Seoul, March 21 : South Korea has lost a lawsuit seeking to annul an investor-state dispute settlement (ISDS) ruling that ordered it to pay compensation to US hedge fund Mason Capital over losses from tech major Samsung’s controversial 2015 merger of two units.
The Ministry of Justice in Seoul said on Friday that the Singapore International Commercial Court turned down the South Korean government’s request the previous day to annul the arbitration ruling that Mason filed against it in 2018, reports Yonhap news agency.
Mason filed the investor-state dispute settlement case in September 2018, claiming that the South Korean government exerted undue pressure on the National Pension Service, a major shareholder of Samsung C&T, to vote in favour of its merger with Cheil Industries.
Mason claimed that as a result, the stock prices of Samsung C&T and tech major Samsung Electronics plunged, causing the firm to incur losses of approximately US$200 million, said the report.
In April 2023, the arbitration tribunal partially upheld Mason’s claims and ordered the South Korean government to pay $32 million in compensation, along with delayed compound interest at an annual rate of 5 percent from July 17, 2015.
In response, the South Korean government filed a lawsuit in Singapore in July of the same year to annul the arbitration ruling.
The justice ministry has argued that the ruling misinterpreted the conditions for jurisdiction recognition under the South Korea-U.S. free trade agreement and therefore constitutes reasonable grounds for cancelling the decision.
The merger, seen as aimed at tightening then Samsung heir Lee Jae-yong’s control over the family-controlled group, had been the centre of a massive influence-peddling scandal that led to the ouster of former President Park Geun-hye and Lee’s imprisonment, the report mentioned.
Mason had accused the Park administration of exerting excessive influence in the state-run National Pension Service, a major shareholder in Samsung C&T, which was seen as a swing vote at that time, casting its vote in favour of the merger. (IANS)