CHINA Shipping Development must pay 11.7 billion won (US$12.6 million) to three South Korean companies after losing a lawsuit over a charter agreement with Korea's bankrupt Huron Company in 2003.

The mainland Chinese shipping company reported 1.3 billion yuan (US$166.4 million) profit in the first six months of this year, down 19 per cent from the same period last year.

"This might have negative impact on the profit of the company and its subsidiaries for the current financial year," China Shipping said in a Hong Kong stock exchange announcement, reported in Logistics Management magazine.

The legal battle arose after Huron chartered two China Shipping tankers, the Dinhe and the Daqin 74, to deliver oil to Korea. Huron settled transport fees from China Shipping but the Korean firm went into liquidation in January 2004 and did not redeem the bills of lading from the banks.

Then Kookmin Bank, Woori Bank and National Federation of Fishery Co-operatives filed a lawsuit in Korea against China Shipping in September 2004, claiming compensation of 11.97 billion won.