The long-running dispute between Lone Star and the Republic of Korea reached a significant stage in November of this year, when an ICSID Ad hoc Committee decided to annul substantial parts of the ICSID award dated 30 August 2022, which had held Korea liable for the violation of the Belgium–Korea BIT. The original tribunal had awarded the claimants approximately USD 216 million, a sum that is far below their initial claim of USD 4.7 billion but is nonetheless substantial.
Korea challenged the ICSID award before an Ad hoc Committee on the basis of Article 52 of the ICSID Convention, which says: “(1) Either party may request annulment of the award by an application in writing addressed to the Secretary-General on one or more of the following grounds: (…) (d) that there has been a serious departure from a fundamental rule of procedure”.
The Ad hoc Committee found a serious departure from a fundamental rule of procedure in the ICSID arbitration. The central criticism concerned the tribunal’s reliance on the findings made in a separate ICC arbitration between Lone Star and a private counterparty named Hana Financial Group, a commercial dispute in which Korea had not participated. The tribunal had adopted evidence from the ICC arbitration award, relying on it to establish that the acts of the Financial Services Commission, Korea’s financial regulator, were illegal and engaged state responsibility. The Ad hoc Committee held that using those findings as determinative evidence, without affording Korea an opportunity to contest them, constituted a serious violation of the principle of due process, a fundamental rule of procedure under international law. This resulted in the annulment of all parts of the original award that recognized the government’s compensation liability.
LSF-KEB Holdings SCA and others v Republic of Korea, ICSID Case No. ARB/12/37,Annulment decision dated 18 November 2025
