Seoul: An international arbitration body has ruled in favor of South Korea, overturning a previous decision that required the nation to compensate private equity fund Lone Star over the 2012 sale of a local bank, Prime Minister Kim Min-seok announced.

According to Yonhap News Agency, the International Center for Settlement of Investment Disputes (ICSID)'s annulment committee nullified the earlier ruling that demanded South Korea pay Lone Star $216.5 million in compensation plus interest. Prime Minister Kim disclosed during a briefing that the annulment effectively extinguishes the government's compensation liability, which was estimated to be around 400 billion won based on current exchange rates.

Per the latest ruling, Lone Star is now obligated to cover South Korea's legal expenses, amounting to approximately 7.3 billion won ($4.98 million), within a 30-day period. This decision comes after South Korea appealed the ICSID's 2022 ruling, which arose from Lone Star's 2012 lawsuit alleging governmental interference during the sale of Korea Exchange Bank (KEB). Lone Star claimed it suffered losses of $4.67 billion due to these actions.

Lone Star had initially purchased KEB in 2003 for 1.38 trillion won and later sold it to Hana Financial Group for 3.92 trillion won in 2012. The firm contended that government interference prevented a higher sale price, forcing a sale at a reduced valuation. In July 2023, Lone Star sought an annulment of the 2022 ruling, arguing the compensation was inadequate, while Seoul lodged a petition to cancel the award in September, citing procedural violations by the tribunal.