Schindler Holding AG, a Swiss-based elevator company, has initiated arbitration against the South Korean government, claiming that it lost more than US$300 million won on its investment in Hyundai Elevator.
According to the Ministry of Justice on Oct. 16, Schindler informed the Korean government on Oct. 11 that it has filed a request for arbitration, saying that it suffered a dilution of its investment in Hyundai Elevator due to the Korean government failure to supervise the company’s capital increases between 2013 and 2015.
Schindler, the second largest shareholder of Hyundai Elevator, claimed that the financial regulators did not take necessary measures even though the Korean company increased capital and issued convertible bonds to protect management rights.
Schindler sent the Korean government a letter of intent to seek arbitration of the dispute in July. The Swiss company’s request for arbitration is seen as an indication that it would enter into a full-fledged investor-state suit after the arbitration period ends.
Schindler appointed Korean law firm Kim & Chang and U.S. law firm Quinn Emanuel Urquhart & Sullivan as its legal representatives. It also chose Neil Kaplan, a former High Court judge in Hong Kong, as a mediator for Schindler's side, and proposed Hong Kong International Arbitration Center as an arbitration agency.
The arbitration tribunal will consist of three members -- the two sides and the chairman. The Korean government plans to select an arbitrator on the Korean side in accordance with the Free Trade Agreement with the European Free Trade Association (EFTA).