South Korea’s Posco Energy Co. said Friday it has filed an $800 million countersuit against its U.S. partner FuelCell Energy (FCE) at the International Chamber of Commerce (ICC) for alleged breach of contract.

The move comes after the U.S. fuel cell manufacturer in June sued Posco Energy and its subsidiary Korea Fuel Cell at the ICC and sought $200 million in damages, claiming that the termination of the contract was due to breach of terms by its Korean partners.

Posco Energy called the FCE’s unilateral termination “invalid,” saying it was the U.S. firm that had violated the agreed-upon terms.

The two first entered into partnership in 2007 when Posco Energy invested $29 million in FCE to secure the licensing rights for molten carbonate fuel cell (MCFC) technologies in Korea. It later put up an additional $55 million in the company.

Posco Energy said it has been trying to set up a joint venture with FCE since 2016 to streamline operations but that FCE had filed a legal suit in the middle of negotiations. It suspected the move could be part of FCE’s plans to sell directly in Korea, one of the world’s largest fuel cell markets.

Posco Energy currently holds exclusive rights to FCE technologies in Asia through 2023. Those rights would have to be invalidated if FCE is to make a move into Korea, which explains its decision to seek arbitration at the ICC, according to Posco Energy.

The $800 million in compensation accounts for the defective FCE products over the years as well as losses due to FCE’s breach of contract and non-fulfillment of obligations, the company added.

Posco Energy said it has racked up massive losses from faulty modular fuel cell stacks supplied by FCE. Stacks are a key component of fuel cell generators that convert hydrogen into electricity.

The company’s fuel cell business logged losses of 44.7 billion won ($38.8 million) in 2014, 83 billion won in 2015, 92.5 billion won in 2016 and 64.5 billion won in 2017.

In November 2019, Posco Energy spun off its fuel cell business to a stand-alone company called Korea Fuel Cell.

By Pulse

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