Seoul wins Hague arbitration as Iranian family’s $566 million claim rejected

The Permanent Court of Arbitration (PCA) in The Hague has fully rejected a 770 billion won ($566 million) claim brought by the Iranian Dayyani family against the South Korean government.

Yonhap News Agency reported the decision, citing South Korea’s Ministry of Justice.

The dispute concerned a delay in the payment of compensation stemming from a failed deal to acquire Daewoo Electronics. The arbitration tribunal also ordered the Iranian claimants to reimburse South Korea 4 billion won in legal costs and approximately 800 million won in administrative expenses.

In 2010, Entekhab, an Iranian industrial group owned by the Dayyani family, won a tender to acquire Daewoo Electronics. In 2011, however, the Korea Asset Management Corporation (KAMCO), a South Korean state-run corporation, terminated the deal.

In 2018, an international arbitration tribunal ordered Seoul to pay the Iranian side 73 billion won plus interest. The ruling became final in December 2019.

South Korea transferred the compensation in April 2022. In October 2021, the Dayyani family had filed a new claim seeking $566 million in damages that it said resulted from the delay in receiving the payment.

The South Korean side argued that the transfer had been delayed because it was necessary to obtain special authorization from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), given the sanctions imposed on Iran’s financial sector.

The arbitration tribunal concluded that South Korea had not discriminated against the Iranian investors and that obtaining OFAC authorization was necessary and legally justified in light of the sanctions restrictions in force at the time.

By Tamilla Hasanova