S. Korea asks Lone Star to reimburse legal costs after winning annulment in investor dispute

The Ministry of Justice said Tuesday it has sent a letter to Lone Star requesting the private equity fund to reimburse legal costs incurred during an investor-state dispute settlement over the 2012 sale of a local bank.

The move came after the International Center for Settlement of Investment Disputes recently ruled in favor of South Korea, nullifying its earlier decision ordering Seoul to pay Lone Star $216.5 million in compensation plus interest.

Under the ruling, Lone Star is required to pay South Korea’s legal costs incurred during the proceedings within 30 days, or by Dec. 18.

In the letter, the ministry requested Lone Star to pay a combined 7.4 billion won ($5 million), including legal costs incurred during the proceeding as well as interest.

“We will do our best to defend the national interest by swiftly retrieving legal costs,” the ministry said, adding that Lone Star has also voluntarily withdrawn a lawsuit it had filed at a US federal court in 2023.

South Korea had appealed the ICSID’s 2022 ruling to pay the compensation to Lone Star, after the private equity fund filed a suit in 2012 claiming that the South Korean government interfered with the sale of Korea Exchange Bank, incurring $4.67 billion in losses.

Lone Star acquired KEB in 2003 for 1.38 trillion won and later sold it off to a major South Korean banking firm, Hana Financial Group, for 3.92 trillion won in 2012.

Lone Star argued that government interference caused the firm to miss the chance to sell KEB at a higher price and that it ended up being forced to sell it at a reduced price.

In July 2023, Lone Star filed a suit to annul the 2022 ruling, claiming that the compensation was not sufficient. Seoul also lodged a petition to cancel the award and suspend the decision in September of that year, citing the tribunal’s overreach and violations of procedural rules. (Yonhap)

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