Lone Star rejects ICSID annulment, eyes new arbitration
The Korea Times | 20 November 2025
Lone Star rejects ICSID annulment, eyes new arbitration
By Bahk Eun-ji
Lone Star said it does not accept this week’s annulment ruling by the International Centre for Settlement of Investment Disputes (ICSID), signaling that it could pursue a new round of arbitration against the Korean government.
The statement came days after an ICSID ad hoc committee nullified the portion of a 2022 ruling that ordered Korea to pay roughly 400 billion won ($272 million) in an investor-state dispute over the U.S. private equity firm’s sale of Korea Exchange Bank (KEB).
In a written response to The Korea Times, a spokesperson for the U.S. firm said it disagrees with the outcome. The spokesperson added that Lone Star was “disappointed in the decision of the ad hoc committee,” emphasizing that the ruling was voided “on procedural grounds.”
The firm added that the decision “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.”
The company also said it “looks forward to presenting its case again to a new tribunal,” expressing confidence that a new panel “will again find that Korea acted unlawfully and will award Lone Star the full amount of its damages.”
In August 2022, ICSID ordered the Korean government to pay Lone Star $216.5 million, plus interest. The ruling followed a claim filed by the U.S. private equity firm in 2012, alleging that the Korean government had obstructed its 2007 plan to sell a controlling stake in KEB to HSBC by delaying regulatory approval, resulting in losses totaling $4.68 billion.
Earlier this week, the Ministry of Justice said the committee found that the original tribunal had committed a procedural violation by relying on findings from a separate International Chamber of Commerce (ICC) commercial arbitration between Lone Star and Hana Bank.
According to a Ministry of Justice official, the ruling “wipes out the payment obligations entirely.”
As Lone Star repeatedly mentioned a “new tribunal,” attention has shifted to what legal avenues the company may pursue next.
A professor at a Seoul graduate school of law, speaking on condition of anonymity because of the sensitivity of the matter, said Lone Star has “two broad procedural options” following the annulment.
One possible route is resubmission under Article 52(6) of the ICSID Convention, which allows either party to request a new tribunal after an award is nullified, but stressed that this does not mean Lone Star will necessarily pursue that path.
She explained that the provision clearly allows a party to request a fresh tribunal. “The door is open for resubmission," she said. However, she noted that the legal and practical implications would depend on the arguments presented and on how the new tribunal chooses to handle the reopened dispute.
The second option, according to the professor, is to pursue a completely separate arbitration outside the ICSID framework. She said Lone Star’s reference to a “new tribunal” should not automatically be interpreted as a commitment to remain within ICSID.
“They could take the case to another arbitration center, including the ICC,” she said, adding that such a move would raise additional questions about jurisdiction and whether a new claim would be treated as distinct from the prior proceedings.
The professor emphasized that it remains unclear which route Lone Star will take, saying the company has not disclosed any “specific procedures, filings or timetable.”
She added that neither side can be said to hold a clear advantage at this stage, as “we do not know what evidence Lone Star intends to rely on.”
The justice ministry said it will continue monitoring the situation closely. “We will respond through the appropriate channels as soon as Lone Star initiates any formal procedure," a senior official said, adding that the government is preparing for “any action the firm may take under ICSID or other institutions.”
With Lone Star still silent on its next concrete step, attention remains focused on whether it will initiate a second arbitration and which procedural path it will choose.
