South Korea Wins ISDS Case Against Iranian Dayyani Family

The South Korean government has won a second international investment dispute (ISDS) case against the Iranian Dayyani family after five years.

According to the Justice Ministry, the government achieved a unanimous victory on September 28 at around 10 p.m. (Korean time) in the ISDS case filed by six members of the Dayyani family based on the Korea-Iran Investment Guarantee Agreement.

As a result, the Dayyani family's claim for approximately 770 billion won (about 507 million euros) in damages was entirely dismissed, and the government will recover about 40 billion won (75%) of its legal costs, along with the full arbitration administrative costs of about 8 billion won.

The Dayyani family, founders and controlling shareholders of Entekhab, Iran's largest home appliance and petrochemical company, filed their first ISDS case on September 14, 2025, after losing a contract guarantee deposit of about 57.8 billion won due to the failure to submit an investment commitment letter during the acquisition of Daewoo Electronics in 2010.

In that case, the Dayyani family received a favorable ruling on June 5, 2018, for about 73 billion won plus interest. The government filed a cancellation lawsuit in a British court that July, but it lost the case in December 2019.

In April 2022, the government paid the Dayyani family approximately 62.2 billion won of the total 85.8 billion won awarded in the first ISDS case, while the remaining 23.6 billion won was deposited in court under a seizure and collection order.

However, the Dayyani family claimed that the government was not fulfilling its obligation to pay the first compensation, leading them to file the second ISDS case on October 18, 2021.

After five years, the arbitration panel dismissed all claims made by the Dayyani family and ordered the government to recover 75% of its legal costs, approximately 40 billion won, along with the full arbitration administrative costs of about 8 billion won.

A Justice Ministry official stated, "This ruling acknowledges the government's significant efforts to fulfill its obligations regarding the first ISDS compensation amid sanctions against Iran."

The official added, "The panel clarified that the South Korean government's efforts align with the principle of good faith under international law, and that unavoidable delays in compliance due to external sanctions should not be viewed as a violation of the agreement. Furthermore, it confirmed that the claimant could not bypass the legitimate judicial system of the host country by leveraging their status as a foreign investor, thereby upholding South Korea's legitimate judicial sovereignty."