Reduction of Lone Star Compensation by Over 600 Million Won... Arbitration Tribunal Accepts Government's Correction Request (Comprehensive)

The South Korean government’s compensation payment to the U.S.-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.

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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 pay Lone Star 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 sale contract between Hana Bank and Lone Star), until the full compensation is paid, calculated at the one-month maturity U.S. 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 arbitral tribunal in October last year, claiming that the compensation amount had been miscalculated. They 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 this application in full 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 plans to review whether to file an application to annul the award. The deadline to apply for annulment is 120 days from the date of this correction decision.

The Ministry of Justice stated, "We will do our utmost to ensure that not a single won of taxpayers’ money is wasted in the subsequent procedures," and added, "We will promptly inform the public of any future developments." Furthermore, they said, "To enhance the transparency of the arbitration process and guarantee the public’s right to know, we plan to disclose as much information related to this case as possible, including the corrected award, within the scope permitted by relevant laws and the procedural orders of the arbitral tribunal."

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