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International body finds for Korea in dispute with Lone Star, annuls settlement ruling

Published: 18 Nov. 2025, 20:00 Updated: 18 Nov. 2025, 20:02

Prime Minister Kim Min-seok, center, announces that the Korean government has won a legal battle against Lone Star Funds, a foreign private equity fund, over a past investor-state dispute settlement (ISDS) ruling related to its sale of Korea Exchange Bank, during a press briefing held at the government complex in central Seoul on Nov. 18. [YONHAP]

The Korean government has won a legal battle against Lone Star Funds, a foreign private equity fund, over a past investor-state dispute settlement (ISDS) ruling related to its sale of Korea Exchange Bank.

"The annulment committee of the International Centre for Settlement of Investment Disputes in Washington ruled in favor of Korea," Prime Minister Kim Min-seok said as he announced the decision Tuesday in a briefing at the central government complex in Seoul.

"The committee has annulled all obligations outlined in the Aug. 31, 2022 arbitration ruling, including the order to pay Lone Star $216.5 million in principal and interest," Kim said, stressing that the previous damages awarded — which amounted to approximately 400 billion won under current exchange rates — had been retroactively voided.

Kim added that the committee also ruled in favor of Korea in ordering Lone Star Funds to pay approximately 7.3 billion won ($5 million) in litigation costs incurred by the Korean government during the annulment proceedings, within 30 days.

Lone Star Funds had initially filed the ISDS claim in 2012, asserting that it suffered $4.68 billion in damages due to what it alleged was unfair interference by the Korean government in its sale of Korea Exchange Bank.

Lone Star Funds acquired Korea Exchange Bank in 2003 for 1.38 trillion won and sold it to Hana Financial Group in 2012 for 3.92 trillion won, after failed negotiations with multiple other buyers. Lone Star Funds claimed that Korean government intervention prevented it from selling the bank at a higher price and forced a markdown, leading to financial losses.

In August 2022, the International Centre for Settlement of Investment Disputes tribunal ordered the Korean government to pay Lone Star Funds $216.5 million — equivalent to approximately 280 billion won at an exchange rate of 1,300 won per dollar — representing 4.6 percent of Lone Star Fund’s original claim.

The tribunal later accepted a correction request from the Korean government, revising the amount to $216.018682 million, citing a calculation error.

Lone Star Funds then sought to annul the decision in July 2023, arguing that the awarded damages were insufficient. The Korean government also filed for annulment in September that same year, claiming the tribunal had overstepped its authority and violated procedural rules.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY HYEON YE-SEUL [[email protected]]