It was confirmed on the 27th that Korea Electric Power Corporation and Korea Hydro & Nuclear Power Co. (KHNP) decided to move home a roughly 1.4 trillion won international dispute they have been waging overseas.
The dispute stems from an "operations support services contract" the two sides signed in May 2010 in connection with the Barakah nuclear power plant project in the United Arab Emirates (UAE). KEPCO was the prime contractor overseeing the project, and KHNP was responsible for operations support services, but as the schedule slipped behind plan, KHNP incurred additional expense. KHNP billed KEPCO about 1.4 trillion won, but when it was not accepted, filed for arbitration with the London Court of International Arbitration (LCIA) in May last year.
The Ministry of Trade, Industry and Resources on the 27th of last month recommended a transfer of the arbitration to the Korean Commercial Arbitration Board (KCAB). Afterward, KHNP on the 26th and KEPCO on the day each held board meetings and reported plans to accept the recommendation. The two entities plan to begin discussions to amend the contract to reflect the transfer of the arbitral institution.
However, arbitration is expected to take at least two years to mend the rift. Even at the LCIA, the proceedings had not begun 10 months after the filing.
Arbitration requires three arbitrators. Each entity appoints one, and through consultation they select one "presiding arbitrator." However, because advantages and disadvantages vary by arbitrator, the selection of the presiding arbitrator has been difficult. This is expected to continue after the transfer to the KCAB.
In addition, under the U.S.-Korea nuclear cooperation agreement, prior authorization from the U.S. government is required to share nuclear plant technical data with a third party, and approval has not yet been granted. Foreign arbitrators or foreign law firms are subject to this authorization.
In the end, the fastest solution is a settlement between the two entities, but breach-of-duty risk is an obstacle. To avoid this, they would later need to prove it was a reasonable decision made after comprehensively weighing litigation expense, chances of prevailing, and national-interest losses from technology leakage. That said, the inauguration of KHNP President Kim Hoe-chun, who hails from KEPCO, is being watched as a potential variable to break the stalemate.
A government official said, "The two sides have begun working-level consultations for a settlement."