The South Korean government has decided to accept a ruling in its international investment dispute (ISDS) with the U.S. hedge fund Elliott Management, drawing attention to the outcomes of ongoing cases and the need for a national permanent response system.
According to legal sources on the 29th, the Ministry of Justice has opted not to file a cancellation lawsuit in a British court regarding the ruling issued on September 30. As a result, the government will pay approximately 153 billion won in compensation, including principal and delayed interest.
The Ministry made this decision after comprehensively reviewing various factors, including opinions gathered from relevant departments, government-appointed law firms, and external experts, as well as an analysis of the ruling.
However, the government has achieved a strong defense record, winning the majority of the 10 ISDS cases formally filed since 2012.
In addition, the government has successfully defended against high-stakes disputes with other U.S. private equity firms, including Lone Star (400 billion won) and Swiss elevator company Schindler (325 billion won), thereby saving taxpayer money. On October 13, it also won a case against a Chinese investor involving a claim of 260 billion won, recovering over 6.4 billion won in litigation costs.
Among the unresolved cases, the Mason Capital dispute, which was filed for similar reasons as Elliott's, saw the Singapore court dismiss the government's cancellation lawsuit, confirming the compensation plan. However, discussions regarding tax imposition issues and other follow-up actions are ongoing.
The dispute with the Dayani family from Iran, stemming from the acquisition of Daewoo Electronics, is currently in a second lawsuit due to delays in dollar remittances caused by U.S. sanctions against Iran. Recently, U.S. shareholders of Coupang submitted a notice of intent to arbitrate in response to government actions following a data breach incident.
Legal experts point out that as foreign investment increases and ISDS cases rise, there is an urgent need to legislate a response system that currently exists only at the presidential directive level and to establish a system for ongoing training of specialized personnel.
In this context, Rep. Park Kyun-taek of the Democratic Party recently introduced a bill titled 'Act on the Prevention and Response to International Investment Disputes.'
The proposed legislation aims to formalize the ISDS response, currently defined by presidential directive, into a permanent national system rather than a temporary task of the Ministry of Justice. It includes provisions for the Minister of Justice to establish a basic plan every five years, train specialized personnel, and secure budgetary support.
* This article has been translated by AI.
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