The South Korean government has lost a significant international investment dispute (ISDS) case brought by the U.S.-based hedge fund Elliott Management over its opposition to the merger of Samsung C&T and Cheil Industries.
On October 28, the Ministry of Justice announced that after extensive discussions with its legal representatives and external experts, it has decided not to pursue a cancellation lawsuit in a UK court regarding the arbitration ruling issued on September 30.
Elliott, a shareholder in Samsung C&T, opposed the merger between Samsung C&T and Cheil Industries in 2015. After the merger was approved in July of that year, Elliott raised concerns about the National Pension Service's vote in favor of the merger and filed the ISDS case on July 12, 2018, citing the Korea-U.S. Free Trade Agreement (FTA).
The original arbitration tribunal ordered approximately $48.49 million in damages, including interest, in June 2023.
In response, the government filed a lawsuit in the UK on July 18, 2023, to annul the arbitration ruling, arguing that the National Pension Service's exercise of voting rights was merely a shareholder action and should not be considered a state agency's responsibility. The UK High Court dismissed the government's case on August 1, 2024, but allowed the government to appeal.
The UK Court of Appeal accepted the government's appeal on July 17, 2025, overturning the lower court's dismissal and sending the case back for further consideration.
On February 23 of this year, the court ruled that the National Pension Service is not a 'state agency' responsible for state compensation in ISDS cases, and thus the remaining actions of the Blue House and the Ministry of Health and Welfare must be reassessed for causation.
The arbitration tribunal, in its recent ruling, acknowledged the causal relationship between the government's actions and Elliott's damages, ordering the government to pay approximately 153 billion won (about $48.49 million) in damages.
The tribunal stated, "If the merger would have been approved without government intervention, there would be no reason for a senior government official to risk criminal liability by intervening in the National Pension Service's voting rights." It also noted that the National Pension Service's vote was not the sole determining factor in the merger's success, and thus the damages could not be recalculated.
A Ministry of Justice official stated, "After thoroughly considering the opinions of relevant departments, legal representatives, and external experts, as well as analyzing the ruling, we have decided not to pursue further legal action due to various factors, including potential additional costs. We will continue to prioritize national interests and respond thoroughly in the future."
* This article has been translated by AI.
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