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Korean Court Rules International Arbitration Application Not Intended for Public Disclosure
Lone Star Funds
Korean Court Rules International Arbitration Application Not Intended for Public Disclosure
  • By matthew
  • October 4, 2013, 09:44
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The Seoul Administrative Court ruled against public disclosure of the contents of the Lone Star Funds’ application for international arbitration against the Korean government.

The Lawyers for a Democratic Society announced on October 3 that the Seoul 11th Administrative Court issued a ruling against them in a case against the Minister of Foreign Affairs regarding the revocation of the disposition for information disclosure.

The full bench of the Seoul Administrative Court pointed out, “The principle of confidentiality is central to arbitration proceedings, unless otherwise specified in separate provisions. In the event that the contents of the application are revealed to the public without the consent of Lone Star, the possibility of a diplomatic dispute may not be excluded.”

Accordingly, the full bench said, “The provisions of Article Ⅸ, Section 1, Paragraph 2 of the Official Information Disclosure Act apply to Lone Star Funds’ application, given that the right to be informed of arbitration materials may be guaranteed after the arbitration proceeding. The contents of the application correspond to information that may significantly harm national interests in the event of its disclosure.”

In November 2012, US-based Lone Star Funds brought an Investor State Dispute (ISD) lawsuit against the Korean government to the International Center for Settlement of Investment Disputes (ICSID), an international arbitration organization. The private equity firm accused the government of sharp declines in stock prices, claiming that Seoul delayed the acquisition of Korea Exchange Bank (KEB) without good reason.

Later, the Lawyers for a Democratic Society asked the Ministry of Foreign Affairs to release the contents of the Lone Star Funds’ application for international arbitration. However, the request was denied on the grounds that the contents are confidential information, thereby prompting the administrative lawsuit.