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Jeong Sung-ho, Minister of Justice. (Photo courtesy of Yonhap News) |
[Alpha Biz= Kim Jisun] The South Korean government has prevailed in its legal challenge against an international investment arbitration ruling that ordered it to pay approximately KRW 160 billion (about USD 108 million) to U.S.-based hedge fund Elliott Management.
As a result of the ruling, the original arbitral award recognizing the government’s compensation liability can no longer be maintained, and the case has been remitted back to the arbitration process.
The Ministry of Justice said on Sunday that it had won the annulment proceedings filed in a UK court against the ISDS arbitral award in favor of Elliott.
In 2023, the Permanent Court of Arbitration (PCA) ruled that the Korean government should pay Elliott approximately KRW 155.6 billion (about USD 108.2 million) in damages.
The government subsequently filed a lawsuit in the UK courts—the seat of arbitration—seeking to set aside the award, arguing that the PCA lacked jurisdiction under the Korea–U.S. Free Trade Agreement (FTA).
In August 2024, a lower UK court dismissed the case, finding that the government’s jurisdictional arguments under the Korea–U.S. FTA did not fall within the scope of judicial review permitted under the UK Arbitration Act.
However, in July last year, the Court of Appeal accepted the Korean government’s appeal and remanded the case to the High Court for further review.
Upon reconsideration, the High Court examined whether there were valid grounds to annul the PCA award and ultimately ruled in favor of the Korean government.
The Elliott dispute stems from the 2015 merger between Samsung C&T and Cheil Industries, which occurred during the management succession process of Lee Jae-yong, Chairman of Samsung Electronics.
Elliott argued that the merger ratio was unfavorable to Samsung C&T shareholders, and that the National Pension Service, a major shareholder and a government-affiliated institution, voted in favor of the deal, causing financial harm to minority shareholders. Elliott was a shareholder in Samsung C&T at the time.
알파경제 Kim Jisun (stockmk2020@alphabiz.co.kr)
