Elliott Investment prevails in Korea's appeal of suit over 2015 Samsung merger

The British high court has upheld a ruling against Korea ordering it to pay $108.5 million to Elliott Investment Management for influencing a 2015 Samsung merger.

The Samsung logo is pictured during the inauguration of the Samsung Galaxy innovation space on the Champs-Elysees avenue in Paris, France, on April 29. [REUTERS/YONHAP]

The British high court dismissed an appeal filed by the Korean government to overturn a tribunal court ruling ordering the country to pay $108.5 million to the U.S. hedge fund Elliott Investment Management for influencing the 2015 merger of two Samsung affiliates.

The investment firm released a press statement Thursday that Korea’s appeal “did not satisfy the threshold requirements of the jurisdictional challenge allowed under section 67 of the Arbitration Act of 1996.”

Elliott hailed the news, stating that Korea owes more than $100 million to the company for violating the Korea-U.S. Free Trade Agreement.

However, it expressed disappointment over Korea’s decision to appeal the verdict once again, as indicated during the court hearing.

“By refusing to accept responsibility for its misconduct, the Republic of Korea keeps alive the doubt investors have about the fairness and honesty of Korea’s markets,” the U.S. hedge fund said.

The ruling stems back to July 2018 when Elliott filed a $770 million damages claim against the government for approving a merger deal between Samsung C&T and Cheil Industries.

Minority shareholders Elliott and another U.S. hedge fund, Mason Capital, opposed the merger, claiming that it would greatly undervalue Samsung C&T shareholders’ interest.

The move would also tighten then-Samsung heir Lee Jae-yong’s influence over the company's affiliates, they argued.

At the time, Elliott and Mason Capital each held a 7.12 percent and 2.2 percent stake in Samsung C&T.

The merger was pushed through anyway, with approval from the largest shareholder at the time, the National Pension Service (NPS), which held an 11.2 percent stake. Both companies alleged that the former Park Geun-hye administration exerted pressure on the NPS to approve it.

The Permanent Court of Arbitration (PCA) in June 2023 partially ruled in favor of Elliott, ordering the Korean government to pay a total of $108.5 million in damages, interest and legal fees.

Korea’s Ministry of Justice appealed the PCA’s ruling with the British high court last July.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]