"Prevented 160 Billion Won in State Funds From Flowing Out"... Government Wins Lawsuit Challenging Elliott Arbitration Award (Updated)

UK Court Rules in Favor of Korean Government...Case Remanded to Arbitration Proceedings

The government has won a lawsuit it filed challenging an investor-state dispute settlement (ISDS) decision ordering it to pay about 160 billion won to U.S. hedge fund Elliott Management.

On the 23rd, the Ministry of Justice announced that it had prevailed in a lawsuit filed in a UK court to set aside the ISDS arbitration award in the case brought by Elliott.

Previously, in 2023, the Permanent Court of Arbitration (PCA) had ruled that the Korean government must pay Elliott approximately 156.6 billion won (about 107.82 million dollars).

In response, the government filed a suit in the courts of the UK, the seat of arbitration, to set aside the award, arguing that under the provisions of the Korea-U.S. Free Trade Agreement (FTA), the PCA had rendered a decision in a case over which it lacked jurisdiction.

On August 1, 2024, the court of first instance dismissed the case, ruling that the Korea-U.S. FTA provisions cited by the Korean government did not fall within the scope of adjudicatory authority under the UK Arbitration Act.

However, in August last year, the Court of Appeal of England and Wales, acting as the second instance, accepted the Korean government’s appeal and remanded the case to the High Court as the court of first instance. After re-examining the matter, the High Court ruled in favor of the Korean government. As a result, the existing arbitration award can no longer be maintained, and the case has been remanded to the arbitration tribunal.

Back in 2015, Elliott filed the claim asserting that, during the process of Samsung Electronics Chairman Lee Jaeyong succeeding to management control, the 2015 merger ratio between Samsung C&T and Cheil Industries was disadvantageous to Samsung C&T, yet the National Pension Service voted in favor of the merger, thereby causing losses to shareholders including Elliott.

Jeong Seongho, Minister of Justice, is briefing at the Government Complex Seoul on the 23rd about the victory in a UK court lawsuit to set aside the arbitration award in the ISDS case against Elliott. Yonhap News