Summary

Background of the Dispute (OCR-ed text may have typos)

On 29 April 2008, BLB's subsidiary Berjaya Leisure (Cayman) Limited ("BCL") entered into a Joint Venture Agreement ("JVA") with JDC for the Project to develop the Land into a "resort-type residential and commercial complex." The JVA provided for the establishment of BJR as a joint venture between BCL and JDC, to be incorporated as a limited liability stock company in Korea with 81% of capital being contributed by BCL and the remaining 19% by JDC.2 The JVA stated that the Land to be utilized for the Project was "wholly owned by JDC." JDC expressly represented in the JVA that "the Land or any part thereof is not subject to any compulsory acquisition by any government authority and the Land is free from all encumbrances and adverse interests."

Pursuant to the JVA, BJR was established under the laws of Korea on 7 August 2008. On 28 January 2009, the Mayor of Seogwipo City issued the Development Business Operating Approval ("DBOA") designating BJR as the developer of the Project. On 30 March 2009, BJR and JDC entered into a sale and purchase agreement ("SPA") for the Land at a purchase price of KRW 72.1 billion, as provided for in the JVA. The SPA stated that the Land was "owned by Seller [i.e., JDC]". JDC expressly represented and warranted that the execution of the SPA was "within Seller's authority and rights". BJR duly paid in full the purchase price stipulated in the SPA to JDC on 8 October 2009. On the same day, BJR entered into a Business Transfer Agreement with JDC under which it took over contracts relating to the construction and preparation for the Project that JDC had previously entered into as the developer of the Project. BJR commenced infrastructure works on the Project on 15 December 2009.

During the negotiation and prior to the execution of the JVA and SPA, JDC never informed BJR or BLB of ongoing lawsuits in the Korean courts by prior owners of the Land seeking cancellation of the expropriation carried out by JDC, on which JDC's title to the Land was based. These lawsuits were brought by the prior owners of the Land in December 2007, before the execution of the JVA and SPA. On 2 December 2009, a first-instance judgment was issued against

JDC in one of the lawsuits, and on 12 January 2011, in an appeal from that judgment by the plaintiffs, the Seoul High Court held that the expropriation was illegal and invalidated it altogether. BLB only became aware of any of these proceedings on 19 January 2011, through local newspaper reports about the Seoul High Court judgment. BLB was formally informed by JDC about the judgment in a letter dated 27 January 2011. In the same letter, JDC reassured BLB that the matter would be resolved "without affecting the project materially." JDC then pressured BJR to proceed with the construction works on the Project notwithstanding the pending appeal before the Korean Supreme Court. Relying on JDC's reassurances and pursuant to their request, BJR completed infrastructure works on the Project and obtained further approvals. BJR also secured funding through a loan agreement with third-party lenders and started construction works on the Project.

On 20 March 2015, the Korean Supreme Court upheld the ruling of the Seoul High Court in its entirety. As a result, the registration of the title to the Land that BJR had acquired became invalid. Following an exchange of letters between JDC and BJR, and after discussions with the Governor of Jeju, BJR suspended the construction works on Phase 1 of the Land on 9 July 2015. On 20 July 2015, the third-party lenders announced an event of default under the loan agreement.

On 20 January 2016, JDC exercised its right of repurchase Phases 2 to 9 of the Land under the SPA, and Phases 2 to 9 of the Land reverted from BJR back to JDC. On 4 March 2016, BJR sent notice to JDC terminating the SPA. BJR has filed suit against the JDC in the Seoul Central District Court for damages that BJR suffered as a result of JDC's breach of the SPA, including its representations and warranties. This lawsuit is still ongoing.

BLB invested, and thus has suffered complete losses of, more than KRW 302.8 billion in the Project. BLB has also suffered damages in the form of its lost future returns on the Project that are preliminarily estimated to be in the range of at least KRW 4.1 trillion.

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