Lonstar Compensation Reduced by Over 600 Million Won... Arbitration Tribunal Accepts Government's Correction Request

The South Korean government’s compensation payment to the US-based private equity fund Lone Star, mandated by the International Centre for Settlement of Investment Disputes (ICSID) arbitral tribunal, has been reduced by approximately 600 million KRW from about 300 billion KRW.

Photo related to Lone Star

On the morning of the 9th, the Ministry of Justice announced that it had received notification of this correction application result from the ICSID arbitral tribunal.

Previously, in August last year, the arbitral tribunal ruled that the South Korean government must compensate Lone Star with 216.5 million USD. Based on the current exchange rate (1,320 KRW per USD), this amounts to approximately 285.7 billion KRW. The tribunal also ordered that interest be paid from the date Lone Star’s damages occurred, December 3, 2011 (the date of the final sales contract between Hana Bank and Lone Star), until the full compensation is paid, calculated at the one-month maturity US Treasury bond rate. Including this interest, the total compensation was expected to approach 300 billion KRW.

In response, the government filed a correction application with the tribunal in October last year, claiming that the compensation amount had been miscalculated. It argued that interest amounts of 201,229 USD from May 24 to December 2, 2011, and 280,089 USD from the following day until September 30, 2013, were already included in the principal compensation, resulting in overlapping and excessive calculation of principal and interest.

The arbitral tribunal accepted all of these claims and corrected the principal compensation to 216,018,682 USD. Accordingly, the Ministry of Justice explained that the amount was reduced by 481,318 USD (approximately 635.34 million KRW).

The Ministry of Justice will disclose its analysis of the correction ruling later that afternoon. Based on the analysis results, it also plans to consider separate lawsuits to cancel the compensation order and applications for suspension of enforcement.

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