Rejection of Enforcement Penalty Is a 'Side Issue'
'Core Issue Is Recognition of Put Option Fulfillment Obligation'
IMM Private Equity, a private equity fund (PEF) management company engaged in a put option dispute with Shin Chang-jae, chairman of Kyobo Life Insurance, emphasized that the recent court ruling actually recognized Chairman Shin's obligation to fulfill the put option. Although the domestic court ruled that the enforcement penalty imposed on Chairman Shin by the International Chamber of Commerce (ICC) arbitration panel was invalid, this is merely a side issue, and the essential obligation to fulfill the put option has been confirmed, they argued.
On the 3rd, IMM PE announced this position. IMM PE stated, "The court judged that the ICC cannot impose indirect enforcement penalties, but this court decision acknowledges the core of the ICC arbitration award, which is Chairman Shin's breach of the shareholders' agreement and the obligation to follow the put option procedure, and approves its enforcement," adding, "Rapid progress and enforcement of the put option procedure are expected going forward."
On the 21st of last month, the Seoul Central District Court ruled in favor of the plaintiff in the 'Request for Review of ICC Enforcement Penalty Imposition Authority' lawsuit filed by Chairman Shin. The court held that the ICC's enforcement penalty has no effect domestically. However, it clearly recognized that Chairman Shin must select an appraisal institution and submit a valuation report.
Previously, in December last year, the ICC arbitration panel ruled that if Chairman Shin did not appoint an appraiser and submit a valuation report on the put option shares within 30 days after the arbitration award, in accordance with the shareholders' agreement with financial investors (FIs), an enforcement penalty could be imposed.
In response, Chairman Shin designated EY Hanyoung as the appraisal institution. However, on February 12, the Financial Supervisory Service selected EY Hanyoung as Kyobo Life Insurance's designated auditor, raising a conflict of interest issue. Ultimately, EY Hanyoung was chosen as Kyobo Life Insurance's designated auditor, and Chairman Shin had to select a new appraisal institution. With the recent court decision eliminating the need to impose enforcement penalties, Chairman Shin's side has become more relaxed. In contrast, FIs who invested in Kyobo Life Insurance's put option, including IMM PE, criticized this as "stalling."
Going forward, Chairman Shin's side will select a third-party appraisal institution to submit the put option price report. If the price differs by more than 10% from the price proposed by the FIs, another appraisal institution must be selected. In this case, if the FIs propose three candidates, Chairman Shin will choose one to finalize the price.
Meanwhile, IMM PE immediately appealed, arguing that the court's ruling that the ICC arbitration panel lacks indirect enforcement authority contradicts precedents set by the domestic Supreme Court.
Shin Chang-jae, Chairman of Kyobo Life Insurance
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