The Ministry of Justice announced on Apr. 18 that it will not appeal a decision by the Singapore International Commercial Court rejecting South Korea’s attempt to overturn an investor-state dispute settlement (ISDS) ruling in favor of U.S.-based hedge fund Mason Capital Management. The South Korean government had sought to annul the ISDS award, which ordered it to pay approximately 43.8 billion won ($32 million) in damages to Mason over losses stemming from the 2015 merger of Samsung C&T and Cheil Industries. The Singapore court dismissed the set-aside application last month.
“The decision was made following extensive consultations with government-appointed legal counsel and external experts,” the ministry said. “In addition to legal considerations, we took into account various factors, including additional litigation costs and interest from possible delays.”
The dispute originated from Mason’s claim that the South Korean government unlawfully intervened in the merger process by pressuring the National Pension Service to support the deal, resulting in significant losses. Mason filed for arbitration with the Permanent Court of Arbitration (PCA) in the Netherlands in 2018. At the time of the merger, Samsung C&T shares were valued at roughly one-third the price of Cheil Industries shares. Mason, which held a 2.2 percent stake in Samsung C&T, argued it incurred substantial losses due to the undervaluation and sought 263.5 billion won ($185 million) in compensation.
In April 2024, the arbitral tribunal ordered South Korea to pay 43.8 billion won in damages to Mason, along with 5 percent annual interest and legal and arbitration expenses. The government subsequently filed a set-aside motion with the Singapore court in July 2024.
In its defense, South Korea asserted that the actions of then-President Park Geun-hye and former Health and Welfare Minister Moon Hyung-pyo—both implicated in the merger-related scandal—did not represent official state conduct. However, the arbitral tribunal found their conduct attributable to the state, and the Singapore court upheld that determination, ruling that their actions were relevant to Mason’s investment.
The government also argued that under the South Korea–United States Free Trade Agreement, only investors that “own or control” an asset can file a claim. It claimed that Mason merely served as an asset manager for Samsung C&T shares held by a Cayman Islands-based fund and therefore lacked standing to bring the case.
However, the court found that Mason held sufficient ownership and control over the investment to qualify as an investor under the treaty, affirming its right to file the ISDS claim.
