An Iranian firm has filed an investor-state dispute claim against the South Korean government for not refunding its down payment on the takeover of a local electronics firm, claiming that Seoul violated a bilateral investment guarantee agreement, a government source said Monday.

In April 2010, the Korea Asset Management Corp. (KAMCO), the state-run company dealing with non-performing loans, picked Iran's Entekhab Industrial Group as the preferred bidder for acquiring a controlling stake in Daewoo Electronics Co. in 2010.

Daewoo Electronics, an affiliate of the now-defunct Daewoo Group, had been under a debt rescheduling program since 1999 when its parent company went bankrupt in the midst of the Asian financial crisis.

The Iranian firm paid 10 percent of the total value, or 57.8 billion won (US$49.2 million), after signing a deal, but KAMCO terminated the contract in May 2011, citing that the Entekhab had called for a discount.

Entekhab had lodged a lawsuit before a Seoul court in 2011, but the court referred the dispute to arbitration. KAMCO and other creditors of Daewoo Electronics rejected the arbitration settlement to refund the down payment to Entekhab.

The government source said Entekhab filed an arbitration application against the South Korean government last week to claim the payment back. 

"Entekhab sent a letter of arbitration on Sept. 14," said the source.

The United Nations Commission on International Trade Law (UNCITRAL) will serve as the court of arbitration on this Entekhab-South Korea case, he added.

The latest case is the third investor-state dispute that the Seoul government has faced, following ongoing cases involving U.S.

buyout fund Lone Star Fund and Hanocal Holding BV of the United Arab Emirates, both of which are pending on the International Center for Settlement of Investment Disputes of the World Bank. (Yonhap)