Lone Star Case Moves Towards Arbitration

The Korea Times has an update on the Lone Star issue which has been quiet for about three years, but is now ready to move towards arbitration:

V.V. Veeder, a British national, has been appointed as the presiding arbitrator for a 5-trillion-won international litigation between the Korean government and Lone Star Funds, sources said Tuesday.

He was one of the three arbitrators who ruled in favor of the U.S. buyout firm in 2011 in its dispute with a Korean government owned company.

According to industry sources, Veeder will arbitrate Lone Star’s Investor-State Dispute Settlement (ISDS) case against the government, whose first hearing will be held on May 15 at the International Center for Settlement of Investment Disputes in Washington D.C.

In most cases, investment tribunals are composed of three arbitrators; one is appointed by the investor, one by the state, and the third is usually chosen in agreement between the parties. The presiding arbitrator holds the casting vote when the other two fail to agree.

The Dallas-based firm filed an ISDS suit in 2012 for 5.13 trillion won ($4.7 billion), arguing that the Korean government had caused it serious financial damage by delaying its approval for the firm to sell the Korea Exchange Bank from 2007 to 2012.  [Korea Times]

You can read more at the link, but basically the crime Lone Star made was that it made too much money in Korea and then tried to take its profits outside of the country.  Their sale of the Korea Exchange Bank led to large protests which caused the government to try and stop the sale any way it can.