Recent Developments

In accordance with the implementation of “Responsibilities Map” under the amendment to the Act on Corporate Governance of Financial Companies of Korea, Lee & Ko provides advice on legal coherence for the BNK Financial Group as well as the subsidiaries of the BNK Financial Group with an aim to prepare or improve executives’ accountability statements, accountability systems, and management measures to fulfill their internal control and management obligations. As a large-scale compliance project at the financial group level, this project is of a great significance as a compliance project with respect to financial holding companies that control and encompass various business sectors such as banks, securities companies, and asset management companies. This project is a leading case to ensure reasonable and appropriate performance of duties on the part of senior management by referring to the UK’s Senior Management & Certification Regime.

In May 2024Lee & Ko successfully represented the Ministry of Education(“MOE”) and the Ministry of Health and Welfare(“MOHW”), in the injunction case filed by professors and students of medical schools.

Faced with shortage of doctors, MOE and MOHW announced a policy to increase the annual enrolment quota for nationwide medical schools from 3,000 to 5,000 starting in 2025. In response to the government's policy, the medical students refused to attend classes and the doctors left the hospitals. In March 2024, Medical school professors and students applied for an injunction to prevent the government from enforcing the policy, arguing that the excessive increase in enrolment quota would seriously impede medical education. 

The trial court dismissed the case finding that the plaintiffs lacked standing to apply for the injunction in March 2024. However, the appellate court ordered the MOE and MOHW to submit evidence supporting the increase of the enrolment quota by 2,000. Given the significance of the matter, the MOE and MOHW retained Lee & Ko. Lee & Ko argued that the court should refuse to grant the injunction as the government sufficiently consulted with the medical community and the policy was essential for public welfare. In May 2024, after a thorough review of the records, the appellate court determined that the plaintiffs did have standing to file the lawsuit. However, the appellate court did not grant the injunction because granting the injunction would have a significant impact on public welfare.

The government's policy to increase the enrolment quota for medical schools was the most talked-about issue this year. As the decision acknowledges that the government's policy is essential for public welfare, it will assist the government in further pursuing its policy.
 

On behalf of Ilsan Grand Bridge Corp (“IGB”), Lee & Ko secured a winning award against Gyeonggi Province (the “Province”) in November 2022 in a lawsuit. The Appellate court also dismissed the appeal filed by the Province in May 2024.

IGB, a corporation established under the Act on Public-Private Partnerships (“PPP”) in Infrastructure (the “Act”) completed construction of Ilsan Bridge in 2008. The Province issued a business license granting IGB to manage the Ilsan Bridge for 30 years on the condition that IGB would transfer the title of the bridge to the Province after 30 years (According to IGB’s estimates, its expected profits from managing the Bridge until 2038 was USD 636 million). However, dissatisfaction among commuters grew as they needed to pay tolls to use the bridge. Around October 2021, the Province executed an administrative order to cancel IGB’s rights in the name of the public good and abolished the tolls.

Lee & Ko persuasively argued that even if the Province may cancel IGB’s business license under the Act, such administrative order must show that the public interest outweighs IGB’s right to a business license. Agreeing with Lee & Ko’s arguments, the court found that the administrative order lacked a clear public interest to revoke IGB’s rights and canceled the administrative order in November 2022. The Appellate Court affirmed the lower court’s decision in May 2024.

This case was the first case regarding the validity of an administrative order under the Act on which criteria the administrative order could be justified in the name of the public good, and thus will likely serve as an important precedent for the PPP projects.
 

Lee & Ko advised LG Electronics on the issuance of overseas bonds in the amount of US$800 million. 

By way of this transaction, LG Electronics is back on track after a gap of 17 years and solidified its position in the Korean Paper market. The bonds were issued in three-year and five-year fixed rate bonds respectively divided into US$500 million and US$300 million, with the five-year bonds issued in the form of a sustainability bond.

LG Electronics, breaking surface in the issuer market after a long pause, was well received by global investors in Asia, the U.S., and Europe, leading to the additional interest rate (spread) being set at the rate that is approximately 40bp lower than the initial price guide (IPG). The managers involved, amongst others, were BNP Paribas, Citigroup, HSBC, JP Morgan, Korea Development Bank, and Standard Chartered Bank.

In this transaction, Lee & Ko provided LG Electronics with a comprehensive and in-depth advice on and around the overall issuance on the basis of its review of applicable laws and regulations related to issuance, relevant contracts and offering circular, and government approvals and licenses. Thanks to its expertise accumulated through many years of experience, Lee & Ko provided advice swiftly and accurately and significantly contributed to the seamless and successful closing of the transaction.

In addition to the issuance of LG Electronics’ overseas bonds, Lee & Ko has been widely recognized for its proven expertise by taking part in the mainstream transactions in the Debt Capital Market area, including but not limited to the transactions involving the issuance of overseas bonds in the amount of US$600 million for Mirae Asset Securities, US$1 billion for Hyundai Capital, US$1.4 billion for Korea National Oil Corporation, US$600 million for Korea Ocean Business Corporation, US$600 million for KB Kookmin Bank, and US$500 million for Korea Expressway Corporation in the first half of 2024.

Lee & Ko successfully represented the Korean government in an investor-state dispute settlement (ISDS) proceeding initiated by the U.S.-based private equity firm Mason Capital L.P. and Mason Management LLC (collectively referred to as “Mason”). Lee & Ko’s International Arbitration team secured a favorable award for the Korean government, significantly limiting the liability to merely 16% of Mason’s original claim, which was worth approximately USD 200 million (around KRW 277 billion). 

This dispute dates back to the 2015 merger between two Samsung Group affiliates, Samsung C&T Corp. and Cheil Industries Inc. Mason, a shareholder of Samsung C&T at the time, alleged in arbitration that the Korean government had unlawfully intervened and pressured the National Pension Service (NPS) to vote in favor of the merger. Mason claimed this intervention deprived them of the potential benefits from their Samsung C&T shares and sought USD 200 million in damages against the Korean government.

This high-profile ISDS case has drawn considerable media attention in the field of international arbitration due to its substantial claim amount, the involvement of multiple civil and criminal court cases, and the complex and challenging nature of the dispute, which spanned over five years since its initial filing in 2018. This case also notably involved a significant debate over the principle of fair and equitable treatment under the Korea-US FTA. This monumental and successful defense, culminating in a landmark decision, underscores Lee & Ko’s exceptional expertise in arbitration, accumulated from handling and representing the Korean government and other investors in various ISDS cases, the team’s meticulous examination of extensive documents, close cooperation with foreign law firms, and advanced legal acumen and strategic prowess in addressing multiple issues.
 

Leading Korean law firm Lee & Ko have advised on Korean Air’s acquisition of a fleet of thirty-three (33) aircraft from Airbus SAS, comprising twenty-seven (27) units of A350-1000 model aircraft and six (6) units of A350-900 model aircraft. The aggregate value of the transaction stands at approximately US$13,700,000,000, which translates to approximately KRW18,173,000,000,000.

Lee & Ko have assisted the client from the outset of the transaction, advising on terms of the relevant legal documentation and related issues from a strategic and holistic perspective. Across a number of agreements, Lee & Ko provided instrumental advice in a timely fashion so that material issues could be identified and commercially appropriate solutions found for them by reference to Lee & Ko’s cumulative expertise and market knowledge.

Lee & Ko have provided forward-looking advice spanning multiple stages of the aircraft’s life beyond the initial purchase. Lee & Ko proactively identified issues which could potentially arise in the future, such as those concerning aircraft delivery or advance payments, and proposed commercially attuned solutions, thereby enhancing the client’s capacity to manage its commercial contracts and its relationships with important stakeholders and its capacity to anticipate and resolve issues ahead of time.

Lee & Ko represented the defendants in a USD 227 million fund fraud case, which attracted much attention nationwide. Lee & Ko obtained a non-guilty verdict in the first and appellate court and is currently representing Discovery Asset Management Co., Ltd.(“DAM”), its executives and employees in the supreme court.

The prosecution indicted Discovery Asset Management Co., Ltd.(“DAM”), its executives and employees on the grounds that i) DAM managed the global fund of funds, which made an investment in U.S. P2P loans with high credit risk, but deceived investors by guaranteeing high returns; and ii) as Direct Lending Investments, which managed U.S. P2P loan products, went bankrupt, DAM failed to respond to all of the resell requirements, which came to a total of USD 227 million, leading to significant damages for the investors. 

On behalf of DAM, its executives and employees, Lee & Ko set up a T/F Team consisting of the attorneys from the litigation group, the criminal practice group, and the capital market compliance group, and argued that DAM was not able to acknowledge high credit risk of U.S. P2P loans by i) pointing out that under the Financial Investment Services and Capital Markets Act, a breach of the duty of care is legally distinct from intention in the context of a criminal offence; and ii) thoroughly analysing the management of U.S. P2P products, and the accounting principles in the U.S., among others. In December 2022, the court agreed with the arguments put forward by Lee & Ko and found DAM, all of its executives and employees not guilty. Likewise, in February 2024, the appellate court ruled that the lower court’s decision was justified.

How to distinguish the duty of care and intention in a criminal offence was the main issue in this case, and this court decision is expected to serve as an important precedent for similar cases in the future. Meanwhile, this case attracted a great deal of media attention, not merely due to the amount of damages, but because the representative director of DAM was a relative of a high ranking government official.