Samsung Heavy Industries said Wednesday it will file a lawsuit against Russia’s largest shipbuilder, Zvezda, for “illegally” terminating shipbuilding equipment supply contracts worth KRW4.85trn ($3.5bn). The Korean shipbuilder said it will also seek damages through international arbitration. 

In 2020 and 2021, Samsung Heavy signed contracts with Zvezda Shipbuilding Complex to supply parts and steel hull blocks for 10 icebreaking LNG carriers and seven shuttle tankers. 

However, in the wake of Russia’s invasion of Ukraine in 2022, the US government placed sanctions on Zvezda leading the two yards to discuss how to resolve the contract. Last year,  Zvezda unilaterally claimed Samsung had defaulted on its obligations and moved to cancel the agreement, something Samsung Heavy is now fighting, having also withheld $800m in advance payments.