensation over a drill ship order cancellation, industry insiders said Thursday.
An arbitration tribunal in London on Wednesday (local time) favored Samsung Heavy’s claims against Pacific Drilling VIII Ltd. (PDC), a subsidiary of U.S.-based Pacific Drilling S.A., regarding the contract cancellation for the Pacific Zonda drill ship.
In 2013, Samsung Heavy secured an order from PDC to build a drill ship for $517 million. But in October 2015, PDC notified Samsung that it would cancel the order, claiming that the shipbuilder was delaying the construction process and was not likely to meet the delivery deadline.
This image provided by Samsung Heavy Industries Co. shows the company’s logo. (PHOTO NOT FOR SALE) (Yonhap)
Samsung Heavy then took the case to Britain’s arbitration tribunal, saying that PDC’s order cancellation was an unfair practice.
For the order, Samsung had received $180 million as advanced payment but didn’t collect the rest.
“Since PDC can appeal (against the ruling), we can’t predict what’s going to happen next,” a Samsung Heavy official said. “We have set $112 million as damage allowance for this case, but it appears that we can retrieve that.”