Kyobo Life Put Option Dispute Rekindled... Appeals Court Rules Chairman Shin’s Indirect Compulsory Payment Valid

First-instance ruling invalidating indirect compulsory payments overturned

There are signs that the put option dispute between Kyobo Life Insurance Chairman Shin Changjae and private equity fund (PEF) managers will flare up again. This is because the Seoul High Court overturned the first-instance ruling by a domestic court that had found invalid the International Chamber of Commerce (ICC) arbitral decision ordering Chairman Shin to pay an indirect compulsory payment of 200,000 dollars per day (approximately 288.3 million won) on a cumulative basis. As the imposition of the indirect compulsory payment has disrupted the existing strategy, Chairman Shin’s side is expected to take the case all the way to the Supreme Court.

According to legal circles and the investment banking (IB) industry on the 25th, in the put option dispute between IMM Private Equity (PE) and EQT on one side and Chairman Shin on the other, the Seoul High Court the previous day additionally accepted the arguments of the private equity funds. This overturned the first-instance judgment, which had held that the ICC had no authority to order an indirect compulsory payment.

Earlier, in December 2024, the ICC arbitral tribunal ruled against Chairman Shin and, under the shareholders’ agreement, ordered him to appoint an appraiser and, if he failed to submit an appraisal report, to pay IMM and EQT an indirect compulsory payment of 200,000 dollars per day on a cumulative basis until the date on which he completes performance of his obligations.

Nevertheless, Chairman Shin refused to perform his obligations, arguing that the arbitral tribunal had no authority to order an indirect compulsory measure. Without the indirect compulsory payment, there would be little burden even if he delayed. In effect, IMM and EQT had hoped he would reach a settlement and step back, as other financial investors (FIs) such as Affinity Equity Partners had done. The first-instance ruling, which did not recognize the ICC’s authority to impose an indirect compulsory payment, supported this strategy.

The reversal in the second-instance ruling has now shifted the landscape. The legal basis has become clearer that, if the arbitral tribunal orders additional measures for performance in the future and the parties fail to comply, an indirect compulsory payment may be imposed. A source in the IB industry said, “Chairman Shin’s side will take this to the Supreme Court,” adding, “In the process, an interim settlement with the private equity funds could also be reached.”

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