Mason Capital L.P. and Mason Management LLC v. Republic of Korea

Case summary

At a glance

Parties: Mason Capital L.P. and Mason Management LLC (both Delaware, U.S.A.) v. Republic of Korea
Case no.: PCA Case No. 2018-55
Forum and rules: UNCITRAL Arbitration Rules 1976; PCA as registry; seat Singapore
Treaty: Free Trade Agreement between the Republic of Korea and the United States of America (signed 30 June 2007, in force 15 March 2012), Chapter 11
Tribunal: Professor Dr. Klaus Sachs (Presiding Arbitrator), The Rt. Hon. Dame Elizabeth Gloster, Professor Pierre Mayer
Sector: Portfolio investment; listed shares; Samsung merger
Outcome: Korea held in breach of the FTA (11 April 2024); damages awarded for the SC&T shares only. The Singapore International Commercial Court dismissed Korea's application to set the award aside (20 March 2025).
Amount: Claimed: USD 147.2 million (SC&T), USD 44.2 million (SEC) and USD 1.1 million (lost incentive allocation, later corrected to USD 917,156), plus interest. Awarded: USD 32,030,876.83, with interest at 5% p.a. compounded yearly from 17 July 2015. Korea also pays EUR 630,000.00 of arbitration costs and USD 10,318,961.78 of legal fees and expenses.

The dispute

Mason, a U.S. investment fund group, held shares in Samsung C&T Corporation (SC&T) and Samsung Electronics (SEC) through a Delaware fund and a Cayman Islands exempted limited partnership whose general partner is Mason Management LLC. On 26 May 2015, SC&T and Cheil Industries announced a merger at a ratio of 1 Cheil share to about 0.35 SC&T shares. Mason and other shareholders considered that ratio unfair to SC&T shareholders. On 17 July 2015 the merger was approved, with the vote of Korea's National Pension Service (NPS), SC&T's largest shareholder. Mason claimed that President Park Geun-hye, Blue House officials and the Ministry of Health and Welfare improperly manipulated the NPS vote, in breach of the FTA's minimum standard of treatment and national treatment obligations. Korea argued that the general partner was not an investor and lacked standing, that the officials' acts were not "measures" attributable to Korea and did not "relate to" Mason, that its conduct did not cause Mason's losses, and that the damages claimed were speculative.

Key holdings

Preliminary objections rejected. The general partner owned and controlled the Samsung shares and made an investment under Article 11.28 of the FTA. Its entitlement to an incentive allocation of fund profits gave it a beneficial interest in the shares. Its investment decision-making and expertise were a contribution of "other resources". Decision on Preliminary Objections ¶¶ 180–187, 216–217, 249, 311
The Tribunal refused, at the preliminary stage, to dismiss the general partner's claim for losses of the Cayman Fund and its limited partner, whether as a matter of standing or as legally deficient under Article 11.20.6. It reserved that question and the costs of the phase. Decision on Preliminary Objections ¶¶ 282, 303, 310
Mason's primary claim, based on a sum-of-the-parts valuation of SC&T, failed. It was not shown with reasonable probability that SC&T's trading discount was caused by the merger or would have disappeared if the merger had been rejected. Final Award ¶¶ 1039–1051
SC&T losses were measured as the market value of 3,046,915 shares at KRW 69,300 on 16 July 2015, less Mason's actual sale proceeds. The result was KRW 37,637,241,204.73. Converted at the exchange rate of 12 August 2015 (1:1175.03), this is USD 32,030,876.83. Final Award ¶¶ 1053–1063, 1108–1109
No damages for the SEC shares. Korea's breach did not legally cause those losses, and the price-target model was not reliably proved. An alternative claim for SEC trading losses was raised too late. A separate claim for the lost incentive allocation would be double recovery. Mason did not fail to mitigate its losses. Final Award ¶¶ 1080–1085, 1092, 1099–1102
Interest is 5% p.a., compounded yearly, before and after the award. Korea bears all legal costs of the preliminary phase (USD 2,456,802.07) and 60% of Mason's main-phase legal costs, a total of USD 10,318,961.78. Korea also bears 75% of the arbitration costs. In the main phase Mason won on three of four jurisdictional issues but recovered about one sixth of the damages claimed. Final Award ¶¶ 1123, 1141–1147
Set-aside dismissed. Only the investor objection is jurisdictional, and on a fresh review the general partner was an investor that owned and controlled the shares. The "measures" and "relating to" requirements of Article 11.1 are not jurisdictional. In any event, informal or illegal acts of officials are "measures", and intervention in a merger relates to the shareholders. The Tribunal's refusal to admit two later Korean court judgments was a reasonable case-management decision and caused no prejudice. SICC Judgment [2025] SGHC(I) 9, ¶¶ 49, 63–65, 78, 106–109, 130–147