Ministry of Justice: "Lone Star Losses Unrelated to Government"

[Asia Economy Reporter Yoo Hyun-seok] It has been confirmed that a dissenting opinion stating "Lonestar's losses are in no way related to the Korean government" emerged from the arbitration tribunal that reviewed the international investment dispute between the Korean government and the US-based private equity fund Lonestar.

According to the ruling document on the government-Lonestar international investment dispute settlement procedure (ISDS·Investor-State Dispute Settlement) released by the Ministry of Justice on the 28th, arbitrator Bridget Stern of the arbitration tribunal expressed a dissenting opinion that the Korean government is not responsible for Lonestar's losses caused by the reduction in the sale price of Korea Exchange Bank.

Arbitrator Stern first pointed out that there is no evidence that the Financial Services Commission explicitly instructed the acquirer, Hana Bank, to lower the sale price. She explained, "While it cannot be denied that there were indications here and there that the Financial Services Commission wanted the sale price to be lowered at the time, these are merely circumstantial or speculative facts, and the Financial Services Commission consistently maintained the official position that 'the sale price should be autonomously determined between the contracting parties.'" She added, "It is impossible to conclude that a state violated international law based solely on circumstantial evidence," emphasizing, "There has never been a precedent where responsibility for an act was attributed to a state based on rumor, implication, interpretation, or speculation."

Arbitrator Stern also argued that even if the Financial Services Commission had directly pressured a reduction in the sale price, it would not be problematic as it was a response to Lonestar's 'judicial risk.' At the time, Lonestar was under investigation by the prosecution as a suspect in the 'Korea Exchange Bank undervalued sale suspicion' and the 'Korea Exchange Card stock price manipulation suspicion.' Among these, the stock price manipulation suspicion was confirmed guilty.

Arbitrator Stern judged, "Even if it is acknowledged that the Financial Services Commission exerted pressure to lower the price, considering the special circumstances of the case at that time, it would not have been an arbitrary act," and "It should be seen as a reasonable response by the Korean financial supervisory authority to an unprecedented situation caused by Lonestar's financial crimes." Furthermore, she elaborated, "The losses incurred by Lonestar resulted from the guilty verdict on the prosecuted financial crimes and the consequent agreement between the contracting parties to lower the price," and "It is not reasonable to link these losses to suspicions of direct or indirect pressure by the Financial Services Commission."

In conclusion, Arbitrator Stern determined that "Lonestar's losses appear to have no connection with the suspicions of pressure by the Financial Services Commission in any aspect," and that the Korean government bears no responsibility.

This dissenting opinion was presented over about 40 pages within the approximately 410-page ruling document. The Ministry of Justice views such a strong opposing opinion within the tribunal as a rare occurrence and is considering filing for annulment and suspension of enforcement.

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