On the 13th, it was confirmed that the hearing in the annulment proceedings over the international arbitration award between the Korean government and the U.S. private equity firm Lone Star had concluded, leaving only the final ruling. A conclusion could come as early as within the year.
Lone Star filed an international arbitration case in 2012 through investor-state dispute settlement (ISDS), demanding a total of $4,679.5 million (about 6.259 trillion won at the exchange rate at the time), saying it suffered losses due to the Korean government's unfair intervention in the sale of Korea Exchange Bank. After acquiring Korea Exchange Bank in 2003, Lone Star sold it in 2007, leaving a profit of 4.6 trillion won.
The International Centre for Settlement of Investment Disputes (ICSID) on Aug. 31, 2022, ordered the Korean government to compensate Lone Star $216.5 million, but both the Korean government and Lone Star objected and applied for annulment.
According to ICSID, the annulment committee, a panel functioning like a court that conducts the annulment process, decided on Sept. 16 to close the proceedings. This means all procedural steps are complete and only the final decision remains. It comes two years after the committee was formed in Nov. 2023.
Earlier, the committee held oral hearings for the Korean government and Lone Star in London, United Kingdom, on Jan. 21–23. These oral hearings were the final arguments in the annulment process. After receiving briefs from both sides, the committee closed the proceedings and began deliberations. Because deliberations usually take two to three months, a conclusion could come as early as within the year.
If the Korean government loses, it must pay the damages and delayed interest. With the recent rise in the exchange rate, the damages, which were about 280 billion won at the time of the 2022 award, have risen to about 316.5 billion won. The delayed interest is estimated at around 60 billion won. The prevailing view in legal circles is that it is unlikely the ICSID award will be overturned in the annulment process. Because an annulment application focuses on whether the ICSID proceedings were lawful, it is not easy to reverse the outcome.