SEOUL, Jan 13 Reuters - South Korea is about to pay compensation to Iran's Dayyani Group over a dispute over a 2015 payment, after the United States cleared the path to the payment without violating its sanctions against Tehran, the Asian nation's foreign ministry said.
Dayyani's family, the family behind Entekhab, an Iranian consumer electronics group, filed an investor-state dispute settlement ISDS complaint against the South Korean government in 2015 citing breach of a deal. Seoul did not return the $50 million deposit that it paid for a failed bid to purchase a majority stake in the bankrupt Daewoo Electronics.
In 2018, the International Centre for Settlement of Investment disputes at the World Bank ordered Seoul to give 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 that the U.S. Treasury's Office of Foreign Assets Control issued a specific license on January 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.
A company from one country can seek arbitration against another country where it has invested through the ISDS.
The Dayyani case marks South Korea's first loss in an investment treaty dispute, and its appeal was rejected in 2019.
In 2018 Washington imposed sanctions on Iran after President Donald Trump resigned 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 demanded the release of about $7 billion of its frozen funds in South Korea, calling it hostage https: www.reuters.