U.S. assent paves way for S. Korea to compensate Iranian investor over dispute

Ajin Electronic Components Co

13/01/2022 03:24

By Hyonhee Shin
    SEOUL, Jan 13 (Reuters) - South Korea is set to pay
compensation to Iran's Dayyani Group over a 2015 dispute after
the United States cleared the path towards the payment without
violating its sanctions against Tehran, the Asian nation's
foreign ministry said.  
    Dayyani, the family behind Entekhab, an Iranian consumer
electronics group, filed an investor-state dispute settlement
(ISDS) complaint in 2015 against the South Korean government
citing breach of a deal. It said Seoul did not return the $50
million deposit it paid for a failed bid to purchase a majority
stake in bankrupt Daewoo Electronics.
    In 2018, the World Bank's International Centre for
Settlement of Investment Disputes ordered Seoul to provide
compensation totalling 73 billion won ($61.4 million) to the
Dayyani family, but the payment has not yet been made due to
U.S. sanctions against Iran. 
    The South Korean foreign ministry said on Wednesday the U.S.
Treasury's Office Of Foreign Assets Control issued a "specific
license" on Jan. 6 to allow the payment using the U.S. financial
system. 
    "The license is expected to lay important groundwork for a
speedy conclusion of the ISDS settlement with the Dayyani
family, which has been one of the pending issues between the two
countries," the ministry said in a statement, adding it would
help improve bilateral ties. 
    The ISDS allows a company from one country to seek
arbitration against another country where it has invested.
    The Dayyani case marks South Korea's first loss in an
investment treaty dispute, and its appeal was rejected in 2019. 
    Washington reimposed sanctions on Iran in 2018 after then
President Donald Trump withdrew from Iran's 2015 nuclear
agreement with six major powers, under which Tehran agreed to
curb its nuclear programme in exchange for U.S. sanctions
relief.
    Iran has repeatedly demanded the release of about $7 billion
of its funds frozen in South Korea, calling it "hostage https://www.reuters.com/world/asia-pacific/iran-says-south-korea-holding-7-bln-iran-funds-hostage-2021-01-05.
" 
($1 = 1,188.4300 won)

 (Reporting by Hyonhee Shin; Editing by Muralikumar
Anantharaman)
 ((hyonhee.shin@thomsonreuters.com; 822 6936 1474;))