South Korea’s Ministry of Justice has secured a decisive victory in the final arbitration of the investor-state dispute settlement (ISDS) case against U.S. hedge fund Elliott Associates. The ruling determines that losses incurred by the National Pension Service (NPS) do not constitute national interest concerns but rather private judgments.
Key Ruling Details
The arbitration panel concluded that the NPS operates as a distinct legal entity. Its investment activities do not impact core national functions such as public safety or defense. “The NPS holds a separate legal personality, and the operation of public pension funds does not relate to national core functions like security or defense,” the panel stated in its decision.
Ministry officials clarified during a briefing that this outcome shields the NPS from ISDS-related investment damages. NPS Minister Ko Hyeon-jun emphasized, “The independence and autonomy of the NPS, which manages retirement funds for the majority of citizens, have gained international recognition. This establishes a foundation for stable fund operations.”
Background and Dispute Origins
The case traces back to 2015 decisions surrounding the merger between Samsung C&T and Cheil Industries. Government influence during those negotiations allegedly affected Elliott’s position. Elliott later received payments from Samsung to withdraw related lawsuits, totaling approximately $7.7 billion (around 1 trillion Korean won).
In July 2018, Elliott initiated ISDS proceedings. The Permanent Court of Arbitration (PCA) ruled in June 2023 that South Korea owed Elliott 690 million won plus interest, totaling over 1.3 billion won. The government contested this, leading to further proceedings at a UK court. That court dismissed Elliott’s initial claim in August 2024 and remanded the case for rehearing, where South Korea prevailed.
Elliott argued that the NPS functions as a constitutional entity managing public pension allocations, thus qualifying as a state organ. However, the final ruling rejected this view.
Potential Next Steps
Elliott has expressed dissatisfaction and may file an appeal within three weeks of the decision. Should an appeal proceed, it would return to the original arbitration panel for review. The UK law firm overseeing the proceedings had previously factored in the government’s involvement.
