Business Korea | 24 November 2020
South Korean government likely to reject Lone Star’s offer
By Jung Suk-yee
Lone Star Funds, which is in litigation against the South Korean government at the International Centre for Settlement of Investment Disputes (ICSID), suggested US$870 million as a concession. The total cost of litigation is US$4.7 billion. The offer was made on Nov. 2 and is effective until Nov. 30.
Although the South Korean government is about to hold a meeting to discuss the matter, it is unlikely to accept the offer and the legal dispute that started in 2012 is likely to continue until next year.
The government’s stance is that it is responsible for nothing and does not have to pay anything to Lone Star Funds. “The fact itself that Lone Star offered the huge discount evidences that its claims have been groundless from the get-go,” it said.
According to the government, Lone Star will not demand any compensation regarding its failed sale of Korea Exchange Bank to HSBC in 2008 if the offer is accepted. “This is another evidence that the government is not responsible,” it said, adding, “In addition, the South Korean government never told Lone Star to lower the price when it sold the bank to Hana Financial Group in 2012.”
The case is likely to be settled at the arbitral tribunal of the ICSID. The tribunal held an online hearing on Oct. 14 and 15 and there may be a couple of more hearings before its conclusion next year.