Hanwha Ocean is considering withdrawing a 47 billion won damages lawsuit against five union executives belonging to the subcontractor workers' union, while working hard to prepare grounds to persuade shareholders so that the charge of embezzlement does not apply. The subcontractor union conducted an illegal strike from June 2 to July 23, 2022, occupying Hanwha Ocean's dock (shipbuilding facilities), resulting in approximately 800 billion won in losses.
So far, Hanwha Ocean has said that if it does not proceed with the damages lawsuit, the charge of embezzlement will be established. It is now in a situation where it must contradict its past statements while reviewing the withdrawal of the lawsuit following the launch of the Lee Jae-myung administration, which is relatively pro-labor.
The former Daewoo Shipbuilding & Marine Engineering filed a damages lawsuit after the strike ended in 2022, and the lawsuit continued even after being acquired by Hanwha Group in December of the same year.
Hanwha Ocean believes that 47 billion won is a realistically difficult amount to receive. In other cases, courts do not always recognize the total damages requested by corporations against unions. On 24th, the Incheon District Court ruled that Hyundai Steel must pay 590 million won to workers in a first-instance ruling regarding a 20 billion won damages lawsuit against 180 executives from the metal workers' union.
Attorney Kim Hyun-min from Okims noted, "Even if Hanwha Ocean wins against some amount of the 47 billion won, the amount that can be retrieved from the five subcontractor union executives is likely to be smaller. If the expenditures, including legal fees, exceed the amount that can be obtained from proceeding with the lawsuit, it would be a better business judgment to discontinue the lawsuit."
Another legal professional said, "There are tangible and intangible benefits gained when withdrawing a damages lawsuit. If social costs are reduced through labor-management agreements and the shipyard operates on schedule, the benefits gained may outweigh the litigation costs. It would be difficult to question embezzlement in such business judgments."
Hanwha Ocean believes it is important for the union to promise to prevent a recurrence of the strike before withdrawing the damages lawsuit. An official from Hanwha Ocean stated, "The loss of 47 billion won has already been reflected in the financial statements, and it is important that the strike does not recur."
If Hanwha Ocean does not file a complaint against its executives for embezzlement, it is unlikely that shareholders will hold the board accountable. According to Article 339, Paragraph 1 of the Commercial Act, a company can claim damages against a director if the director violates laws or regulations or neglects their duties intentionally or through negligence.
Attorney Jeong Byeong-won of One & Partners said, "While shareholders pay the litigation costs for a shareholder representative lawsuit, the benefits go to the company if they win, so there is little incentive for shareholders to bring a lawsuit."