Government's Lawsuit to Cancel 'Elliott ISDS Ruling' Dismissed by UK Court

Compensation Ordered at 138.9 Billion KRW... Ministry of Justice Reviews Appeal

The UK court dismissed the lawsuit filed by the government challenging the international investment dispute (ISDS) ruling that ordered it to pay over 130 billion won to the US-based hedge fund Elliott Management.

According to the legal community on the 2nd, the UK court announced on the 1st (local time) that it dismissed the government's annulment lawsuit against the Permanent Court of Arbitration (PCA) ruling last June that ordered payment of approximately 138.9 billion won (about 107.82 million USD) to Elliott Management. The UK court ruled that the Korea-US Free Trade Agreement (FTA) provision, which was the basis for the government's annulment lawsuit, does not fall within the jurisdiction under UK arbitration law, and thus dismissed the case.

The government has argued that the arbitral tribunal misinterpreted the jurisdictional requirements under the Korea-US FTA, making the ruling subject to legitimate annulment under UK arbitration law. They claimed that the PCA issued a ruling on a case over which it had no authority to adjudicate.

Previously, the PCA accepted part of the claim by Elliott, a US-based hedge fund, that the Korean government violated the Korea-US FTA during the merger process of Samsung C&T and Cheil Industries, ordering payment of 53,586,931 USD (approximately 69 billion won based on the then exchange rate of 1,288 won per dollar) plus delayed interest.

Including the principal compensation, delayed interest, and legal costs, the total amount the government must pay was about 138.9 billion won as of the ruling date.

However, the UK court stated that it deemed it necessary to receive the appellate court's judgment on this dismissal ruling and granted permission to appeal ex officio. The Ministry of Justice plans to review the filing of an appeal after interdepartmental consultations.