Korean Government Wins Appeal in UK Court for 'Elliott 130 Billion Compensation' Cancellation Lawsuit

[Financial News] The Korean government won the appeal in the UK court for the cancellation lawsuit against the result of the international investment dispute (ISDS) with the American hedge fund Elliott Management (Elliott).
According to the Ministry of Justice on the 18th, the UK Court of Appeal overturned the dismissal judgment of the first instance court on the 17th (local time) regarding the appeal for the cancellation of the Permanent Court of Arbitration (PCA)'s ruling that the Korean government should pay Elliott Management approximately 130 billion won, and sent the case back to the first instance.
The possibility has arisen that the ruling that the Korean government must compensate Elliott approximately 130 billion won could be canceled. The UK High Court must determine whether the PCA had jurisdiction over the decision for the Korean government's compensation to Elliott.
Elliott filed an ISDS in 2018, claiming that the Korean government unfairly intervened through the National Pension Service during the approval process of the merger between Samsung C&T and Cheil Industries in 2015, causing a loss of 770 million dollars. The PCA ruled in June 2023 that the Korean government should pay Elliott 62.2 billion won along with delayed interest and legal costs, totaling 130 billion won.
The government filed a cancellation lawsuit in the UK court against this. It argued that the phrase "This chapter applies to measures adopted or maintained by a Party" at the beginning of Chapter 11 of the Korea-US Free Trade Agreement (FTA) also applies to 'arbitration claims' mentioned in the middle of the same chapter. It claimed that there must be 'measures adopted or maintained by a Party' to make an arbitration claim.
The UK first instance court dismissed this on August 1 last year, stating that the phrase only applies to Section 1 of Chapter 11 and is unrelated to 'arbitration claims' in Section 2. However, the second instance court accepted the Korean government's argument. It viewed that the cancellation reason claimed by the Korean government pertains to 'substantive jurisdiction' under UK arbitration law, as the first instance court's interpretation of the Korea-US FTA Chapter 11 preamble is a regulation of the arbitral tribunal's jurisdiction.
kyu0705@fnnews.com Dong-Gyu Kim Reporter