Government Files Request to Cancel Lone Star ISDS Claim "Tribunal Overreach, Violation of Procedural Rules"

On the 1st, our government filed a request to annul the international investment dispute (ISDS) arbitration ruling that recognized the Korean government’s liability to pay approximately 280 billion KRW in compensation related to the sale of Korea Exchange Bank by the foreign private equity fund Lone Star.

The Ministry of Justice announced on the same day that it had filed a request to annul the ruling with the International Centre for Settlement of Investment Disputes (ICSID), citing clear ultra vires acts by the tribunal, serious violations of procedural rules, and failure to state reasons.

Lone Star filed an ISDS claim in 2012, alleging that our government unfairly intervened in the sale process of Korea Exchange Bank, causing damages of 4.6795 billion USD (approximately 6.1 trillion KRW). Lone Star purchased Korea Exchange Bank in 2003 for 1.3834 trillion KRW and engaged in sale negotiations with several companies before selling it to Hana Financial Group in 2012 for 3.9157 trillion KRW. Lone Star claimed that due to government intervention, it lost the opportunity to sell at a higher price and had to lower the price, demanding compensation for damages.

On August 31 of last year, ICSID ruled that our government must pay Lone Star 46% of the claimed damages, amounting to 216.5 million USD (approximately 280 billion KRW based on an exchange rate of 1,300 KRW/USD). Lone Star also filed a request to annul the ruling with ICSID on July 29, arguing that the compensation amount was insufficient.

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