South Korea loses legal battle with Iranian group over Daewoo Electronics sale

South Korean government has lost a legal dispute with an Iranian firm over the failed takeover of Daewoo Electronics in 2011, officials said Thursday.

Iran’s Dayyani group, a major shareholder of Entekhab Industrial Group, sought an investor-state dispute settlement after South Korea’s state-run Korea Asset Management Corp. (KAMCO) canceled a contract to sell a major stake in Daewoo Electronics to Entekhab in 2011 due to funding uncertainties, Yonhap reported.

Dayyani filed the complaint with the International Center for Settlement of Investment Disputes (ICSID), criticizing Seoul for violating a bilateral investment treaty and demanding the Korean government pay 93.5 billion won ($87.4 million).

Earlier this month, the ICSID ordered the South Korean government to pay 73 billion won, according to South Korea’s financial regulator, the Financial Services Commission (FSC).

The government is reviewing follow-up measures in the wake of the ruling, the FSC said in a statement.

KAMCO picked Entekhab as the preferred bidder for acquiring a controlling stake in Daewoo Electronics in 2010.

Entekhab paid 10 percent of the total value, or 57.8 billion won, after signing a deal, but KAMCO terminated the contract in May 2011, citing Entekhab’s request for a discount.