No End in Sight
The Ministry of Justice and the Financial Services Commission said at a briefing on Sept. 14 that it is still hard to predict when and how the international investment disputes between the South Korean government and Lone Star Funds that have already continued for 10 years will end.
The disputes date back to 2012, when the American private equity firm claimed US$4.68 billion in damages and said that the South Korean government intentionally delayed its approval of the sale of Korea Exchange Bank and put pressure in order to lower the selling price. Previously, the PEF acquired Korea Exchange Bank in 2003 and then attempted in vain to sell it to HSBC between 2007 and 2008.
From 2013 to 2015, the PEF and the government argued with each other with more than 1,500 evidentiary documents and approximately 100 witness and expert statements. In addition, four trial procedures were carried out until June 2016.
However, the final arbitration decision was postponed over and over, the chief arbitrator resigned in March last year, and the procedure was resumed after the subsequent appointment of a successor. The successor and the two sides had an online Q&A session in October last year.
The current stance of the government is that criminal cases that might have affected Lone Star Funds’ eligibility as a major shareholder were underway at that time and, as such, the delay was legitimate. The final result of the arbitration is given within 120 days (up to 180 days) from the declaration of procedure termination.