[Edaily Reporter Kim Hyun-jae ] The outcome of the international investment dispute (ISDS) between U.S.-based private equity firm Elliott and the South Korean government has been overturned once again. After initially accepting a ruling by the Permanent Court of Arbitration (PCA) to pay compensation following Elliott’s ISDS claim, the South Korean government subsequently filed a lawsuit in a British court to overturn that ruling and prevailed. However, in the retrial, the court again found the government liable to pay compensation.

The appellate arbitration tribunal ruled that there was a causal link between the government’s intervention during the 2015 merger of Samsung C&T and Cheil Industries and the damages suffered by Elliott, and ordered the South Korean government to pay compensation and late interest.

According to the Ministry of Justice on the 1st, the remand arbitration panel for the ISDS case filed by Elliott delivered a ruling against the South Korean government at around 7:00 p.m. on the 30th of last month. Consequently, the South Korean government must pay Elliott approximately $48.49 million (approximately 65.8 billion won) in principal damages, along with late interest and other costs. Elliott stated in a separate announcement that the total amount due—including the principal, accrued interest, and legal fees—is approximately $113 million (approximately 153.6 billion won).

ISDS is a procedure for resolving disputes through international arbitration regarding losses incurred due to actions taken by the government of the host country.

Elliott filed the ISDS claim in 2018, alleging that it suffered losses of approximately $770 million due to the South Korean government’s unfair intervention—through the mobilization of the National Pension Service—during the 2015 merger between Samsung C&T and Cheil Industries. In June 2023, the Permanent Court of Arbitration (PCA) partially upheld Elliott’s claims and ruled that the South Korean government must pay Elliott approximately $48 million, plus legal fees and interest, for a total of 130 billion won.

In response, the government filed a lawsuit in July 2023 with a British court—the seat of arbitration—seeking to set aside the arbitral award. Citing the issue of “subject-matter jurisdiction,” a ground for setting aside an award under the UK Arbitration Act, the South Korean government argued that the PCA lacked jurisdiction to hear the Elliott case but had nevertheless rendered a decision.

The trial court dismissed the action, ruling that the interpretation of Article 11.1 of the Korea-U.S. FTA (Free Trade Agreement)—which forms the basis of the annulment suit—was not a matter of subject-matter jurisdiction. The government filed an appeal in September 2024.

Last February, the UK High Court set aside part of the original award and remanded the case to the arbitral tribunal. The UK High Court set aside the portion of the original award that treated the National Pension Service as a state entity and attributed its actions to the government. However, it remanded the case to the arbitral tribunal to re-examine the causal link between the interventions by the Blue House and the Ministry of Health and Welfare and the damages, as well as the resulting scope of compensation.

It is reported that, during the remand proceedings, the remand arbitration tribunal recognized a causal link between the government’s intervention and Elliott’s losses. However, the legal reasoning differed. While the original award attributed the National Pension Service’s vote in favor of the merger to the South Korean government, this time the tribunal determined—regardless of the National Pension Service’s legal status—that government intervention by the Blue House and the Ministry of Health and Welfare led to Elliott’s losses. Consequently, the relief granted in the 2023 original award was reinstated.

Elliott claimed that the total payment, comprising the principal amount of compensation plus accrued interest and legal costs, amounted to approximately $113 million. The $48.49 million figure announced by the Ministry of Justice represents only the principal amount of compensation; the total liability is expected to increase once interest and costs are included.

An official from the Ministry of Justice stated, “We will analyze the ruling with relevant ministries, the government’s legal counsel, and external experts, and do our utmost to take the necessary follow-up measures.”