Hanwha Ocean Faces $1Bn Arctic LNG 2 Claim Over Terminated Contracts
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South Korean shipbuilding giant Hanwha Ocean is facing a damages claim expected to exceed 1 billion dollars from Novatek-backed Arctic LNG 2 over terminated shipbuilding contracts for icebreaking LNG carriers. The shipbuilder said the claim arose from alleged breaches of step-in agreements relating to contracts it terminated. Hanwha Ocean cancelled the contracts in 2022 following Western sanctions on Russia, and has received a notice of arbitration filed with the Singapore International Arbitration Centre.
Details of the Claim
Hanwha Ocean faces a substantial damages claim. It comes from Arctic LNG 2. This project is backed by Novatek. The claim concerns terminated shipbuilding contracts. These covered icebreaking LNG carriers.
The claim has a specific basis. It relates to alleged breaches of agreements. These are step-in agreements. They connect to the terminated contracts. The company disclosed this in a filing.
The Background to the Termination
The contracts were terminated in 2022. This concerned three LNG carriers. They were being built for Sovcomflot. The termination followed geopolitical developments. Western sanctions on Russia prompted it.
The vessels had a defined purpose. Arctic LNG 2 was due to charter them. The three LNG carriers would have served the project. The sanctions disrupted these arrangements. This led to the contract terminations.
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The Arbitration Process
The claim has entered formal arbitration. The company received a notice of arbitration. The charterer filed it. It went to the Singapore International Arbitration Centre. This begins the dispute resolution process.
The company outlined its response. It intends to actively respond to proceedings. It also seeks an amicable resolution. The claim is expected to exceed 1 billion dollars. The specific amount will be determined during arbitration.
Significance of the Dispute
The dispute reflects sanctions-related disruption. The contracts were casualties of sanctions. Western measures on Russia affected them. This forced the terminations. The claim stems from these events.
The dispute is part of broader litigation. The company faces related arbitration too. This involves Sovcomflot-affiliated companies. It has continued since 2023. This concerns the same 2020 contracts.
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This article was contributed by an external writer affiliated with our publication.
