8 hours Ago By [email protected](KoreaTimes)
An artist's impression of a KDDX destroyer / Courtesy of HD Hyundai Heavy Industries By Nam Hyun-woo The legal battle between Korea’s two major shipbuilders over the Republic of Korea Navy’s 7.8 trillion won ($5.6 billion) KDDX next-generation destroyer project came to a halt on Friday, as Hanwha Ocean withdrew its complaint against HD Hyundai Heavy Industries (HD HHI).
According to Hanwha Ocean, it withdrew its complaint with police against HD HHI. The withdrawal came eight months after Hanwha Ocean called for police investigations into executives of HD HHI for their alleged involvement in the theft of naval ship technologies between 2012 and 2015. The two shipbuilders have been trading salvoes after the Defense Acquisition Program Administration (DAPA) in February decided not to exclude HD HHI from the KDDX project, even though its executives were found guilty by the Supreme Court in November last year for stealing destroyer design data from Daewoo Shipbuilding & Marine Engineering (DSME), which is now Hanwha Ocean.
While filing complaints to police in March, Hanwha Ocean held multiple press conferences and presented various documents from courts and prosecutors as evidence that HD HHI’s management may have ordered or been aware of the tech theft by its employees. The legal battle has been gaining industry interest due to the size of the project and its potential impact on each company’s reputation. DSME was in charge of the conceptual design of the KDDX destroyers from 2012 to 2013, but HD HHI secured a bid for the basic design of the destroyers in 2020.
Since then, questions have been raised over the selecting process, with reports alleging that DAPA was set to task HD HHI with drafting a detailed design of the KDDX-class destroyers and constructing the first ship without any competitive bidding process . Reporters attend Hanwha Ocean's press conference on its complaint against HD Hyundai Heavy Industries at Hanwha Group's headquarters in Seoul, March 5. Yonhap Hanwha Ocean said it decided to withdraw the complaint due to “a need to cooperate for national interests.
” “We believe withdrawing the complaint is the right action for serving the national interests given the necessity of deploying next-generation Aegis destroyers in a timely manner and expanding Korea's defense exports,” Hanwha Ocean said in a statement. “To align with the government’s one-team strategy for the shipbuilding industry and pursue cooperation between domestic companies to strengthen competitiveness against Chinese shipbuilders, we decided to cancel the lawsuit in order to build trust between domestic companies for the greater good.” HD HHI also released a statement and stressed that it was “selected as the KDDX basic design contractor through fair and lawful procedures” and that it was “relieved that Hanwha Ocean decided to withdraw its complaint, although it was delayed.
” Read More Will HD Hyundai sign sole-source contract for KDDX project? HD Hyundai Heavy distances itself from ex-DAPA head's charges Though the two shipbuilders have taken a step back in their legal battle, the future progress of the KDDX project remains uncertain. Earlier this month, DAPA Minister Seok Jong-gun said in an interview with YouTube channel 3PRO TV that selecting multiple contractors or jointly developing the destroyers are “unrealistic” options. “Companies should follow DAPA’s decision,” the minister said.
“If objections continue, the military and the general public will ultimately be the ones to suffer losses.” Since HD HHI was selected as the contractor for basic design, industry officials assume that chances are high for DAPA to go on with HD HHI for detailed designing and building of the first ship. If DAPA, however, decides to put this on a competitive bidding, Hanwha Ocean may stand a chance because HD HHI received a 1.
8-point penalty due to the employees’ convictions. In July last year, HD HHI lost the contracts to build the Ulsan-class Batch-III ships 5 and 6 to Hanwha Ocean by a margin of 0.14 points.
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