South Korea has filed an appeal against a ruling by a Hague-based arbitration court that ordered the country to pay $32m to US hedge fund Mason Capital Management as compensation over its intervention in the 2015 merger of two Samsung affiliates, according to a report by the South Korea Herald.
The country’s Justice Ministry announced on Thursday its decision to appeal the Permanent Court of Arbitration’s decision in April to side with Mason Capital Management.
The hedge fund initially sought $200m in compensation, arguing that the South Korean government’s influence over the National Pension Service led to the approval of the $8bn merger between Samsung C&T and Cheil Industries, causing a drop in Samsung C&T’s stock value and resulting in investor losses.
The Justice Ministry claims the PCA “erroneously interpreted” its jurisdiction under the South Korea-US free trade agreement, which, according to the ministry, provides substantial grounds for appeal. The ministry plans to challenge the ruling at a Singaporean arbitration body, asserting that it will make every effort to avoid paying the compensation.
In its statement, the Justice Ministry criticised the PCA’s decision, arguing that it misinterpreted the actions of a few individuals, including former President Park Geun-hye, as representing government decisions. Park’s administration was implicated in the controversial merger deal, which was central to a corruption scandal involving high-profile politicians and business leaders. This scandal eventually led to Park’s impeachment in 2017 and the imprisonment of Samsung Electronics Executive Chairman Lee Jae-yong.
The appeal follows a similar move by the Justice Ministry last year to contest the PCA’s award of $108.5m to US activist fund Elliott Investment Management over the government’s role in the same merger. That ruling is currently being challenged at a British arbitration body.
