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S. Korea to object to British court's interim charging order over failed M&A deal

All News 11:22 September 03, 2020

SEOUL, Sept. 3 (Yonhap) -- South Korea said Thursday that it will present its objections to a recent British court ruling in a case over a failed takeover of Daewoo Electronics by Iran's Dayyani family.

The move came after the High Court of Justice in Britain granted the Dayyani family an interim charging order against shares of Dana Petroleum, a wholly owned subsidiary of South Korea's state-run Korea National Oil Corp.

South Korea will raise objections with the British court this month, an official of the Financial Services Commission said, without providing a specific time frame.

The official said the South Korean government has been in talks with the Dayyani family over how to pay 73 billion won (US$61.5 million) to the family behind Iranian business group Entekhab Industrial Group.

The legal dispute dates back to 2010 when South Korea's state-run Korea Asset Management Corp. (KAMCO) picked Entekhab Industrial Group as the preferred bidder for a controlling stake in Daewoo Electronics.

Entekhab, represented by its Singapore-based firm D&A, paid 10 percent of the total value, or 57.8 billion won, after signing the deal. The deal, however, fell through as KAMCO terminated it in May 2011, citing funding uncertainties.

The Dayyani family asked KAMCO to return the paid amount, but creditors of Daewoo Electronics declined, attributing the cause of the deal failure to D&A.

The Iranian family sought an investor-state dispute settlement against Seoul for the 57.8 billion-won payment and filed the complaint with the International Center for Settlement of Investment Disputes (ICSID), demanding 93.5 billion won, including interests and other costs.

In 2018, the ICSID ruled in favor of the Iranian family, ordering Seoul to pay 73 billion won in compensation, explaining that Daewoo Electronics creditors were responsible for the deal breakdown.

In December, the British court rejected Seoul's request to nullify the international ruling.

It was the first case the South Korean government lost against a foreign firm in an Investor-State Dispute Settlement, a system through which investors sue countries for discriminatory practices.


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