Elliott Arbitration Tribunal Accepts South Korea's Rectification Request... Compensation Reduced by 9.7 Billion Won

The correction request filed by our government regarding the ruling that ordered the US-based private equity firm Elliott to pay approximately 69 billion KRW in compensation has been accepted. As a result, the compensation amount was reduced by about 9.7 billion KRW.

On the 1st, the Ministry of Justice announced that it had received a decision accepting the interpretation and correction request of the arbitration award related to the international investment dispute (ISDS) filed by Elliott against our government.

The arbitral tribunal fully accepted our government's argument that the additional settlement payment Elliott received from Samsung C&T in May 2022 should be deducted as a 'pre-tax amount' rather than a 'post-tax amount' when calculating damages. On the other hand, Elliott's correction request claiming that the method of calculating pre-award interest was incorrect was entirely dismissed.

As a result of this decision, the principal compensation amount was reduced from approximately 68.7 billion KRW to about 62.2 billion KRW, a decrease of roughly 6.5 billion KRW. The pre-award interest was corrected from about 32.6 billion KRW to approximately 29.4 billion KRW, a reduction of 3.2 billion KRW.

However, the arbitral tribunal dismissed our government's interpretation request regarding the method (currency) of interest payment. Considering the original award's order and reasoning, it is interpreted that both the principal and interest are calculated based on Korean won, but the actual payment should be made in US dollars applying the exchange rate on the award date (June 20). This conclusion implies no ambiguity in meaning.

The Ministry of Justice stated, "We will continue to do our best to ensure that the precious taxes of our citizens are not wasted in the ongoing annulment lawsuit of the arbitration award currently underway in the UK courts."

Previously, Elliott, a shareholder of Samsung C&T, filed an ISDS claim worth 770 million USD (approximately 1.0378 trillion KRW) against our government in July 2018, alleging that the Ministry of Health and Welfare and the National Pension Service exerted pressure to vote in favor during the approval process of the merger between Samsung C&T and Cheil Industries in 2015, causing damages.

The International Centre for Settlement of Investment Disputes (ICSID) arbitral tribunal partially accepted Elliott's claims on June 20 last year and ordered our government to pay Elliott 53.58 million USD (approximately 69 billion KRW) plus delayed interest as compensation. Considering the litigation costs to be borne by both our government and Elliott, it was estimated that the actual amount our government must pay Elliott would reach about 130 billion KRW. Accordingly, on July 18, the Ministry of Justice filed a request for interpretation and correction of the award with the arbitral tribunal and initiated an annulment lawsuit at the UK court, the seat of arbitration.

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