Court overturns $107M ruling against Korea in ISDS over Samsung merger
Published: 24 Feb. 2026, 19:14
Updated: 24 Feb. 2026, 19:18
![Cho A-ra, director general for international investment disputes at the Ministry of Justice, briefs reporters at the ministry’s Gwacheon Government Complex in Gyeonggi on Feb. 24 regarding a court ruling that annulled an international investor-state dispute settlement award involving U.S. hedge fund Elliott Management. [YONHAP]](https://koreaseafood.online/data/photo/2026/02/24/7c3ee517-bb16-49c1-9b06-7d651ca31216.jpg)
Cho A-ra, director general for international investment disputes at the Ministry of Justice, briefs reporters at the ministry’s Gwacheon Government Complex in Gyeonggi on Feb. 24 regarding a court ruling that annulled an international investor-state dispute settlement award involving U.S. hedge fund Elliott Management. [YONHAP]
A British court overturned an arbitration award of more than $100 million against Korea, giving Seoul a key victory in its long-running dispute with the U.S. hedge fund Elliott Management over a 2015 Samsung merger.
The decision hinged on the court’s finding that a vote to back the deal by the National Pension Service (NPS) could not be regarded as state action.
Elliott, which is seeking compensation for financial losses from the merger, repeatedly pointed to the findings of a special counsel investigation a decade ago that concluded senior government officials had improperly influenced the pension fund’s decision.
Cho A-ra, director general for international legal affairs at the Ministry of Justice, said in a briefing on Tuesday that the British lower court sent the case back to the arbitral tribunal to reassess whether government intervention directly caused Elliott’s losses and whether damages should be awarded.
![The Samsung logo is seen at Samsung Electronics' store in Seoul on April 15, 2025. [REUTERS/YONHAP]](https://koreaseafood.online/data/photo/2026/02/24/f43514df-e30a-40fb-a5b0-3baac49b8928.jpg)
The Samsung logo is seen at Samsung Electronics' store in Seoul on April 15, 2025. [REUTERS/YONHAP]
The case stems from a contentious merger between Samsung C&T and Cheil Industries, a deal widely seen at the time as critical to strengthening then-Samsung Electronics vice chairman Lee Jae-yong’s control over the Samsung conglomerate. Elliott, a shareholder of Samsung C&T at the time of the deal, opposed the merger, arguing that the swap ratio undervalued its holdings and disadvantaged minority investors.
The NPS, one of the largest shareholders in Samsung C&T, voted in favor of the merger. Elliott later claimed that the vote resulted from improper pressure from senior officials in the Korean government and caused financial losses.
In 2018, the hedge fund filed an investor-state dispute settlement (ISDS) claim under the Korea-U.S. FTA, arguing that government interference in the pension fund’s decision violated treaty protections for foreign investors.
A tribunal at the Permanent Court of Arbitration, an international body that administers dispute resolution, later ruled that Korea must pay Elliott $107.8 million, including interest and legal costs.
The government sought to annul the award in British courts, the seat of the arbitration. Its central argument focused not on whether officials had intervened, but on whether the pension fund’s vote could legally be treated as a government measure under the trade agreement.
Article 11.1 of the FTA allows ISDS claims only concerning measures “adopted or maintained” by a party to the agreement. Seoul's lawyers argued that the NPS, though a public institution, has separate legal status and exercises shareholder rights in the same manner as other investors.
“If even this kind of exercise of shareholder rights becomes subject to an ISDS, then the shareholding decisions of sovereign wealth funds and public pension funds not only in Korea but in other countries as well would also be exposed," said Han Dong-hoon, then-justice minister, after filing the annulment action.
“It is a widely accepted principle of corporate law that minority shareholders are not liable to other minority shareholders for how they exercise their voting rights," he added.
![Then-Justice Minister Han Dong-hoon answers reporters’ questions on July 18, 2023, after filing a suit to annul the ruling in the investor-state dispute settlement. [YONHAP]](https://koreaseafood.online/data/photo/2026/02/24/7ed680d0-131a-4c39-8938-de333cece4df.jpg)
Then-Justice Minister Han Dong-hoon answers reporters’ questions on July 18, 2023, after filing a suit to annul the ruling in the investor-state dispute settlement. [YONHAP]
An earlier British court initially rejected that jurisdictional argument. The British Court of Appeal, however, held that the treaty provision functioned as a threshold requirement and sent the case back for further review in July of last year.
In its latest ruling, the High Court concluded that the pension service is not a state organ under the treaty. It noted that the fund has an independent legal identity, that managing pension assets does not constitute a core sovereign function such as national defense or policing and that its routine decisions are not fully controlled by the government.
At the same time, the court found that intervention by officials at the presidential Blue House and the Ministry of Health and Welfare did amount to state conduct. It therefore held that the ISDS claim itself was valid and sent the case back to the arbitral tribunal to reconsider whether that intervention directly caused Elliott’s losses and, if so, whether damages are warranted.
The dispute unfolded against the backdrop of Korea’s 2016 corruption scandal that led to the impeachment of former President Park Geun-hye. Courts later upheld bribery convictions in the broader corruption scandal, finding that Samsung provided financial support to entities linked to Park’s confidante, Choi Soon-sil, in exchange for government backing of the merger.
A special counsel investigation found that, on instructions from the Blue House under Park, then–Health and Welfare Minister Moon Hyung-pyo and Hong Wan-sun, former chief investment officer of the National Pension Service, pushed through approval of the merger. Both were convicted of abuse of authority, and in 2022, the Supreme Court finalized prison sentences of two years and six months.
![People walk past the Royal Courts of Justice in London on Aug. 28, 2025. [EPA/YONHAP]](https://koreaseafood.online/data/photo/2026/02/24/bfdd3f08-be98-442f-b4ca-052cb68d45aa.jpg)
People walk past the Royal Courts of Justice in London on Aug. 28, 2025. [EPA/YONHAP]
The Justice Ministry's Cho described the British court proceedings to overturn the arbitration award as "David's battle against Goliath."
Because of limited resources, the government’s litigation costs — including attorney fees — were about one-sixth of Elliott’s, she said. In the British proceedings, Elliott retained three King’s Counsels — typically senior trial lawyers appointed by the British monarch — while the Korean government retained one.
The British courts grant applications to set aside arbitration awards in only about 3 percent of cases, according to Justice Minister Jung Sung-ho on Monday.
“This ruling helps ensure that the National Pension Service’s investment decisions — involving roughly 1.8 quadrillion won [$1.25 trillion] in assets — are not broadly treated as government measures and exposed to potential ISDS claims," Cho said.
“It could have resulted in reduced investment activity and diminished returns, which is why we approached the dispute with a strong sense of responsibility," Cho added. “We will thoroughly prepare for the remanded proceedings and put national interests first."
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM SEONG-JIN [[email protected]]
with the Korea JoongAng Daily
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