Korea Must Pay 73 Bil. Won to Iranian Investor
Last year, the Dayyani family won its investor-state dispute against the South Korean government. The High Court of Justice in London recently turned down the government’s appeal to overturn the ruling. The government now must pay 73 billion won to the Iranian family.
The litigation dates back to 2000. In January 2000, Korea Asset Management Corp. acquired Daewoo Electronics’ non-performing loans from financial institutions. Then, the creditors including Woori Bank as a main creditor bank selected Entekhab, an Iranian consumer electronics company in which the Dayyani family is the largest shareholder, as the preferred bidder for the sale of Daewoo Electronics in April 2010. In November 2010, the creditors signed a 577.8 billion won sale contract with D&A, Dayyani’s special purpose company in Singapore. At that time, D&A paid the creditors 57.8 billion won in down payment.
In December 2010, the creditors canceled the contract and did not return the down payment, claiming that D&A submitted a letter of commitment with the total required fund lacking 154.5 billion won. D&A filed for an injunction with the Seoul Central District Court in June 2011. The court ruled in favor of the creditors in February 2012.
In September 2015, Dayyani brought the case to the International Center for Settlement of Investment Disputes, claiming that the South Korean government must pay 93.5 billion won. In June last year, the center told the government to pay 73 billion won and the case became the first international investor-state dispute the South Korean government lost.
The government had an emergency meeting and discussed how to respond. It is going to take measures after a thorough review of the ruling.