Elliott Associates, L.P. (U.S.A.) v. Republic of Korea

At a glance

Parties

Elliott Associates, L.P. (Delaware, U.S.A.) v. Republic of Korea

Case no.

PCA Case No. 2018-51

Forum and rules

UNCITRAL Arbitration Rules 2013, PCA as registry; seat London, United Kingdom

Treaty

Free Trade Agreement between the Republic of Korea and the United States of America, 30 June 2007 (Chapter Eleven)

Tribunal

Dr. Veijo Heiskanen (Presiding Arbitrator), Mr. Oscar M. Garibaldi, Mr. J. Christopher Thomas KC (separate concurring opinion)

Sector

Corporate shareholding; Samsung C&T / Cheil merger; public pension fund voting

Outcome

Award of 20 June 2023: Korea breached the Treaty and must pay damages. After the English High Court set aside the finding that the NPS was a State organ and remitted the causation issue, the Award on the Remitted Issue of 30 September 2026 again found causation and awarded the same corrected damages.

Amount

Awarded on 20 June 2023: USD 53,586,931.00, corrected on 1 September 2023 to USD 48,490,438.00, plus 5% interest compounded yearly from 16 July 2015. The Award on the Remitted Issue confirmed USD 48,490,438.00. Costs of the original proceedings: Korea pays USD 28,903,188.90 to Elliott, and Elliott pays USD 3,457,479.87 to Korea. Costs of the remitted proceedings: Korea pays USD 302,142.65 (arbitration costs) and USD 3,643,201.29 (legal costs). The claim for the costs of the English set-aside proceedings was denied.

The dispute

Elliott Associates, L.P., a Delaware limited partnership, held 7.12% of the shares in Samsung C&T Corporation (SC&T). It opposed the proposed merger of SC&T with Cheil Industries Inc. The National Pension Service (NPS) manages Korea's National Pension Fund, which held 11.21% of SC&T. It voted in favour of the merger, and the merger was approved on 17 July 2015. Korean courts later found that the office of President Park (the Blue House) and the Ministry of Health and Welfare had unlawfully interfered in the NPS vote. They convicted President Park and Samsung's JY Lee of bribery. Elliott claimed that Korea breached the minimum standard of treatment and national treatment under the Korea–US FTA. Korea objected that the conduct was not a measure "adopted or maintained" by Korea, that the NPS's conduct was not attributable to it, that Elliott had no covered investment, and that the claim was an abuse of process. On the merits, Korea denied breach and causation, relied on assumption of risk, and disputed quantum, including the effect of Elliott's March 2016 settlement agreement with SC&T.

Key holdings

1. Korea breached the Treaty. The Tribunal ordered it to pay USD 53,586,931.00 in compensation, with pre-award interest at 5% compounded yearly from 16 July 2015 and post-award interest at the same rate. All other claims were dismissed. Award ¶ 995
2. Costs were apportioned. Elliott prevailed on jurisdiction, merits and causation, but Korea largely prevailed on quantum: Elliott was awarded about 13–18% of the amount claimed. Each party bears its own arbitration costs of USD 2,360,582.29 in total. Kobre & Kim's fees of USD 38.8 million were not reasonable in full and only USD 8.8 million was allowed. Elliott recovers 78% of its legal costs (USD 28,903,188.90) and Korea 22% of its legal costs (USD 3,457,479.87). Award ¶¶ 988–994
3. J. Christopher Thomas concurred in the result, but for different reasons on whether the measures 'related to' Elliott's investment. In his view, measures about the voting of the NPF's shares related to Elliott because a corrupt intent to advance JY Lee's succession plan necessarily aimed to defeat Elliott's proxy campaign. He noted that the national treatment claim was barred by Korea's Equity Interests Reservation in Annex 2. Separate Opinion ¶¶ 12, 71–73
4. Korea's request for correction was granted. The Award had used the post-tax Top Up Payment (KRW 65,902,634,943) when the Tribunal intended to use pre-tax figures; the pre-tax amount is KRW 72,440,673,672. A 'material or substantive' computational error can be corrected under Article 38(1). The loss became KRW 62,206,067,478 and the award USD 48,490,438.00. Korea's request for interpretation was denied. Elliott's request to recalculate interest on KRW 771,026,741,100 was denied as a revision, not a correction. Decision on Correction ¶¶ 46–49, 63–65
5. On the remitted issue, the Tribunal held that the Treaty breaches by the Blue House and the Ministry of Health and Welfare met the requirements of factual and legal causation. There was therefore no basis to revisit quantum. Elliott's renewed claim for interest on a larger principal was a new claim outside the remitted issue. Award on the Remitted Issue ¶¶ 281–283
6. Costs in the remitted phase: the costs orders of the original Award were reinstated. Costs of the remitted proceedings follow the event: Elliott recovers USD 302,142.65 in arbitration costs and USD 3,643,201.29 in legal costs. Its claim for the costs of the English set-aside proceedings was denied as a new claim for costs incurred outside the arbitration. Award on the Remitted Issue ¶¶ 302–315

Procedural history

1. 12 July 2018Elliott delivers its Notice of Arbitration and Statement of Claim to Korea.
2. 15 November 2018The Tribunal is constituted.
3. 1 April 2019Procedural Order No. 1 fixes London as the seat and sets out the transparency rules.
4. 20 November 2019Procedural Order No. 7 dismisses Korea's application to delay publication of its Statement of Defence pending Korean criminal proceedings.
5. 13 January 2020Procedural Order No. 8 holds that documents held by the Korean judiciary and prosecutors are in Korea's possession, custody or control, and that Korea must use best efforts to obtain documents from the NPS.
6. 15–26 November 2021Hearing in Geneva.
7. 20 June 2023Award, with the Separate Opinion of J. Christopher Thomas KC: breach found and damages awarded.
8. 1 September 2023Decision on Requests for Correction and Interpretation: damages reduced to USD 48,490,438.00.
9. 17 July 2023 – 18 March 2026Korea challenges the Award under sections 67 and 68 of the English Arbitration Act 1996. The judgment of Foxton LJ of 23 February 2026 ([2026] EWHC 368 (Comm)) sets aside the finding that the NPS is a de facto State organ. An order of 18 March 2026 remits the causation and relief issue to the Tribunal.
10. 30 September 2026Award on the Remitted Issue: causation found, compensation of USD 48,490,438.00 confirmed, and costs awarded to Elliott.

Tribunal, counsel and experts

Decided by

• Veijo Heiskanen President
• Oscar M. Garibaldi Co-arbitrator
• J. Christopher Thomas Co-arbitrator (separate concurring opinion)

For the claimant

Three Crowns LLP · Kobre & Kim · KL Partners

For the respondent

Arnold & Porter LLP · Peter & Kim · Freshfields Bruckhaus Deringer · Lee & Ko

Experts

Richard Boulton (claimant) · Berkeley Research Group, LLC (claimant) · Choong-kee Lee (claimant) · Sang-hoon Lee (claimant) · Curtis Milhaupt (claimant) · James Dow (respondent) · Sung-soo Kim (respondent) · Kee-Hong Bae (respondent) · Jae Hyung Kim (respondent)

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Keywords

• Korea–US FTA
• KORUS
• Samsung C&T
• Cheil Industries
• merger
• National Pension Service
• attribution
• de facto State organ
• minimum standard of treatment
• national treatment
• measures relating to
• causation
• bribery
• shareholder voting
• correction of award
• error in computation
• set-aside
• remission
• English Arbitration Act 1996
• transparency

Summary generated with AI from the published documents — refer to the award for the authoritative text.