South Korea's Government Overturns $216.5 Million Fine in Lone Star Case

SEOUL (Reuters) -The International Centre for Settlement of Investment Disputes (ICSID) has nullified its 2022 order that the South Korean government pay damages of $216.5 million plus interest to Lone Star Funds over the U.S. firm's sale of Korea Exchange Bank, Prime Minister Kim Min-seok said on Tuesday.

The tribunal also ordered Lone Star Funds to pay the South Korean government its litigation expenses of around 7.3 billion won ($4.99 million) within 30 days, Kim told a briefing.

In 2023 the South Korean government and Lone Star Funds sought the annulment of the order.

It was not clear why the private equity firm sought annulment of the ruling, but it had expressed disappointment in the amount ICSID ordered Seoul to pay after it sought payment of $4.68 billion in a claim it filed in November 2012.

"Lone Star is disappointed in the decision of the ad hoc Committee. The Committee's decision to annul the original ruling on procedural grounds does not change the underlying fact that Korean regulators improperly blocked and interfered with Lone Star's multi-year effort to sell its controlling interest in KEB," a spokesperson said after Tuesday's decision.

"Lone Star looks forward to presenting its case again to a new Tribunal, whom we are confident will again find that Korea acted unlawfully, and will award Lone Star the full amount of its damages."

($1 = 1,462.6500 won)

(Reporting by Jihoon Lee. Editing by Susan Fenton and Mark Potter)