South Korea wins the international investment dispute with Elliott Management Corporation... Compensation ruling overturned

The South Korean government won an international investment dispute (ISDS) case against Elliott Management Corporation, a U.S. hedge fund. The lawsuit stemmed from the Permanent Court of Arbitration (PCA) ruling in 2023 that required the South Korean government to pay Elliott 155.6 billion won.

The South Korean government argued that the PCA lacked jurisdiction over this case and applied to the UK courts to revoke the arbitration award under the terms of the Korea-U.S. Free Trade Agreement (FTA). As a result, the case was dismissed in the first instance in 2024 due to jurisdictional issues related to the Korea-U.S. FTA, but the UK Court of Appeal later accepted the case and remanded it for retrial, leading to a shift in the situation.

Ultimately, the UK High Court, reviewing the case, confirmed that there were grounds to revoke the PCA award and supported the South Korean government’s position. Consequently, the original PCA ruling, which acknowledged Korea’s liability to pay damages, was rendered invalid, and the case was sent back for arbitration to be reheard.

The root of the issue dates back to the 2015 merger between Samsung C&T and Cheil Industries. At that time, Elliott was one of Samsung C&T’s major shareholders and opposed the merger on the grounds that the merger ratio was unfavorable to Samsung C&T. However, since the National Pension Service supported the merger, Elliott claimed that its interests as a shareholder of Samsung C&T had been harmed.

This victory represents a significant achievement for the South Korean government in an international dispute. The future development of the arbitration process is closely watched, with some analysts suggesting that this could impact the international financial market and the practice of dispute resolution among enterprises.