April 27, 2024

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[THE INVESTOR] Korea will have to cough up 73 billion won (US$68 million) after losing an investor-state dispute settlement filed by an Iranian company, the government said on June 7.

In 2015, Entekhab, owned by Iran’s Mohammad Reza Dayyani, filed a lawsuit with United Nations Commission on International Trade Law saying that Seoul violated the bilateral investment treaty in the process of its taking over what was then Daewoo Electronics in 2010. 

United Nations Commission on International Trade Law

In April 2010, Entekhab agreed to buy Daewoo Electronics for 578 billion won and paid 10 percent of the deal price to creditors of the Korean company in November. In December, creditors terminated the deal after Entekhab missed the deadline for payment, asking for a discount.

The Iranian firm demanded the return of its down payment for the purchase of Daewoo Electronics which was later sold to Dongbu Group but the creditors led by state-run Korea Asset Management Corp refused.

“We’re thoroughly reviewing the situation,” the government said in a statement on June 7.

This is the third ISD case filed against Korea, following the disputes with Lone Star Fund in 2012 and Hanocal Holding, a company backed by UAE’s royal family member Sheikh Mansour in 2015. Hanocal dropped its claims in 2016 while the case of Lone Star, which is seeking US$4.67 billion compensation, is still awaiting a final verdict.

By Park Ga-young (gypark@heraldcorp.com)