Gov't to compensate Hyundai Asan $6 million for discontinued inter-Korean freight train service

The inter-Korean freight train, launched on Dec. 11, 2007, transported raw materials from South Korea’s Munsan to North Korea’s Bongdong Station, delivering supplies to the Kaesong Industrial Complex and returning with finished goods.

The inter-Korean freight train resumes operations after a 56-year hiatus on Dec. 11, 2017. Service was suspended less than a year later due to North Korea's restrictions on land routes. [CHOI SEUNG-SIK]

The government said Thursday it plans to compensate Hyundai Asan 8 billion won ($6.04 million) in unpaid costs related to the operation of inter-Korean freight train service that ran between the two Koreas from late 2007 to the end of 2008, marking the end of a 17-year-long legal dispute over the project.

“We are consulting with related agencies to fulfill the court's ruling and plan to proceed with the payment in accordance with the required procedures,” the South's Unification Ministry said in response to an inquiry by Democratic Party Rep. Kim Young-bae.

The inter-Korean freight train, or the Gyeongui Line freight train, launched on Dec. 11, 2007, transported raw materials from South Korea’s Munsan to North Korea’s Bongdong Station, delivering supplies to the Kaesong Industrial Complex and returning with finished goods.

However, less than a year later, on Nov. 28, 2008, the service was discontinued due to North Korea's restrictions on land routes. The freight train was initially seen as a symbol of economic cooperation between the two Koreas, with hopes of improving cross-border transport and restoring the Trans-Korean Railway.

Hyundai Asan, a subsidiary of the Hyundai Group involved in inter-Korean economic projects, provided materials and equipment for the train operations but has yet to receive approximately 3.9 billion won for the project. The Lee Myung-bak administration raised concerns about contract procedures, arguing that the project had been rushed and lacked proper oversight.

After inter-Korean exchanges were further strained following the Covid-19 pandemic in 2019, Hyundai Asan filed a lawsuit in March 2022 seeking payment. In July 2023, the court ruled in favor of the company, ordering the government to pay over 8 billion won, including the unpaid project costs and delayed interest. The ruling was finalized when the government decided not to appeal.

"After discussions with related ministries, we concluded that appealing the ruling would not be worthwhile due to the low likelihood of changing the court’s factual findings," explained a senior Unification Ministry official.

North Korea was found to have begun dismantling a section of the Gyeongui Line railway near the Kaesong Industrial Complex amid speculation that North Korea’s Supreme People’s Assembly, scheduled for next Monday, is expected to amend its constitution to formally codify leader Kim Jong-un's declaration of a "hostile relationship" with the South.

“Recent satellite imagery shows that North Korea has dismantled a railway bridge crossing the Sacheon River on the northern section of the Gyeongui Line,” a ministry official said during a closed-door briefing on Wednesday.

A Gyeongui Line railway bridge in North Korea was still intact in the photo above taken on Feb. 10, but by Sept. 23, its deck appears to have disappeared, leaving only the bridge structure. [GOOGLE EARTH/AIRBUS/MINISTRY OF UNIFICATION]

Analysis of Airbus satellite photos taken on Sept. 23 revealed that most of the bridge heading to Panmun Station, close to Kaesong, had been removed, leaving only its pillars intact. The bridge was still fully intact as of February this year. Around the same time, North Korea also planted eight rows of land mines and raised earthen barriers along the land route of the Gyeongui Line.

The Unification Ministry is also closely monitoring the possibility that North Korea may unilaterally terminate the 1991 Inter-Korean Basic Agreement.

The agreement, which has been in place for 33 years, defines the relationship between the two Koreas as a “special interim relationship stemming from the process toward unification,” rather than two separate states.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]