Seoul: An international arbitration body for investor-state dispute settlement has ruled in favor of South Korea in its challenge to the award for private equity fund Lone Star over its 2012 sale of a local bank, Prime Minister Kim Min-seok said Tuesday.

According to Yonhap News Agency, the International Center for Settlement of Investment Disputes (ICSID)'s annulment committee has nullified the earlier decision ordering South Korea to pay Lone Star US$216.5 million in compensation plus interest. Prime Minister Kim announced this development during a briefing.

South Korea had appealed the ICSID's 2022 ruling to pay the compensation to Lone Star. The private equity fund filed a suit in 2012, claiming that the South Korean government interfered with the sale of Korea Exchange Bank (KEB), which resulted in $4.67 billion in losses.

Lone Star acquired KEB in 2003 for 1.38 trillion won (US$940.6 million) and later sold it to a major South Korean banking firm, Hana Financial Group, for 3.92 trillion won in 2012.