Compensation Payments to South Korea and Iran's Dayani Possible with U.S. Treasury Approval

[Asia Economy Reporter Yoo In-ho] It has been reported that South Korea can now remit the international investment dispute (ISDS) compensation payment to the Iranian Dayani side.

The Ministry of Foreign Affairs announced on the 12th, “The U.S. side informed us of the issuance of a special license by the Office of Foreign Assets Control (OFAC) under the U.S. Treasury Department on the 6th of this month for the remittance of the compensation payment.”

Robert Malley, the U.S. Special Envoy for Iran, recently met with Choi Jong-geon, First Vice Foreign Minister of South Korea, in Vienna, Austria, where the Iran nuclear deal restoration negotiations are underway, and informed him of the issuance of the special license.

The Ministry of Foreign Affairs explained that this license approves the use of the U.S. financial system for the payment of compensation to the Dayani side, and that the South Korean and U.S. authorities have been continuously consulting on this matter.

The Dayani family, private investors from Iran, filed international arbitration in 2015, claiming that the South Korean government violated the principle of fair and equitable treatment under the Korea-Iran Investment Protection Agreement during the process when their Iranian home appliance company Entekhab attempted to acquire and merge with Daewoo Electronics in 2010-2011.

At that time, Dayani claimed that the South Korean government should return 93.5 billion KRW, including the deposit and interest on the deposit.

Accordingly, the arbitration tribunal ruled in June 2018 that the government should pay approximately 73 billion KRW out of the claimed 93.5 billion KRW to the Dayani side.

However, due to financial transaction restrictions caused by sanctions against Iran, the government faced difficulties in paying the arbitration compensation to the Dayani side.

If the compensation were paid in dollars as requested by Dayani, it would violate the sanctions, but with this OFAC license, dollar remittance has become possible.

The Ministry of Foreign Affairs stated, “This license will serve as an important foundation to promptly conclude the ISDS arbitration case with the Dayani family, which was one of the pending issues between Korea and Iran, and is expected to contribute to the improvement of Korea-Iran relations.”

This content was produced with the assistance of AI translation services.