Yongin must pay $435M for delay in rail service

An international arbitration court ordered Yongin City government to take responsibility for the delay of a rapid transit system that would connect the city with the Bundang line in the west.

Yongin Rapid Transit confirmed Tuesday that the International Court of Arbitration ordered Yongin city government to pay it 515.9 billion won ($434.6 million) for economic losses because the opening of the Yongin EverLine rail service has been delayed for more than a year.

The company had planned to start operating the 18.5-kilometer (11.5-mile) rapid transit system in July 2010, but the project became stuck for a year because the city government demanded the resolution of safety and noise concerns.

The suit was filed in February by Yongin Rapid Transit in the International Court of Arbitration under the International Chamber of Commerce (ICC), a Paris-based dispute resolution tribunal, because one of the chief investors in the project is Canada’s Bombadier Advanced Rapid Transit. The ruling has legal force in Korea.

The ruling said Yongin city government must pay 453 billion won before Oct. 11 and the balance later.

Officials in Yongin are hustling to find ways to pay the money, and want to negotiate with Yongin Rapid Transit to delay the payments and discuss alternatives to paying in cash, such as giving a share in the railway service.

A government official said the compensation is about 40 percent of the city’s annual budget.

“I think both sides, the government and the transit corporation, already know that the possibility of paying the compensation in cash is very low,” an official said “The city is suggesting solutions to this problem including sharing business rights with the transit company in running the railway.”

The official also said that it is considering issuing local bonds.

The Yongin EverLine was scheduled to open in July 2010, but the city said the project was flawed and had to be fixed before service could begin. The project began in 2005, but its opening has been delayed for a year because the mayor, Kim Hak-kyu, opposed the project. Kim told the JoongAng Ilbo in an interview in February that he had to delay the start of the service because Yongin Rapid Transit failed to make safety and noise fixes.

By Yu Gil-yong, Kwon Sang-soo [sakwon80@joongang.co.kr]