South Korea's said Wednesday that the US has issued a specific license that allows Seoul to send at least $63 million in overdue payment to an Iranian investor.
In its statement Wednesday, Korea's ministry of foreign affairs said the US Special Envoy for Iran Robert Malley and South Korea's First Vice-Foreign Minister Choi Jong-kun had discussed the issue of remittance of arbitral award to the Dayyani family.
The US Treasury Department's Office of Foreign Assets Control (OFAC) issued the "specific license" on January 6 to authorize the Seoul to pay the Iranian investor. The license, the Korean foreign ministry said, approves the use of the US financial system for the execution of the arbitral award.
The US State Department Spokesman Ned Price said last week, ahead of South Korea's First Vice-Foreign Minister's arrival in Vienna, that Washington would waive possible sanctions on South Korea over frozen Iranian assets only with “everything” agreed in Vienna nuclear talks. The talks that started last April continue with no prospect of an early resolution.
It is not clear how and on what conditions the US has agreed to allow the payment by Korea.
A Snowa home appliances building in Iran.
Since introducing ‘maximum pressure’ sanctions and leaving the JCPOA in 2018, the US has threatened punitive action against any third party buying Iran’s oil or dealing with its financial sector. Two South Korea banks hold $7-9 billion of Iranian money, largely owed for oil imports prior to American sanctions. In 2021 Iran detained a Korean tankerand banned the import of home appliances made by the two leading Korean manufacturers, Samsung and LG.
The payment of the compensation to the Dayyani family appears to be intended to mend trade relations between South Korea and Iran.
Iran's Supreme Leader Ali Khamenei in Septemberbanned imports from South Korea’s LG and Samsung products, which he only referred to as "two South Korean companies." While he said this was meant to boost local manufacturers, state media also saw the move as a diplomatic message.
The Dayyani family who will be receiving the award now initiated an investor-state dispute settlement (ISDS) arbitration against South Korea's government in 2015 over their down-payment for the acquisition of Daewoo Electronics in 2010. The acquisition never took place, but the deposit was confiscated in the process in Korea.
In 2018, an arbitration tribunal ruled in favor of the Dayyanis, but the South Korean government said it could not make a payment due to US banking sanctions.
The Dayyani family is a major shareholder of Entekhab, a private industrial and investment group that owns several home appliance companies including Snowa. The latter is now the largest home appliance producer in Iran. The industrial group previously produced home appliances under the Daewoo brand in Iran.
Mohammadreza Dayyani, the CEO of Entekhab, in October said South Korean companies had abandoned the Iranian market after the US withdrawal from the 2015 nuclear deal and re-imposition of sanctions despite having an 80 percent share in Iran's home appliances market.
Even after the ban, Dayyani said, Korean products which are unofficially imported by individuals from neighboring countries have a considerable share in the Iranian market.
South Korean ambassador Yun Kang-hyeo told the Iranian Labour News Agency (ILNA) in December that his country had suffered more than any – other than Iran itself – from US sanctions.
In the same interview, ambassador Yun alleged that Snowa, the company owned by the Dayyani family, was behind the ban on Korean home appliances because the return of Korean giants would be detrimental to the huge investments they have made to produce their own brand.
"I explained to Snowa that they need to cooperate with Korean companies such as Samsung and LG if they want progress in the production of home appliances in Iran. "The CEO of Snowa accepted my suggestion and we discussed how we could find a good way for cooperation," the Korean ambassador said according to ILNA.