Hyundai Heavy Rejects IPIC’s Claim It Won Arbitration

By Shinhye Kang

Feb. 17 (Bloomberg) -- International Petroleum Investment Co. said it won part of an arbitration case over the control of Hyundai Oilbank Co. brought by Hyundai Heavy Industries Co., while the world’s largest shipbuilder rejected the claim.

The International Chamber of Commerce, or ICC, dismissed claims by Hyundai against IPIC, the Abu Dhabi government-owned company said today in an e-mailed statement. ICC’s December decision merely excludes IPIC from the case, Hyundai Heavy said in a separate e-mailed statement. Arbitration continues between IPIC units Hanocal and IPIC International and Hyundai Heavy, both companies said.

The dispute between the Hyundai Oilbank shareholders began when the Korea Economic Daily reported Nov. 26, 2007, that GS Caltex Corp., South Korea’s second-largest refiner, will bid for IPIC’s stake. Hanocal and IPIC International own a 70 percent stake in Hyundai Oilbank, while Hyundai Heavy holds 19.2 percent.

The South Korean shipbuilder on March 25 accused IPIC of breaching a shareholder agreement and offered to buy out its controlling stake, saying it would seek arbitration against IPIC and its two units in Singapore if it disagreed. Neither company would give details of the alleged breach in the shareholder agreement. The ICC has declined to comment on the case until it’s settled.

“ICC has merely limited the parties related to the case to Hanocal and IPIC International as parent company IPIC has no stake in Hyundai Oilbank,” Hyundai Heavy said. The dispute hasn’t been resolved at all, and the ICC will have a hearing in May, according to the shipbuilder.

IPIC is now asking the arbitrators to order Hyundai shareholders to pay legal fees and other costs incurred during the arbitration, IPIC said in the statement.

Shares of Ulsan-based Hyundai Heavy fell 4.6 percent to 208,000 won in Seoul trading as of 12:22 p.m. local time. The benchmark Kospi index dropped 3 percent.

To contact the reporter on this story: Shinhye Kang in Seoul at skang24@bloomberg.net.