Australia, Naval Group hammer out $830M compensation deal ending submarine dispute

The Australian Government has finalized negotiations with French shipbuilding company Naval Group to conclude the attack class submarine program.

The government made the decision to terminate the contract on the basis of advice about capability requirements for the Australian Defence Force cancelling contract with Naval Group for the construction of submarines.

The two parties have reached “a fair and equitable settlement” to bring a conclusion to the future submarine program. According to the government’s officials, Australia will pay €555 million (around $830 million).

“We deeply respect France’s role and active engagement in the Indo-Pacific. Given the gravity of the challenges that we face both in the region and globally, it is essential that Australia and France once again unite to defend our shared principles and interests: the primacy of international law; respect for sovereignty; the rejection of all forms of coercion; and taking resolute action on climate change,” Australian officials noted.

To remind, in September last year, Australia unveiled plans to build at least eight nuclear-powered submarines under a new Indo-Pacific security partnership with the United States and Britain, AUKUS pact.

The first initiative under AUKUS was for Australia to acquire nuclear-powered submarine technology, focusing on identifying the optimal pathway to deliver the nuclear-powered submarines.

The government’s intention is to build nuclear-powered submarines in South Australia, maximizing the use of Australian workers. The pursuit of nuclear-powered submarine technology meant that Australia will no longer proceed with the Attack-class conventional submarine program with Naval Group.