[NEWSWORKS=LEE HAN IK] The Seoul Central District Court in South Korea has put FuelCell Energy's receivable under provisional seizure on January 13th, 2020.

On the first Friday of 2020, POSCO Energy has filed for provisional seizure against FuelCell Energy(FCE, a U.S. hydrogen fuel cell manufacturer) to the Seoul Central District Court to recover its losses caused by FCE.

Considering the implemented legal actions against FCE, POSCO Energy appears to have concluded that negotiations would not resolve the conflict.

The conflict between FCE and POSCO Energy was caused due to a facility provided by FCE. It was known to stabilize stacks inside of 300kW fuel cell which has impacts on the generator’s efficiency. 

The facility was built in June of 2016 after a purchase contract in 2014 and a technical support contract in 2015.

Although FCE had designed and provided the parts for the facility, it was never operatinal due to numerous problems.

Shortly after the completion of the construction, POSCO Energy formed a joint investigation team with FCE and discovered ninety-seven problems. POSCO Energy continuously ask for solutions, but it has yet to be resolved due to the lack of cooperation by FCE.

"This is not the only reason that FCE appears to be uncooperative in its business with POSCO Energy," a source in the fuel cell industry said. "POSCO Energy has shown efforts by establishing a fuel cell specialized company called Korea Fuel Cell and JV(Joint Ventures) to strengthen its competitiveness in the fuel cell business. But since FCE continues to make unreasonable demands and ignore the existing agreements, POSCO Energy won’t be pushed around by FCE anymore."

The official also said that the latest legal measures seem to be an example of a change in relations between the two companies.

POSCO Energy has been building production facilities worth 500 billion Korean-Won in Pohang, South Korea, since 2008 and has actively been marketing to expand the domestic fuel cell market in a bid to tap into the local market for Molten Carbonate Fuel Cells(MCFC).

Not only the fuel cells provided by FCE during the early stages of the project show significant flaws within the warranty periods, but also a series of products worn out earlier than the anticipated life spans. 

As a result, POSCO Energy has suffered from rumors that it was going to withdraw from fuel cell business for years. Also, it had to suffer from losses and lowered corporate performance due to FCE product defects.

Withal the fuel cell industry for power generation hopes the problems between the  two companies' to be resolved amicably and hopes the business will be normalized; the industry pointed out that FCE's attempt to solely enter the government-backed fuel cell market without consulting POSCO Energy, which holds the exclusive distribution rights in Asia, is a 'nonsense.'