Obligation to Pay Damages and Interest Annulled
"Liability for 400 Billion Won in Compensation Extinguished"
Lone Star Ordered to Pay 7.3 Billion Won in Litigation Costs
The South Korean government has won a verdict in the international investment dispute (ISDS) case against the foreign private equity fund Lone Star, a legal battle that has lasted for over a decade.
Prime Minister Kim Minseok (second from left) is holding an emergency briefing on the 'Lone Star International Investment Dispute Settlement (ISDS) Cancellation Application' at the Government Seoul Office Building on the 18th. To the right of Prime Minister Kim is Justice Minister Jung Sungho. Photo by Yonhap News
On the evening of the 18th, Prime Minister Kim Minseok held an emergency briefing at the Government Seoul Office Building, stating, "At 3:22 p.m. today (1:22 a.m. Eastern Standard Time), the Lone Star ISDS Annulment Committee of the International Centre for Settlement of Investment Disputes (ICSID) in Washington, D.C. delivered a ruling in favor of the Republic of Korea."
Prime Minister Kim explained, "The Annulment Committee has annulled both the principal of 216.5 million dollars in damages and the obligation to pay interest to Lone Star, which had been recognized in the arbitral award dated August 30, 2022."
He added, "As a result, the government’s liability for compensation-recognized in the original award and amounting to approximately 400 billion won at the current exchange rate-has been retroactively extinguished."
Prime Minister Kim further stated, "The Annulment Committee also ordered Lone Star to reimburse the South Korean government for the total litigation costs of approximately 7.3 billion won incurred during the annulment proceedings, to be paid within 30 days."
This case began when Lone Star, after acquiring Korea Exchange Bank for approximately 1.3 trillion won in 2003 and later selling it to Hana Financial Group in 2012 for nearly three times that amount, claimed that the South Korean government had caused it to miss the opportunity to sell at a higher price and demanded damages.
In 2022, the original arbitral award ordered the payment of 216.5 million dollars in damages. However, both Lone Star and the South Korean government filed for annulment, leading to this latest ruling.
Prime Minister Kim emphasized, "This is a significant achievement in protecting national finances and taxpayers' money," adding, "It is also a recognition of the Republic of Korea’s sovereignty over financial supervision." He further explained, "This outcome is the result of active litigation efforts by the Ministry of Justice and other relevant government agencies."
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