KT sues Ssangyong E&C over demand for extra construction costs

Employees of Ssangyong E&C and its subcontractors hold a rally in front of the Pangyo KT Office Building in Seongnam, Gyeonggi Province, in this October 2023 file photo. Courtesy of Ssangyong E&C

KT filed a lawsuit against Ssangyong E&C last Friday to avoid additional payment for the construction of the Pangyo KT Office Building in Seongnam, Gyeonggi Province, which was completed in April last year, the telecommunications firm said Sunday.

In response, Ssangyong E&C threatened to hold another rally in front of KT headquarters in Seoul, following the previous one held in front of the Pangyo KT Office Building last October to urge the telecommunication firm to pay an additional 17.1 billion won ($12.5 million).

Their conflict started after Ssangyong E&C demanded KT pay additional amounts in July 2022, in line with inflation caused by the COVID-19 pandemic, the Ukraine war, delayed import of materials, union strikes and suspended framework construction.

KT, however, refused to accept the request, citing their contract ruling out price adjustments in case of inflation or deflation.

Since then, the Ministry of Land, Infrastructure and Transport has been mediating their dispute.

“Ssangyong E&C has continuously damaged our image by holding a rally to make an unreasonable request for the payment of additional construction costs,” KT said in a statement. “Although we sought an amicable settlement of the matter, we could not reach an agreement with Ssangyong E&C.”

Ssangyong E&C claimed that KT is failing to fulfill its promise to participate in the mediation sincerely.

“We delayed our planned rally in front of KT headquarters in March, as we trusted KT’s promise,” Ssangyong E&C said in a statement. “We will hold a rally in front of KT headquarters and take stern measures.”

The construction of KT’s new 12-story building with four basement levels was completed in April last year, after 31 months of work. Ssangyong E&C won the construction order worth 96.7 billion won in 2020, outbidding seven other contractors.

Industry officials expect that the outcome of the dispute between KT and Ssangyong E&C will be a case in point for other companies embroiled in conflicts over construction costs.