Elliot Files US$770 Mil. ISD Claim against Korean Government

Elliott Management, a US-based activist hedge fund, has filed an investor-to-state litigation (ISD) worthy of 865 billion won against the Korean government.

The Korean government announced on July 13 that Elliott has submitted an application for arbitration, claiming that it he had suffered at least US$770 million in losses (about 865.4 billion won) due to unfair measures by the South Korean government in the process of approving the merger of Samsung C&T and Cheil Industries. In ISD proceedings, filing an arbitration application is thought to be a stage of entering litigation after an arbitration period.

Elliott sent a notice of intent to the Korean government on April 13. ISD can be filed 90 days after submitting a notice of intent. Elliott filed a suit as soon as the 90 days had passed.

Elliott’s latest damage claim was US$100 million more than the amount demanded in the notice of intent submitted three months ago. Elliott is not disclosing how it calculated the damages.

The ISD filed by Elliott is the fourth of its kind against the South Korean government after the one filed by Lone Star in 2012 and Hanokal and Dayani in 2015. Among them, the government lost a legal dispute with Dayani, the largest shareholder of the Iran-based Entek Group. The government filed a suit to cancel the arbitration award.

The government is responding to Elliott's lawsuit by setting up a joint response system centering on the Office for Government Policy Coordination and involving the Ministry of Strategy and Finance, Ministry of Foreign Affairs, Ministry of Justice, Ministry of Trade, Industry and Energy, Ministry of Health and Welfare, and appointing legal representatives.