The South Korean government has secured a final win in an investor-state dispute settlement (ISDS) case brought by Swiss elevator maker Schindler, and will recover all 9.6 billion won ($6.9 million) it spent on legal fees.
The Ministry of Justice said on the 28th that it had confirmed Schindler did not file a suit with the Paris Court of Appeal to set aside the arbitration award.
On March 14, an arbitral tribunal at the Permanent Court of Arbitration (PCA) dismissed all of Schindler's claims and ordered the company to bear the government's legal costs. Because Schindler did not seek annulment of the award within the statutory deadline, the ruling rejecting the entire 325 billion won damages claim became final.
The dispute stemmed from a conflict between Hyundai Elevator and Schindler, its second-largest shareholder, over the Korean company's rights offering and the transfer of call options. Schindler argued that steps Hyundai Elevator took on its finances and governance around 2013 to 2015 eroded the value of its stake. It said its holding fell to about 15% from 35% during the rights offering and that it suffered losses as the share price declined.
Schindler filed the ISDS claim against the South Korean government in 2018, arguing that agencies including the Fair Trade Commission, the Financial Services Commission and the Financial Supervisory Service failed to properly regulate or investigate the transactions, causing its losses. It initially claimed 500 billion won in damages before settling on a final claim of 325 billion won.
The tribunal found that the agencies' actions were neither arbitrary nor discriminatory and that each body carried out its investigations and reviews within the scope of its lawful authority. It therefore found no breach of the investment treaty by the South Korean government and no state responsibility under international law.
The government has won a string of ISDS cases this year brought by global companies and investors, including U.S. private equity firm Lone Star and hedge fund Elliott. On the 14th, it also prevailed in an ISDS case filed by a Chinese investor who lost pledged shares after failing to repay loans from a Korean financial institution, clearing it of liability for a final claim of 264.1 billion won.
A Ministry of Justice official said the government "will continue to respond to international investment disputes in a professional and systematic manner and do its utmost to protect the national interest."
