The government has fully recovered a total of 7.4 billion won in litigation costs incurred in the process of seeking the annulment of the international investment dispute (ISDS) arbitration award against Lone Star.
On the 17th, the Ministry of Justice announced that it had recovered the entire amount of 7,475,460,000 won, which includes approximately 7.3 billion won in annulment procedure litigation costs, about 800 million won in rectification procedure litigation costs, and delayed interest.
This recovery comes 29 days after the Lone Star ISDS Annulment Committee ruled in favor of the Korean government on November 18 and decided that Lone Star must pay all litigation costs. This amount is the highest ever recovered by the government in any ISDS case to date.
Jung Hongsik, Director of the International Legal Affairs Bureau at the Ministry of Justice, is giving a briefing on the decision to cancel Lone Star's ISDS on the 19th of last month at the Ministry of Justice in the Government Complex Gwacheon, Gwacheon-si, Gyeonggi Province. Photo by Yonhap News
Immediately after the annulment decision was announced, the government proactively initiated the process to enforce the recovery of litigation costs, including sending a "payment demand letter" to Lone Star. The government also notified Lone Star that if payment was not made by the deadline of the 18th, it could initiate compulsory enforcement procedures.
On the 3rd of this month, Lone Star promised the Korean government that it would pay in US dollars two days before the deadline specified in the decision (based on US Eastern Time), and on that day, the transfer was completed to the account designated by the Ministry of Justice.
Minister of Justice Jeong Seongho stated, "With the recovery of these litigation costs, the legal dispute with Lone Star that has continued for about 13 years since 2012 has come to a close with a complete victory for the Republic of Korea government. This is a valuable result achieved through the government's unwavering efforts to the very end."
Previously, in 2012, Lone Star filed an ISDS claim, arguing that the Korean government had unfairly intervened in the sale of Korea Exchange Bank, causing damages of 4,679,500,000 dollars (approximately 6.1 trillion won).
In August 2022, the International Centre for Settlement of Investment Disputes (ICSID) ruled that the Korean government must pay 4.6% of the damages claimed by Lone Star, amounting to 216,500,000 dollars (about 280 billion won, based on an exchange rate of 1,300 won per dollar). After the government's request for rectification, the compensation was set at 216,018,682 dollars.
However, the Lone Star ISDS Annulment Committee recently ruled in favor of the Korean government in the annulment application, canceling all obligations to pay the principal and interest on the compensation previously awarded by the arbitral tribunal. The committee also decided that Lone Star must reimburse the Korean government for approximately 7.3 billion won in litigation costs incurred during the annulment process within 30 days.
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