Korean Air Wins Appeal Partially in Delay Penalty Suit over UAV Deliveries

An appellate court has upheld a lower court ruling that Korean Air is not obligated to pay a portion of the delay penalties imposed by the Defense Acquisition Program Administration (DAPA) regarding delayed deliveries of unmanned aerial vehicles (UAVs).

The 22-2 Civil Division of the Seoul High Court (Presiding Judges Nam Sung-min, Shim Dam, and Sung Soo-je) dismissed the appeals from both sides on August 20 in a lawsuit filed by Korean Air against the state seeking confirmation of the non-existence of debt, maintaining the partial plaintiff-victory ruling.

In December 2015, Korean Air signed a contract with DAPA for the initial mass production of a total of 16 sets of division-level reconnaissance UAVs, which are operated by division-level units for independent surveillance and reconnaissance operations.

However, as deliveries were delayed due to reasons such as changes in specification designs, DAPA held Korean Air responsible and imposed delay penalties amounting to 208.1 billion KRW, deducting 65.85 billion KRW from the delivery payment.

Claiming that the mass production was delayed due to DAPA's unilateral requests for specification changes and that the company bore no responsibility, Korean Air filed a lawsuit in April 2021.

Previously, the first-instance court ruled that Korean Air's delay penalty should be 25.4 billion KRW, which is 10 percent of the contract amount of 254 billion KRW.

Accordingly, the court ordered DAPA to return 40.45 billion KRW out of the 65.85 billion KRW it had deducted from the delivery payment under the guise of delay penalties to Korean Air.

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.