Following the government's final victory in the investor-state dispute settlement (ISDS) with U.S.-based private equity firm Lone Star over the sale of Korea Exchange Bank, it recovered the full lawsuit expense of about 7.4 billion won.
The Ministry of Justice said on the 17th that it completed recovery by receiving from Lone Star the full payment of $5,060,222 (about 7,475,460,000 won) in government lawsuit expenses incurred in the ISDS award rectification and annulment procedures.
It came 29 days after the Lone Star ISDS annulment committee ruled on the 18th that the Korean government prevailed and that Lone Star must pay the full lawsuit expenses. The government plans to return the 7.4 billion won to the treasury in accordance with the National Finance Act and other relevant statutes.
Under the "loser pays costs" principle, the annulment committee ordered Lone Star to pay within 30 days the Korean government's lawsuit expenses, including legal and arbitration expenses incurred in the annulment proceedings.
On the 25th, seven days after the annulment decision, the government sent a "demand for payment" to Lone Star. It urged immediate repayment of the principal lawsuit expenses and default interest by the deadline specified in the decision (Dec. 18). It also notified that if payment was not made by the deadline, it could initiate enforcement proceedings, including seizing Lone Star's assets scattered around the world.
On the 3rd, Lone Star said it would pay the lawsuit expenses in U.S. dollars two days before the government's set deadline. As promised by Lone Star, the government received a remittance of $5.06 million on that day (the 16th local time) into the account designated by the Ministry of Justice.
A Ministry of Justice official said, "Before a month had passed since the annulment decision was rendered, we fully recovered the largest lawsuit expenses in the history of Korea's ISDS cases, protecting the treasury."
The Ministry of Justice interpreted Lone Star's voluntary pre-deadline full payment of the lawsuit expenses as recognition that the International Centre for Settlement of Investment Disputes (ICSID) annulment committee's decision to annul the award was a reasonable one with no further room for international legal dispute. The government is also preparing for the possibility that Lone Star could bring a "second arbitration."
Minister Jung Sung-ho said, "With the recovery of 7.4 billion won in lawsuit expenses, the 13-year legal dispute with Lone Star has been brought to a close with a complete victory for the Korean government," adding, "The government will keep monitoring Lone Star's future moves closely with the mindset that it's not over until it's over."