Elliott files ISD suit against S. Korean government

U.S. activist fund Elliott Associates submitted to the South Korean government a notice of arbitration over an investor-state dispute (ISD) pertaining to the South Korea-U.S. Free Trade Agreement. Elliott submitted a notice of intent proposing a settlement to the government in April, but the two sides failed to reach a settlement within 90 days, which resulted in a full-blown lawsuit this time.

According to the Justice Ministry and other sources on Friday, Elliott submitted the notice of arbitration claiming that it suffered at least 770 million U.S. dollars in financial losses, as the South Korean government illicitly intervened by mobilizing the National Pension Service and others in the process of approving the merger between Samsung C&T and Cheil Industries in 2015.

Damage that Elliott claims to have incurred increased 100 million dollars from the amount suggested in the notice of intent filed four months ago, but the U.S. activist fund stopped short of disclosing how the damage was calculated. It is the fourth time that an ISD suit has been filed against the South Korean government after those by Lone Star in 2012 and Hanokal and Dayani in 2015.

Earlier, another U.S. hedge fund Mason Capital Management submitted a notice of intent claiming that it suffered 175 million dollars in losses in the course of the merger between Samsung C&T and Cheil Industries by citing the same reason as in Elliott’s case last month. People inside the South Korean business community have raised concern that the South Korean government might have ended up becoming the target of damage suits by speculative foreign funds, as former Health and Welfare Minister Moon Hyung-pyo was found guilty for abuse of the National Pension Service’s supervisory authority by a lower court and a court of appeals.


Hyung-Jun Hwang constant25@donga.com