[NEWSWORKS=LEE HAN IK] POSCO Energy is preparing to initiate an international lawsuit against FuelCell Energy(FCE), a U.S. hydrogen fuel cell manufacturer. POSCO Energy has concluded that negotiating with its former partner, FCE, would not solve the conflict between them.

POSCO Energy has made its decision to make an international lawsuit regarding its loss caused by the deficient ‘stack module’ that FCE has proivded, according to people in the industry.

Prior to the international lawsuit, Posco Energy has received ruling from the court in January, 2020 and March, 2020 that it can proceed a provisional attachment order on FCE’s bonds.

The net worth of the FCE bonds on the provisional attachment exceeds 10 billion won: 8.6 billion Korean won and 2 billion won for damages caused by FCE’s inadequate manufacturing facility.

The provisional attachment order will be imposed on the LTSA(Long Term Service Agreement) fund that Korea Southern Power Co. Ltd(KOSPO) is paying for 20MW fuel cell power plants which FCE established back in 2018.

According to the LTSA between FCE, KOSPO has to pay FCE an annual amount around 8 billion won for operation and maintenance of the fuel cell equipments.

When the provisional attachment order is applied, FCE’s revenue would freeze for about 15 months.

“POSCO Energy is planning on asking an International Court of Arbitration for the settlement of the two provisional attachment orders which worth around 100 billion won.” said a POSCO Energy official.

FCE also has hinted a lawsuit against POSCO Energy.

On February 20th 2020, FCE has sent a cancellation notice of the contract stating that POSCO Energy has severely violated a license agreement. FCE also mentioned that if the violation is not resolved within 60 days, the agreement would be terminated.

“The claims that FCE has made are not true for the most part. FCE is the one violating the agreement and the trust between the two companies by trying to enter South Korean market without consulting POSCO Energy. So we are following the procedures for legal actions against FCE” the spokesperson for POSCO Energy said.

Industry experts who are familiar with the issue between the two said “Regarding POSCO Energy’s loss caused by FCE’s technological error and quality defects accumulates over 1 trillion won, FCE’s assertion on POSCO Energy’s violation of license agreement is a nonsense,“ adding that ”POSCO Energy should start a lawsuit by the rule against FCE which is a way to strengthen domestic fuel cell market.“