Tribunal Restores South Korea’s Liability in Elliott Samsung Merger Dispute

A remand arbitration tribunal has again found South Korea liable to U.S. hedge fund Elliott Investment Management over government intervention in the 2015 merger of Samsung C&T and Cheil Industries, reinstating damages of about $48.49 million plus interest.

South Korea’s Ministry of Justice said the three-member tribunal issued its decision on September 30. The same arbitrators who handled the original investor-state dispute concluded that the government’s intervention in support of the merger was causally linked to Elliott’s losses.

The latest ruling comes seven months after a British court partially set aside the original award. That court accepted Seoul’s argument that the National Pension Service could not itself be treated as a state organ for the purposes of the dispute. However, it separately found that government involvement in the pension fund’s decision-making could qualify as a relevant measure under the Korea-U.S. Free Trade Agreement. It therefore returned the question of causation to the arbitration tribunal.

Neither the South Korean government nor Elliott appealed that decision. On remand, the tribunal determined that the government’s conduct and Elliott’s losses were sufficiently connected, bringing the dispute back to substantially the same compensation level as the original award.

Elliott has said the total amount due could reach about $113 million, or roughly 153.7 billion won, once interest and legal costs are included. The fund also said interest would continue to accrue at approximately $10,000 per day until payment is completed. The government’s core damages obligation under the award is about $48.49 million, equivalent to roughly 65.8 billion won.

The dispute dates to 2015, when Elliott opposed the merger of Samsung C&T and Cheil Industries. The fund alleged that government officials improperly influenced the National Pension Service, then a major Samsung C&T shareholder, to vote for the transaction. Elliott initiated investor-state arbitration in 2018 under the bilateral free trade agreement.

An arbitration tribunal first recognized South Korea’s liability in June 2023. Seoul challenged that award in the British courts, arguing that the tribunal lacked jurisdiction because the pension service’s vote was not attributable to the state. After an initial dismissal and a successful appeal, the case ultimately produced the partial annulment and remand earlier this year.

The Ministry of Justice said it will closely examine the new award with other government agencies, its legal representatives and outside experts before deciding on further action.