The government has decided not to appeal an international arbitration ruling that ordered it to pay $32 million (approximately 4.38 billion won) to the U.S.-based private equity firm Mason regarding the former Samsung C&T. As a result, the government is expected to disburse approximately 8.6 billion won, including compensation and interest, from its budget to Mason.
The Ministry of Justice said on the 18th, “After in-depth discussions with government representative law firms and external experts multiple times, we have decided not to appeal the March 20 ruling of the Singapore International Commercial Court, which dismissed the government's request to annul the Mason ISDS (Investor-State Dispute Settlement) arbitration ruling.”
It continued, “Considering not only the legal principles but also various circumstances such as additional expenses and interest that would arise if an appeal were filed, we made this decision.” The Ministry of Justice has assessed that the government budget required to be paid to Mason amounts to approximately 8.6 billion won, including compensation and interest. The interest is calculated from the date of the shareholder meeting for the merger resolution of Samsung C&T and Cheil Industries (July 15, 2015) and accrues daily until the payment date.
Earlier, Mason filed an investor-state lawsuit against the South Korean government with the Permanent Court of Arbitration (PCA) in 2018. Mason held a 2.2% equity stake in Samsung C&T in 2015. However, when the Samsung Group pursued a merger by calculating that one share of Samsung C&T was equal to 0.35 shares of Cheil Industries, Mason opposed the merger, asserting that they had incurred losses. Nevertheless, the government pressured the National Pension Service, a major shareholder, to approve the merger, leading to the result that they claimed caused them losses, prompting the ISDS filing.
The PCA issued a partial favorable ruling for Mason in April of last year. Although it fell short of the $200 million in damages sought by Mason, it ordered the South Korean government to reimburse approximately $32 million, along with 5% annual interest, legal fees, and arbitration costs. Consequently, the Ministry of Justice filed an annulment lawsuit against the arbitration ruling in July of the same year in a court in Singapore but lost last month.
This is the first time that the government has not appealed after losing an ISDS filed by a foreign private equity firm. In another ISDS filed by another investor, Elliott, related to the merger between Samsung C&T and Cheil Industries, the government lost in 2023 but appealed. The PCA ruled in 2023 that “the South Korean government must pay Elliott $53.58 million (approximately 76.1 billion won), along with interest and legal costs.”
A Ministry of Justice official noted, “In the case of Elliott, since not all decisions regarding the case were made by the PCA, we judged that there was room for dispute.” It continued, “In contrast, Mason had fully completed substantive decisions in the Singapore court, leading to our conclusion that there was no benefit in appealing.”