International Court of Arbitration
The Supreme Court of Korea announced on Nov. 15 that it returned the case filed by the LSF-KDIC against the KR&C to the Seoul High Court.
The LSF-KDIC is a 50-50 special-purpose company of Lone Star and the Korea Deposit Insurance Corporation (KDIC), set up for the purpose of disposing of distressed assets of financial institutions, and the KR&C is a subsidiary of the KDIC. The former had claimed that the latter should return US$33.698 million (39.413 billion won), and the case had been decided against the former in the original trial.
The Supreme Court ruled that the agreement among the three parties of the KR&C, LSF-KDIC and Lone Star is valid in that arbitration supersedes settlement in a case where the parties and stakeholders fail to reach an agreement.
The LSF-KDIC had demanded that the amount, part of its prepayment to the KDIC, be returned after the failure of its plan to sell its Busan Total Cargo Terminal site at 135 billion won (US$115 million), after its purchase at 73.7 billion won (US$63.0 million). The KR&C had turned down the demand and the case had been transferred to the International Court of Arbitration (ICA). In April 2011, the ICA had ruled that the KR&C pay 50 percent of the site disposal costs, arbitration fees and legal fees of the plaintiff. Then, the LSF-KDIC had submitted the written judgment to the domestic court to receive the money.
In general, a domestic court ruling should proceed for such a judgment to become effective in Korea. In the first and second trials, the KR&C had been on the winning side. However, the Supreme Court ruled that the three-party agreement for arbitration is valid because the LSF-KDIC constitutes one of the parties of the agreement, although it is not a stakeholder.