Lone Star Award Disclosure Lawsuit Dismissed in Second Trial, Overturning First Ruling

"No Refusal to Disclose... Even If There Were, Disclosure Could Harm National Interest"

The lawsuit demanding the disclosure of previously undisclosed sections of the arbitral award in the International Investment Dispute Settlement (ISDS) case between the government and the foreign private equity fund Lone Star was dismissed in the second trial.

On June 19, the Seoul High Court's Administrative Division 3 (Presiding Judge Yoon Kangyeol) overturned the lower court's ruling and dismissed the case filed by Song Kiho, a former lawyer and current Director of National Situation Room at the Presidential Office, who during his time as a lawyer had sued the Minister of Justice to disclose the original Lone Star judgment.

The court stated, "It cannot be considered that a disposition refusing disclosure of the information in question was made in this case," and added, "A lawsuit seeking cancellation on the premise that the information was not disclosed is inadmissible because there is no disposition subject to cancellation." The court further explained, "Even if we assume there was a refusal to disclose, the defendant's decision to withhold the information is considered lawful, so the plaintiff's claims cannot be accepted on the merits either." The court also stated, "It is recognized that there is a significant risk of seriously harming the national interest as this concerns diplomatic relations."

The court explained, "If the information were disclosed, it could damage the relationship of trust and weaken the Republic of Korea's diplomatic negotiating power," and added, "We judge that this information, if made public, could significantly harm the national interest, particularly in the context of diplomatic relations."

The first trial had partially ruled in favor of the plaintiff, ordering the disclosure of the names of government officials redacted in the arbitral award, but allowing the names of Hana Financial Group officials to remain undisclosed.

Previously, in November 2012, Lone Star filed for international arbitration through ISDS, claiming that the Korean government had unfairly intervened in the sale of Korea Exchange Bank, resulting in damages of $467.95 million.

In August 2022, after 10 years, the arbitral tribunal ruled that the Korean government must pay $216.5 million?4.6% of the damages claimed by Lone Star (approximately 298 billion won). The Ministry of Justice under the Yoon Sukyeol administration released the arbitral award in September of the same year, redacting the names of those involved, citing diplomatic confidentiality.

In response, attorney Song filed an administrative lawsuit demanding the disclosure of all names of responsible parties and Hana Financial Group officials redacted in the award. Song, who previously served as chair of the International Trade Committee of Lawyers for a Democratic Society (Minbyun), was appointed Director of the National Situation Room at the Presidential Office on June 13.