KEPCO and KHNP Dispute Enters Domestic Arbitration Proceedings

Published 01 Jun.2026 14:30(KST)

KHNP Files Claim Worth 1.66 Trillion Won
Largest Case in KCAB’s History

The dispute over construction costs for the Barakah Nuclear Power Plant in the UAE between Korea Electric Power Corporation (KEPCO) and Korea Hydro & Nuclear Power (KHNP), amounting to 1.1 billion dollars (approximately 1.66 trillion won), has officially entered international arbitration proceedings at the International Arbitration Center of the Korean Commercial Arbitration Board (KCAB). This case is expected to become the largest in KCAB’s history.

On May 21, KHNP submitted a request for arbitration to the KCAB International Arbitration Center (Case No. 26112-0010), seeking payment of approximately 1.1 billion dollars from KEPCO in connection with the Operation Support Services (OSS) contract for the UAE nuclear power plant construction project. As a result, the dispute between the two parties will be conducted under international arbitration rules at KCAB, a domestic arbitration institution.

Law Times

From Domestic to International Arbitration

Given that this dispute is between domestic state-owned enterprises, there was initially some speculation that it might be filed as a domestic arbitration case with KCAB. In reality, however, it was filed with the KCAB International Arbitration Center. This decision was made to maintain continuity with the international arbitration proceedings previously conducted at the London Court of International Arbitration (LCIA) in the United Kingdom.

Both parties withdrew the previous LCIA arbitration. However, considering that a significant portion of the procedures had already taken place, the arbitral tribunal formed under the LCIA is expected to remain in place. The position of presiding arbitrator is currently vacant, while the two arbitrators appointed by KEPCO and KHNP, respectively, remain unchanged. It is reported that both arbitrators are foreign nationals.

The Ministry of Trade, Industry and Energy and KEPCO strongly insisted that international arbitration rules should be applied, even if the case was moved to KCAB. This stance was based on the fact that the contract and key documents were drafted in English and that the case had originally been conducted under LCIA’s international arbitration procedures.

In particular, the OSS contract itself was structured as a back-to-back contract based on English, and from the outset, the dispute was designed to be handled as an international dispute. The only change was the switch of arbitration institutions from LCIA to KCAB; the retention of foreign arbitrators was in line with this approach.

The claimed amount of approximately 1.66 trillion won accounts for about 3.3% of KEPCO’s equity capital (approximately 49.3 trillion won). KEPCO’s position is that it cannot accept the majority of KHNP’s claim and that it has no obligation to make payment.

The conflict between KEPCO and KHNP originated from the issue of additional cost burdens resulting from delays in the construction schedule of the Barakah Nuclear Power Plant in the UAE.

In February 2026, the Ministry of Trade, Industry and Energy recommended transferring the international arbitration case being conducted at the LCIA to KCAB, a domestic arbitration institution, and called for the establishment of a separate consultative body to discuss fundamental settlement measures.