Kyobo Life Put Option Dispute, Partial Acceptance of Affinity's Claim in ICC 2nd International Arbitration

Affinity Consortium (Guardian Holdings Limited, Bearing PEA, IMM PE, Henir Limited Liability Company, hereinafter Affinity) received a partial award in favor of its claim in the International Chamber of Commerce (ICC) international arbitration case concerning a 2 trillion won-scale put option (the right to sell shares at a specific price) dispute with Shin Chang-jae, chairman of Kyobo Life Insurance.

On the 17th (local time), the ICC arbitral tribunal accepted Affinity's claim and ordered Chairman Shin to appoint an appraiser according to the shareholders' agreement and submit an appraisal report.

Furthermore, the tribunal ordered that if Chairman Shin violates the above order, he must pay a daily amount of coercive fines until the obligation is fulfilled. Accordingly, the put option exercise amount will be finalized, and the put option is expected to be executed promptly. Thus, the arbitral tribunal sided with Affinity in the long-standing dispute triggered by Chairman Shin's refusal to appoint an appraisal institution.

Previously, in September 2012, Affinity purchased a 24% stake in Kyobo Life Insurance from Daewoo International and entered into a shareholders' agreement with Chairman Shin. The agreement included a put option clause stipulating that if Kyobo Life Insurance's IPO was not completed by the end of September 2015, Affinity could exercise the put option to sell its shares to Chairman Shin's side. Subsequently, due to Kyobo Life Insurance's failure to proceed with the IPO and its refusal to accept Affinity's put option exercise, the case was brought to ICC arbitration.

This arbitration award is the second arbitration following the first arbitration in September 2021. In the first arbitration, the tribunal recognized that the put option under the shareholders' agreement was valid and that Affinity validly exercised the put option in 2018, acknowledging Chairman Shin's breach of the shareholders' agreement. However, since Chairman Shin refused to appoint an appraisal institution and the put option price calculation process did not proceed, the tribunal ruled that Chairman Shin was not obligated to purchase the shares at Affinity's put option price.

In response, Affinity filed the second arbitration, and the arbitral tribunal accepted Affinity's claims, ordering Chairman Shin to take measures to pay the put option exercise amount to Affinity. A representative of the Affinity Consortium said, "We expect Chairman Shin's side to accept the results of the second arbitration promptly and to swiftly implement them to resolve the dispute surrounding Kyobo Life Insurance."