By Kim Jae-won
The financial regulator said Tuesday that an Iranian home appliance manufacturer has filed an international arbitration claim against the Korean government for not refunding its down payment on the takeover of an electronics firm.
The Financial Services Commission (FSC) said Iran's Dayyani, a major shareholder of Entekhab Industrial Group, filed a complaint with the United Nations Commission on International Trade Law (UNCITRAL) for arbitration between the company and the Korean government over its failed deal to buy Daewoo Electronics five years ago.
"Dayyani filed an international arbitration claim with the UNCITRAL on Sept. 14 against the government of the Republic of Korea, asking for a refund of its down payment in the Daewoo Electronics deal," said the FSC in a statement.
In April 2010, Entekhab paid 10 percent of the deal price, or 57.8 billion won ($49.2 million), after signing a deal with Korea Asset Management Corp. (KAMCO) to buy a controlling stake in Daewoo Electronics, but KAMCO terminated the contract in May 2011, citing that Entekhab had called for a discount.
Instead, Korea's Dongbu Group acquired a 51 percent stake in Daewoo Electronics at 138 billion won in February 2013, changing its name to Dongbu Daewoo Electronics.
Entekhab had lodged a lawsuit before a Seoul court in 2011, but the court referred the dispute to arbitration. KAMCO and other creditors of Daewoo Electronics rejected the arbitration settlement to refund the down payment to Entekhab.
Daewoo Electronics, an affiliate of the now-defunct Daewoo Group, had been under a debt rescheduling program since 1999 when its parent company went bankrupt in the midst of the Asian financial crisis.
The latest case is the third investor-state dispute that Seoul has faced from international investors, following ongoing cases involving the Texan buyout of Lone Star and Hanocal Holding of the United Arab Emirates, both of which are pending at the International Center for Settlement of Investment Disputes of the World Bank.
Lone Star accused the Korean government of inflicting losses worth $4.7 billion to the fund by delaying a regulatory approval to sell Korea Exchange Bank to HSBC in 2008. The deal collapsed as HSBC withdrew its offer after the global financial crisis hit the world.
Lone Star also said that the Korean government imposed hundreds of billions of won of corporate tax on its sale of KEB to Hana Financial Group, violating a Korea-Belgium treaty that exempts double taxation. Lone Star owned KEB through its subsidiary based in Belgium.
The financial regulator said Tuesday that an Iranian home appliance manufacturer has filed an international arbitration claim against the Korean government for not refunding its down payment on the takeover of an electronics firm.
The Financial Services Commission (FSC) said Iran's Dayyani, a major shareholder of Entekhab Industrial Group, filed a complaint with the United Nations Commission on International Trade Law (UNCITRAL) for arbitration between the company and the Korean government over its failed deal to buy Daewoo Electronics five years ago.
"Dayyani filed an international arbitration claim with the UNCITRAL on Sept. 14 against the government of the Republic of Korea, asking for a refund of its down payment in the Daewoo Electronics deal," said the FSC in a statement.
In April 2010, Entekhab paid 10 percent of the deal price, or 57.8 billion won ($49.2 million), after signing a deal with Korea Asset Management Corp. (KAMCO) to buy a controlling stake in Daewoo Electronics, but KAMCO terminated the contract in May 2011, citing that Entekhab had called for a discount.
Instead, Korea's Dongbu Group acquired a 51 percent stake in Daewoo Electronics at 138 billion won in February 2013, changing its name to Dongbu Daewoo Electronics.
Entekhab had lodged a lawsuit before a Seoul court in 2011, but the court referred the dispute to arbitration. KAMCO and other creditors of Daewoo Electronics rejected the arbitration settlement to refund the down payment to Entekhab.
Daewoo Electronics, an affiliate of the now-defunct Daewoo Group, had been under a debt rescheduling program since 1999 when its parent company went bankrupt in the midst of the Asian financial crisis.
The latest case is the third investor-state dispute that Seoul has faced from international investors, following ongoing cases involving the Texan buyout of Lone Star and Hanocal Holding of the United Arab Emirates, both of which are pending at the International Center for Settlement of Investment Disputes of the World Bank.
Lone Star accused the Korean government of inflicting losses worth $4.7 billion to the fund by delaying a regulatory approval to sell Korea Exchange Bank to HSBC in 2008. The deal collapsed as HSBC withdrew its offer after the global financial crisis hit the world.
Lone Star also said that the Korean government imposed hundreds of billions of won of corporate tax on its sale of KEB to Hana Financial Group, violating a Korea-Belgium treaty that exempts double taxation. Lone Star owned KEB through its subsidiary based in Belgium.
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