"State Agency 국민연금 Causes Shareholder Losses by Voting"… Basis for 130 Billion KRW Compensation to Elliott

Recently, the International Investment Dispute Settlement (ISDS) ruled that the Korean government must pay 130 billion KRW to the US-based hedge fund Elliott Management. The background to this ruling was the Permanent Court of Arbitration (PCA)'s judgment that "the Ministry of Health and Welfare's intervention in the National Pension Service's voting is tantamount to government responsibility." The Ministry of Justice disclosed the arbitration tribunal's issue-by-issue decisions containing this information on the 23rd.

According to the data, the arbitration tribunal based its decision on domestic court rulings. It cited the verdicts against former Minister of Health and Welfare Moon Hyung-pyo and Hong Wan-seon, then head of the National Pension Service Fund Management, who were sentenced to imprisonment for pressuring the National Pension Service to vote in favor of the merger between Samsung C&T and Cheil Industries. The tribunal viewed the National Pension Service as effectively a state agency and found a causal relationship between the National Pension Service's voting and the losses suffered by Samsung C&T shareholders. It ruled that the Korean government violated the 'minimum standard of treatment obligation' under the Korea-US FTA, which requires fair treatment and protection of foreign investors.

Based on this, the arbitration tribunal partially accepted Elliott's claims and ordered the Korean government to compensate $53,586,931 (approximately 69 billion KRW). Including delayed interest and legal interest, the total amount to be paid is about 130 billion KRW. However, the worst-case scenario was avoided. Elliott had argued that damages should be based on the expected value of Samsung C&T shares if the merger had been rejected, but the tribunal accepted the Korean government's argument that the actual stock price should be used as the basis.

Regarding the arbitration tribunal's ruling, an annulment lawsuit can be filed within 28 days from the date of the judgment. The Ministry of Justice plans to review the ruling and decide whether to appeal. The Ministry stated, "We will thoroughly analyze the ruling with government-appointed law firms and experts and respond accordingly," adding, "We will consider response measures, including filing an annulment lawsuit."

This content was produced with the assistance of AI translation services.