Schindler, a Switzerland-based elevator producer which is the second biggest stakeholder of Korea's Hyundai Elevator, had preliminary talks with the South Korean government on Sept. 5 before filing an investor-state dispute (ISD) suit. The company sent a notice of intent seeking an ISD in July, claiming that it had sufferd losses of 300 billion won (US$267.02 million) due to Hyundai Elevator’s recapitalization procedure. It is expected to decide whether to file a lawsuit soon based on the results of the talks.
According to financial authorities, the government’s joint task force team consisting of the Ministry of Justice (MOJ), the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) had the first round of ISD negotiations with legal officials from Schindler at the FSS office in Yeouido, Seoul on Sep.5.
Bae, Kim & Lee LLC. participated in the talks as the legal representative of the South Korean government and Kim & Chang and a Hong Kong-based law firm as the counterpart of Schindler.
Schindler claims that it suffered losses as Hyundai Elevator increased capital by 96.9 billion won (US$86.6 million) through allocation of shares to third parties in June 2013 and another 180.3 billion won (US$161.13 million) in March 2014. In this regard, the company sent a notice of intent to the MOJ on July 11, saying, “The losses amount to 259 million Swiss franc (US$266.54 million or 298.26 billion won). The final amount of compensations for the ISD suit is expected to exceed 1 trillion won (US$893.66 million) including losses caused by the issuance of large-scale convertible bonds and the sale of Hyundai Logistics in addition to the capital increase.
The South Korean government has never accepted the request without litigations so the two sides are not expected to reach an agreement at the talks. Schindler's suit will be the sixth of its kind against the South Korean government.