Samsung Engineering has filed an investor-state dispute settlement suit against Saudi Arabia with the International Center for Settlement of Investment Disputes of the World Bank over changes made to its power plant construction contracts for Yanbu Industrial City.

Earlier this year, Saudi Arabia’s Saline Water and Conversion Corp. canceled the contract for a major power and desalination plant in Yanbu Industrial City after disagreements arose with Samsung Engineering over changes to the project. 


In 2012, Samsung won roughly 50 to 60 percent of the Yanbu Power and Desalination Plant phase 3 project orders, worth some 1.6 trillion won ($1.45 billion).

However, after Saline Water and Conversion Corp. changed its turbine specifications for its 3,100-megawatt power plant, the corporation decided to terminate its contract with Samsung in January, as the two sides failed to reach a new pricing agreement. The project was initially due to be completed by the end of last year.

Samsung Engineering reportedly received roughly $830 million for its plant project up to this year, with the power and desalination plant only about halfway complete.

Investor-state dispute settlement is a system for filing arbitration with an international body against a country, after a company that has invested in a country has been infringed upon or damaged by a sudden change in policy.

By Julie Jackson (juliejackson@heraldcorp.com)