Three Crowns has secured for Elliott Associates L.P. an award against the Republic of Korea, under the Korea-US Free Trade Agreement, where Korea has been found to have breached the minimum standard of treatment under international law, and ordered to pay Elliott over US$100 million, for damages, interest, and legal fees.

The arbitration arose from one of the biggest governmental corruption scandals to rock the Republic of Korea in decades; resulting in the prosecution, conviction, and incarceration of Korea’s then-Head of State.


There was a plan by the founding-family owners of Samsung to consolidate control while funding a multi-billion-dollar inheritance-tax bill. The centrepiece of that plan was a merger between two Samsung entities—Samsung C&T (SC&T) and Cheil Industries (Cheil)—at distorted prices that would transfer value from SC&T shareholders (including Elliott) to Cheil’s.

The merger had to be approved by a supermajority of SC&T shareholders. Elliott opposed the merger and publicly campaigned against it, galvanizing opposition to its unfair terms.

Samsung went to lengths to ensure the merger was approved, enlisting the connivance of the Korean Government. Therefore, senior government officials took illegal steps to ensure that its National Pension Service (the NPS), a key shareholder in SC&T, would vote in favour of the merger. Those steps began in Korea’s Presidential Blue House, continued through Korea’s Ministry of Health and Welfare, and resulted in the subverting of NPS’s decision-making to ensure it approved a merger plan that damaged the interests of SC&T’s shareholders, including the NPS itself.

Due to this illegal governmental intervention, the SC&T-Cheil merger was approved on the predatory terms proposed by Samsung, with the NPS vote in favour being decisive. Were it not for this, Elliott would have won the vote, and other investors and Korean pension holders would have been saved billions of dollars in losses.

The evidence of this concealed governmental intervention may never have emerged in the arbitration but for the evidence gathered and presented by the Korean Public Prosecutor during the criminal prosecutions of senior Governmental and Samsung officials in Korea. Together with the Korea’s then-Head of State, Samsung officials were sentenced for their involvement in this conspiracy.

The intervention of the Korean Government caused damage to the shareholders of SC&T. At this time of the merger, the shares of SC&T were trading at a price lower than their value, including because of this risk of a predatory merger. Without the Republic of Korea’s conduct, the SC&T shareholders would have stopped the merger, avoiding the transfer of value to shareholders of Cheil and causing the traded share price of SC&T to increase towards its intrinsic value. The Korean Government’s intervention deprived the shareholders of SC&T of the opportunity to realise that value increase.

This governmental intervention has led to the prosecution, conviction, and imprisonment of the Republic of Korea’s former President, its former Minister of Health and Welfare, and officials in the Ministry of Health and Welfare and the NPS.

The Tribunal’s Decision

The arbitral tribunal concluded the Republic of Korea failed to afford to Elliott the minimum standard of treatment under the Korea-US Free Trade Agreement. It found that the actions of the NPS were attributable to the Republic of Korea, notwithstanding that the NPS’s conduct had been in the context of the exercise of its shareholder rights.

The arbitral tribunal determined the Republic of Korea is required to pay US$53.58 million for the damage caused to Elliott, in addition to interest of 5%, compounded annually from 16 July 2015 until the date of the award. With interest, the total amount awarded is approximately US$79 million. The Republic of Korea was also ordered to pay over US$25 million for Elliott’s legal fees.

The Three Crowns team included partners Constantine Partasides KC, Georgios Petrochilos KC and Liz Snodgrass, counsel Simon Consedine, and associates Nicola Peart, YiKang Zhang, and Julia Sherman. Three Crowns was co-counsel with Kobre & Kim and KL Partners.

« Back