South Korea secured a significant legal victory on Thursday in its ongoing arbitration dispute with U.S. hedge fund Elliott Management over the controversial 2015 merger of two Samsung affiliates. The UK Court of Appeal ruled in South Korea’s favour, reviving its challenge to a $100 million arbitration award issued by the Netherlands-based Permanent Court of Arbitration (PCA) in 2023.
This development comes just hours after Samsung Electronics Chairman Jay Y. Lee was cleared by South Korea’s Supreme Court of accounting fraud and stock manipulation charges tied to the same merger.
Background: Samsung C&T and Cheil Industries Merger
In 2015, Samsung C&T merged with Cheil Industries in an $8 billion deal, strengthening family control over Samsung’s sprawling conglomerate.
- Elliott Management’s Role: Minority stakeholder in Samsung C&T, opposing the merger
- Dispute Origin: Elliott accused South Korea’s National Pension Service (NPS) of unfairly approving the deal, leading to the PCA’s $100 million award against South Korea
UK Court Ruling: South Korea’s Appeal Moves Forward
- Court: UK Court of Appeal
- Outcome: South Korea’s appeal allowed
- Next Step: The Case was sent back to London’s High Court to review the arbitration tribunal’s jurisdiction under the U.S.–South Korea free trade agreement
Previously, London’s High Court had rejected South Korea’s attempt to overturn the PCA award, stating the tribunal had jurisdiction. The Court of Appeal’s decision reopens that argument.
Connection to Jay Y. Lee’s Legal Victory
On the same day as the UK ruling, South Korea’s Supreme Court upheld a lower court’s decision clearing Jay Y. Lee of:
- Accounting fraud
- Stock manipulation
These charges were tied directly to the 2015 Samsung C&T–Cheil merger. Prosecutors’ appeals were dismissed, removing a long-standing legal risk for Lee and Samsung Electronics.
What This Means for Samsung and South Korea
- For Samsung:
- Jay Y. Lee’s acquittal solidifies his leadership position at Samsung Electronics
- Removes legal uncertainty tied to the 2015 merger
- For South Korea:
- Opportunity to contest the $100 million arbitration ruling
- Potential reduction in financial liability to Elliott Management
Conclusion
South Korea’s victory in the UK Court of Appeal marks a pivotal moment in its years-long legal battle with Elliott Management over the Samsung merger. Coupled with Jay Y. Lee’s Supreme Court acquittal, the outcomes signal major wins for both the South Korean government and Samsung as they move past one of the conglomerate’s most controversial chapters.
