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According to a pair of press release statements, global publisher Webzen and Red 5 have entered into legal wrangling centered around the development and publication of Firefall. Red 5 Studios has filed for arbitration against Webzen for "alleged breach of obligations" and is seeking to recoup $5 million. Webzen has responded by saying that it has more than fulfilled its obligations and vigorously denies the allegations.
From Red 5:
“We are deeply disappointed that Webzen has forced us to react this way,” said Red 5 CEO Mark Kern. “Since day one, our goal has been to craft a revolutionary gaming experience, get that game into the hands of as many people as possible, and do so utilizing the free to play model. Sadly, we do not believe that Webzen has lived up to its obligations under our agreement, which isn’t fair to our passionate team at Red 5 or to our supportive fans in Asia.” Kern confirms that the arbitration will not disrupt Red 5’s continued development of the game. Red 5 still plans to self-publish the game in the United States and Europe and will offer Firefall as a free digital download that’s free of any monthly fees. Webzen continues to hold publishing rights in Asia as well as a few other territories.
From Webzen (via email press document):
As the publisher of the game in territories other than North America and Europe, WEBZEN has patiently waited for the completion of the game for five years despite numerous delays in development. The game, for which WEBZEN has invested nearly $25 million, is not yet complete, and we are dismayed that Red 5 has initiated this dispute before we are able to enjoy the results of our investment.
We'll keep you posted on this developing situation.
UPDATE: An open letter has been posted by Red 5's CEO Mark Kern to fans of Firefall.