A South Korean court on Friday ruled in favor of Hyundai Heavy Industries Co. to enforce an international ruling that the shipbuilder has a right to repurchase shares of a local oil refiner from an Abu Dhabi-based firm.
In December of last year, Hyundai Heavy, the world's largest shipbuilder, filed a suit against International Petroleum Investment Co. (IPIC) to enforce the International Court of Arbitration's ruling that confirms its right to buy back shares of Hyundai Oilbank Corp., the country's fourth-largest refiner.
In November, the arbitration court ruled that the Abu Dhabi-based firm must sell back its 70-percent stake in the refiner to Hyundai Heavy for 15,000 won (US$12.5) per share, a transaction valued at around 2.6 trillion won. The shipyard currently owns 21.13 percent of the country's smallest refiner.
But IPIC rejected the validity of the ruling, claiming that some key factual and legal conclusions that led to the decision were incorrect and that it is not enforceable in South Korea.
"IPIC should fulfill the arbitration court's ruling that sells back its shares to Hyundai Heavy," Seoul's Central District Court said in a statement. "Also, Hyundai Heavy is allowed to enforce the arbitration court's ruling."
A dispute began in early 2008 when Hyundai Heavy announced it would exercise an option to buy IPIC's stake, saying IPIC tried to sell part of its stake in violation of an earlier agreement.
In that year, Hyundai Heavy filed a petition with the International Court of Arbitration under the International Chamber of Commerce.
IPIC acquired 50 percent of Hyundai Oilbank in 1999 for $500 million, and took another 20 percent in 2003 from Hyundai Group, which was trying to reduce its debt at that time.
With court approval, Hyundai Heavy will be able to expand into energy-related business while reducing its dependency on shipbuilding segments.
Hyundai Heavy is seeking to diversify its business portfolio by launching wind power and other alternative energy-related businesses.