The South Korean government was ordered to compensate Iran’s Dayyani, the largest shareholder of Entekhab Industrial Group, Iran’s largest home appliance maker, for its failed attempt to take over Daewoo Electronics in 2010.
The Financial Service Commission (FSC) said Thursday that the International Center for Settlement of Investment Disputes (ICSID) ruled in favor of Dayyani, demanding the Korean government pay 73 billion won ($68 million) out of 93.5 billion won claimed by the Iranian company.
The Korean government held an emergency meeting after the ruling of the ICSID to discuss follow-up measures and has decided to take a counteraction, according to the FSC.
Dayyani in 2015 filed an international arbitration with the ICSID against the Korean government for violating the principle of fair treatment under the bilateral investment treaty in a deal that Entekhab was seeking to buy a controlling stake in Daewoo Electronics in 2010.
Entekhab paid 57.8 billion won, 10 percent of the total deal price, to South Korea’s state-run Korea Asset Management Corp. (KAMCO), the largest shareholder of Daewoo Electronics at that time, in an upfront payment in 2010 after being picked as a preferred bidder for Daewoo Electronics. But KAMCO terminated the deal in May 2011 citing funding uncertainties after the Iranian electronics group failed to meet Daewoo Electronics shareholders’ demands and asked for a discount.
Entekhab filed a lawsuit with a Seoul court that in November 2011 ordered Daewoo Electronics return the down payment and Entekhab pay $30 million in outstanding bill to settle the dispute. But the creditors of Daewoo Electronics refused to pay back and the Korean electronics firm went under Dongbu Group in 2013.
Earlier this year, Entekhab attempted to buy Daewoo Electronics again when the Korean electronics company was put up for sale. The deal with the Iranian electronics company fell through again due to price disagreement.
Daewoo Electronics, a distant third in the Korean electronics industry, is now under Dayou Group that owns a smaller kitchen appliances company Dayou Winia. The smaller Korean peer acquired Daewoo Electronics at 120 billion won.
By Jin Young-tae and Choi Mira
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]