U.K. court overturns decision on arbitration in Samsung's South Korean merger dispute
In a significant development, South Korea has successfully appealed against U.S. hedge fund Elliott in a long-running dispute over the 2015 merger of two affiliates of Samsung, Samsung C&T and Cheil Industries. The UK Court of Appeal ruled that an international arbitration tribunal lacked jurisdiction over Elliott's claim related to the merger, effectively dismissing Elliott's case in that forum.
The ruling was crucial as it dismissed Elliott's attempt to use international arbitration as a venue for their challenge. By ruling that the tribunal lacked jurisdiction, the Court of Appeal upheld South Korea's stance, thereby supporting the government and Samsung's position in the dispute. This outcome was key to South Korea's successful appeal and helped bring legal certainty and stability to the prolonged saga surrounding the merger.
The dispute arose when Elliott sued over the role played by South Korea's National Pension Service in approving the merger, as Elliott was a minority stakeholder in Samsung C&T. The order for South Korea to pay around $100 million to U.S. hedge fund Elliott was issued by the Netherlands-based Permanent Court of Arbitration in 2023. However, South Korea's government sought to challenge the tribunal's decision at London's High Court.
The latest ruling by the Court of Appeal sends the case back for reconsideration by the High Court, which will now decide on the challenge to the arbitration tribunal's jurisdiction. This development comes shortly after South Korea's Supreme Court upheld the dismissal of prosecutors' appeal against a Seoul court's 2024 decision to clear Samsung Electronics Group's Chairman Jay Y. Lee, who was facing charges of accounting fraud and stock manipulation over the 2015 merger.
The ruling by the Court of Appeal marks a significant turning point in concluding a decade of legal battles tied to the merger. It removes a long-running legal risk for the head of the country's biggest company, Samsung Electronics, and brings closure to a dispute that has been a source of tension between South Korea and the U.S. hedge fund.
The Court of Appeal's ruling on Elliott's case dismisses the use of international arbitration as a Business avenue for their challenge against the 2015 Samsung merger. The decision upholds South Korea's stance in the dispute, offering Financial relief and legal certainty in a long-running saga surrounding the merger.
