"There was a clear procedural defect in the first award. In light of common sense and legal principles, I thought Korea could not help but win."
Attorney Kim Gap-yoo, managing partner at Peter & Kim, who led Korea to victory in a 13-year lawsuit against U.S. private equity fund Lone Star, said this in an interview with ChosunBiz at his office in Samseong-dong, Seoul, on the 20th. The annulment success rate at the International Centre for Settlement of Investment Disputes (ICSID) is only 1.5%, but he said he "never expected to lose." Since 1972, only 8 out of 503 cases have been fully annulled. With this decision, the government's compensation liability of about 400 billion won has been extinguished.
Kim is a first-generation international arbitration expert who has led the government's legal team since 2012, when Lone Star filed its claim alleging Korea was responsible for delaying the sale of Korea Exchange Bank.
Kim cited "procedural defects" as the basis for his confidence in victory. He said the first-instance tribunal relied decisively on an award by the International Chamber of Commerce (ICC), in which the Korean government was not a party, yet did not give Korea a sufficient opportunity to rebut.
Kim said he gained confidence that it was "worth trying" after reading the dissent by Brigitte Stern, an emeritus professor at Paris 1, who pointed out the defects in the first award. The annulment committee also sided with Korea, saying "due process and the right of defense were violated." The following is a Q&A with Kim.
─ Is process important?
"Looking at past annulment cases, the success rate was only 1.5%. To the public, that might feel like the odds of a game with no chance, but from a lawyer's perspective, procedural defects were the force that could break through the 1.5% wall. If we had lost, I might have been so shocked that I would have quit being a lawyer. That's how clear the defects were in my view, based on common sense and legal principles."
─ How did the annulment committee react to the Korean government's arguments?
"Interest was very high. At the London hearing in January this year, the annulment committee members actively questioned both the Korean government and Lone Star and closely examined the issues. If they had been indifferent, it would have been hard to be hopeful, but I felt they were seriously reviewing our arguments. Even after the hearing, we kept submitting briefs spanning 900 pages to explain the situation to the annulment committee."
― If Lone Star refuses to accept the decision and initiates a separate arbitration?
"There is no further appeal process. The only thing Lone Star can do is bring a new arbitration limited to the annulled portion. Issues already finalized, such as taxes, cannot be relitigated. Whether to file a new case is entirely up to Lone Star."
─ Who deserves behind-the-scenes credit for this win?
"Multiple ministries, including the Financial Services Commission (FSC), the National Tax Service, and the Ministry of Justice, moved quickly as one team, and lawyers and professors who provided legal opinions, as well as those who testified directly, played major roles. I am giving this interview as the representative, but they are the ones who deserve the applause."
─ There is political controversy over trying to take credit for the Lone Star case outcome.
"At the stage of reviewing whether to seek annulment, the co-counsel team recommended filing for annulment, and former Justice Minister Han Dong-hoon accepted that recommendation and made the decision, for which I am grateful. While we were working, the experts' judgment was never ignored or dismissed. Over the 13-year litigation process, administrations changed several times and there were even two presidential impeachment crises. Even in such circumstances, the robust government system that made consistent decisions in accordance with law and principle played a major role."
─ There must have been many memorable moments.
"I remember going to the Peace Palace in The Hague, Netherlands, in 2016 for the hearing before the annulment case. The Peace Palace was built after the Second Hague Peace Conference, which the "Hague emissaries" sent by Emperor Gojong in 1907 were unable to attend. A country that had to turn back 99 years ago because it had no diplomatic rights was now conducting international arbitration in The Hague. Coincidentally, the room where the hearing was held was called the 'Japanese Room,' and inside it was a Korean representative seat bearing the taegeuk emblem. Seeing Korea standing proudly among many nations, I felt that we had become a "prosperous nation" that attracts foreign capital and handles disputes. It was a moment that strengthened my resolve to bring the case to a good close."
─ Wasn't it challenging to represent a state rather than corporations?
"(Laughs) The Korean government is quite a demanding client. It is as if there are 'many mothers-in-law': every step must be transparently disclosed and leave no room for anyone to find fault, so the bar is inevitably high. Expense control is also strict. Because it is run with taxpayers' money, costs must be minimized while the result must be perfect. That made me all the more proud."
─ As a first-generation Korean international arbitration expert, what would you like to tell junior lawyers?
"For 10 years I have used the term 'K-legal.' Just like K-pop and K-food, I believe Korean legal professionals can thrive on the world stage. The Korean legal community has many outstanding talents, and their abilities are in no way inferior to those of overseas legal professionals."