UK Court Overturns Ruling and Remands Case
Government Prepares for Possible Elliott Appeal
The government has won an appeal in a UK court against an international investment dispute settlement (ISDS) ruling that ordered it to pay more than 130 billion won in damages to the US-based hedge fund Elliott Management.
According to the Ministry of Justice on the 18th, the UK Court of Appeal accepted the government's appeal regarding the ISDS arbitration award filed by US private equity fund Elliott in 2018. The court overturned the lower court's dismissal of the case and remanded it to the first instance for a substantive judgment.
As the High Court in the UK will now determine whether the Permanent Court of Arbitration (PCA) had jurisdiction over the case involving Elliott and the Korean government, there is now an opportunity for the ruling that required the government to pay over 130 billion won in damages to be overturned.
Elliott filed the ISDS claim in July 2018, arguing that it suffered significant losses during the 2015 merger between Samsung C&T and Cheil Industries because the Blue House and the Ministry of Health and Welfare pressured the National Pension Service to vote in favor of the merger.
The PCA arbitral tribunal ruled on June 20, 2023, that the Korean government must pay Elliott $53,586,931 (approximately 6.9 billion won at the then exchange rate of 1,288 won per dollar), as well as delayed interest and legal costs, totaling over 130 billion won in damages.
The Ministry of Justice filed for annulment in the UK, the seat of arbitration, but the UK Commercial Court dismissed the case in early June after about a year. In response, the Ministry of Justice filed an appeal on September 12, 2023. The UK Court of Appeal accepted the government's argument, finding that the lower court's interpretation of Article 11.1 of the Korea-US FTA was inconsistent with the wording and ordinary meaning of the treaty, and also conflicted with other parts of the agreement.
The court further ruled that, in accordance with principles of international law and a proper interpretation of the Korea-US FTA in light of its wording and structure, Article 11.1 pertains to the jurisdiction of the arbitral tribunal, and that the grounds for annulment raised by the government fall under the issue of "substantive jurisdiction" under UK arbitration law.
The government stated, "We will do our utmost in responding to the remanded first instance proceedings and will also prepare for any possible appeal by Elliott, continuing to prioritize the national interest above all else."
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