Key Takeaways
- • Lord Justice Foxton partially set aside a US$48.5 million investment treaty arbitration award under the Korea-US Free Trade Agreement (KORUS) in favor of Elliott Associates LP on February 23, 2026, in a landmark jurisdiction ruling.
- • The Court determined that the National Pension Service (NPS), a shareholder acting in the disputed 2015 Samsung C&T and Cheil Industries merger, did not constitute an organ of the Korean state under KORUS treaty language, thereby stripping the tribunal of jurisdiction over the core claims.
- • The original award, valued at US$48.5 million at issuance, had grown to approximately US$100 million by the time of the set-aside proceedings, reflecting accumulated interest and enforcement costs.
- • Korea's victory was grounded in a successful jurisdictional argument that broader state responsibility and attribution doctrines were ousted by the specific treaty wording, establishing that the NPS's conduct was not "by a Party" as required under KORUS.
- • The case originated from Elliott's allegations that Korea unlawfully intervened in the Samsung merger through NPS influence on shareholder votes, claims now remitted to the tribunal for fresh consideration following the Court's jurisdictional findings.
Summary
In a significant victory for state interests in investment treaty disputes, the English Commercial Court partially set aside a major arbitration award against South Korea on February 23, 2026. Lord Justice Foxton's judgment ([2026] EWHC 368 (Comm)) addressed a US$48.5 million award won by Elliott Associates LP, a US hedge fund, in a dispute arising from the 2015 merger between Samsung C&T and Cheil Industries. The award had accumulated to approximately US$100 million by the time of the set-aside proceedings.
The core dispute centered on Elliott's claim that South Korea unlawfully intervened in the Samsung merger through the National Pension Service (NPS), a government-affiliated shareholder holding stakes in both companies. Elliott contended that the NPS acted as an organ of the state and improperly influenced shareholder votes on the merger approval, allegedly breaching Korea's obligations under the Korea-US Free Trade Agreement (KORUS). The original tribunal had awarded Elliott damages on these grounds, but the judgment has now been significantly undermined.
The Court's decisive reasoning turned on a narrow but critical jurisdictional point: whether the NPS's conduct qualified as conduct "by a Party" under KORUS treaty language. Foxton concluded that it did not, and that broader doctrines of state responsibility and attribution—which might otherwise attach the NPS's actions to the Korean state—were explicitly ousted by the treaty's specific wording as *lex specialis* (special law). This ruling stripped the tribunal of jurisdiction over Elliott's core claims, reflecting a growing judicial skepticism toward expansive interpretations of state agency in investment treaty cases.
The judgment follows a Court of Appeal decision in 2025 that had reversed an earlier Commercial Court ruling and remitted the matter for substantive consideration of Korea's jurisdictional objections. Korea's victory in this round sends multiple issues back to the tribunal for fresh examination. The Samsung merger itself had generated subsequent criminal proceedings in Korean courts, underscoring the controversial nature of the underlying transaction and the competing interests at stake between minority investor protection under trade agreements and state sovereignty concerns.
The core dispute centered on Elliott's claim that South Korea unlawfully intervened in the Samsung merger through the National Pension Service (NPS), a government-affiliated shareholder holding stakes in both companies. Elliott contended that the NPS acted as an organ of the state and improperly influenced shareholder votes on the merger approval, allegedly breaching Korea's obligations under the Korea-US Free Trade Agreement (KORUS). The original tribunal had awarded Elliott damages on these grounds, but the judgment has now been significantly undermined.
The Court's decisive reasoning turned on a narrow but critical jurisdictional point: whether the NPS's conduct qualified as conduct "by a Party" under KORUS treaty language. Foxton concluded that it did not, and that broader doctrines of state responsibility and attribution—which might otherwise attach the NPS's actions to the Korean state—were explicitly ousted by the treaty's specific wording as *lex specialis* (special law). This ruling stripped the tribunal of jurisdiction over Elliott's core claims, reflecting a growing judicial skepticism toward expansive interpretations of state agency in investment treaty cases.
The judgment follows a Court of Appeal decision in 2025 that had reversed an earlier Commercial Court ruling and remitted the matter for substantive consideration of Korea's jurisdictional objections. Korea's victory in this round sends multiple issues back to the tribunal for fresh examination. The Samsung merger itself had generated subsequent criminal proceedings in Korean courts, underscoring the controversial nature of the underlying transaction and the competing interests at stake between minority investor protection under trade agreements and state sovereignty concerns.
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