SEOUL, November 19 (AJP) -South Korea has finally put to rest its years-long investment dispute with U.S. private equity firm Lone Star, after the International Centre for Settlement of Investment Disputes (ICSID) overturned its earlier ruling that ordered Seoul to pay $216.5 million in compensation plus interest over the fund’s 2012 sale of a Korean bank.
“The government's compensation liability — about 400 billion won at today’s exchange rate — has been retroactively cancelled,” Prime Minister Kim Min-seok said late Tuesday, announcing the final ruling by the Washington-based tribunal.
Instead, Lone Star has been ordered to cover South Korea's legal expenses of 7.3 billion won ($5 million) within 30 days.
The nullification marks a rare reversal by ICSID: only eight such cases have been overturned out of 503 settlements since the tribunal’s establishment in 1972. Seoul appealed the arbitral court’s 2022 decision, which had partially sided with Lone Star’s claim that it incurred losses of $4.67 billion due to alleged government interference in the sale of Korea Exchange Bank (KEB).
The presidential office welcomed the ruling as a “correction” of the earlier interpretation.
Lone Star purchased KEB in 2003 for 1.38 trillion won during the banking failures that followed South Korea’s Asian financial crisis and 1998 International Monetary Fund bailout. After multiple failed attempts to offload the lender, the fund sold KEB to Hana Financial Group in 2012 for 3.92 trillion won.
The two sides have been locked in legal battles ever since, with Lone Star alleging that Seoul’s heavy involvement in the sale process depressed the bank’s value.
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