▲ Cho Ara, director for International Investment Disputes, holds a briefing on the ruling to annul the Investor-State Dispute Settlement (ISDS) award involving U.S. hedge fund Elliott Management at the Ministry of Justice in Gwacheon, Gyeonggi Province, on February 24.
The South Korean government has decided to accept the defeat handed down in the remitted arbitration of its Investor-State Dispute Settlement (ISDS) case with U.S. private equity fund Elliott Management.
This decision signifies the acceptance of liability for approximately 153 billion won, which combines the principal compensation amount and accrued interest.
The Ministry of Justice announced today (October 28) that it will not file an action for annulment with a British court regarding the remitted arbitration award issued on September 30.
The Ministry of Justice explained that this conclusion was reached after comprehensively reviewing various factors, including opinions gathered from related ministries, government-designated legal representatives, and external experts, the results of the arbitration award analysis, and the additional costs that would be incurred.
An official from the Ministry of Justice stated, "Specific plans and amounts regarding the payment of damages are currently under discussion."
This case began when Elliott filed for ISDS in 2018 based on the South Korea-U.S. Free Trade Agreement (FTA).
Elliott claimed that it suffered losses because the government improperly interfered with the National Pension Service's exercise of voting rights during the 2015 merger of Samsung C&T and Cheil Industries.
In response, the arbitral tribunal recognized the government's liability in June 2023, ordering it to pay Elliott approximately 48.49 million dollars in damages along with delayed interest.
Consequently, the government filed a lawsuit in July of the same year with a British court—the seat of arbitration—to annul the award, arguing that the tribunal lacked jurisdiction because the National Pension Service's exercise of voting rights did not constitute an action attributable to the South Korean government under the South Korea-U.S. FTA.
The court of first instance dismissed the government's lawsuit in August 2024, but in July of the following year, the British Court of Appeal accepted the government's appeal and remanded the case back to the first-instance court.
The remanded first-instance court partially annulled the original arbitral award in February of this year by accepting the government's argument that the National Pension Service cannot be regarded as a state organ.
It sent the case back to the arbitral tribunal to reassess matters such as the causal relationship between the government's intervention and Elliott's losses.
Having received the case back in March of this year and resumed proceedings, the remitted arbitral tribunal once again recognized the causal relationship between the government's actions and Elliott's losses on September 30, despite the ruling in the annulment action.
It ruled that the government is liable to pay Elliott approximately 48.49 million dollars in principal compensation plus interest, totaling around 153 billion won.
Having received the defeat, the Ministry of Justice decided to accept the outcome after analyzing the award for about a month and reviewing the additional costs that would be incurred if an annulment suit were filed.
As a result, 8 years and 3 months after Elliott filed for ISDS in July 2018, the government is concluding its dispute with Elliott and finalizing its defeat.
An official from the Ministry of Justice stated, "The government will continue to put national interests first and respond thoroughly in the future."
(Photo: Yonhap News)
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