Elliott Associates LP v Republic of Korea - KORUS FTA - Elliott-Samsung-Cheil - PCA Case 2018-51 - Award - English and Korean - 20 June 2023
Country
Year
2023
Summary
AWARD
The Arbitral Tribunal
Dr. Veijo Heiskanen (Presiding Arbitrator)
Mr. Oscar M. Garibaldi
Mr. J. Christopher Thomas KC
TABLE OF CONTENTS
I. INTRODUCTION
A. The Parties
B. The Subject Matter of the Dispute
II. PROCEDURAL HISTORY
A. Commencement of the Arbitration and Constitution of the Tribunal
B. The Terms of Appointment and Procedural Order No. 1
C. The Procedural Timetable and First Round of Written Submissions
D. Document Production, Amendments to the Procedural Calendar, and Non-Disputing Party Submission
E. Second Round of Written Submissions, Additional Document Production Requests, and Filing of Additional Documentary Evidence
F. The Statement on Rejoinder on Preliminary Objections and Further Document Production Requests
G. Scheduling of the Hearing
H. Hearing
I. Post-Hearing Proceedings
III. FACTUAL BACKGROUND OF THE DISPUTE
A. The Parties and Related Individuals and Entities
1. The Claimant and its Affiliates
2. The Respondent and Related Individuals and Entities
3. Samsung Group
4. The National Pension Fund
5. National Pension Service
6. Experts Voting Committee
B. The Claimant's Shareholding and Interest in SC&T and Cheil
1. SC&T
2. Cheil
C. The Merger
1. Rumors of the Proposed Merger
2. The Claimant's Response to the Rumors of the Merger
3. The Announcement of the Merger Vote
4. The Claimant's Opposition to the Merger
5. The NPS's Vote in Favor of the Merger
6. Consummation of the Merger
7. The Expected Benefits of the Merger
D. Share Price Reappraisal Proceedings before Korean Courts and the Settlement Agreement between EALP and SC&T
E. Other Proceedings Subsequent to the Merger
1. Criminal Proceedings against JY Lee and certain Government Officials
2. Proceedings by Other Shareholders to Annul the Merger
3. The NPS Internal Audit
IV. REQUESTS FOR RELIEF
A. The Claimant's Request for Relief
B. The Respondent's Request for Relief
V. JURISDICTION AND ADMISSIBILITY
A. Whether the Claimant's Claims Arise Out of "Measures Adopted or Maintained" by the Respondent
1. The Respondent's Position
2. The Claimant's Position
3. The Tribunal's Determination
B. Whether the Conduct of the NPS is Attributable to the Respondent
1. The Respondent's Position
2. The Claimant's Position
3. The U.S. Submission
4. The Tribunal's Determination
C. Whether the Claimant has Made Covered "Investments" Pursuant to the Treaty
1. The Respondent's Position
2. The Claimant's Position
3. The U.S. Submission
4. The Tribunal's Determination
D. Whether the Claimant's Claims Constitute an Abuse of Process
1. The Respondent's Position
2. The Claimant's Position
3. The Tribunal's Determination
VI. MERITS
A. Minimum Standard of Treatment
1. The Claimant's Position
2. The Respondent's Position
3. The U.S. Submission
4. The Tribunal's Determination
B. National Treatment
1. The Claimant's Position
2. The Respondent's Position
3. The U.S. Submission
4. The Tribunal's Determination
C. Assumption of Risk
1. The Respondent's Position
2. The Claimant's Position
3. The Tribunal's Determination
D. The Parties' Requests for Adverse Inferences
1. The Claimant's Requests
2. The Respondent's Requests
3. The Tribunal's Determination
VII. CAUSATION
A. The Applicable Legal Standards
1. The Claimant's Position
2. The Respondent's Position
3. The U.S. Submission
B. Whether the Respondent Caused the NPS to Vote in Favor of the Merger
1. The Claimant's Position
2. The Respondent's Position
C. Whether the NPS Vote Caused the Merger to Be Approved
1. The Claimant's Position
2. The Respondent's Position
D. Whether the Merger Caused Loss to the Claimant
1. The Claimant's Position
2. The Respondent's Position
E. The Tribunal's Determination
VIII. QUANTUM
A. The Claimant's Valuation on the Basis of Intrinsic Value
1. The Claimant's Position
2. The Respondent's Position
B. The Respondent's Valuation on the Basis of Stock Market Price
1. The Respondent's Position
2. The Claimant's Position
C. Profits from Cheil Swaps and Mitigation of Loss
1. The Claimant's Position
2. The Respondent's Position
D. Proceeds from Settlement Agreement with SC&T
1. The Respondent's Position
2. The Claimant's Position
E. Quantification of Loss
1. The Claimant's Position
2. The Respondent's Position
F. Currency of Award
1. The Claimant's Position
2. The Respondent's Position
G. The Tribunal's Determination
IX. INTEREST
A. The Claimant's Position
B. The Respondent's Position
C. The Tribunal's Determination
X. COSTS
A. The Claimant's Position
1. Allocation of Costs
2. Reasonableness of Costs
B. The Respondent's Position
1. Allocation of Costs
2. Reasonableness of Costs
C. The Tribunal's Determination
XI. AWARD
I. INTRODUCTION
...
B. THE SUBJECT MATTER OF THE DISPUTE
5. This arbitration arises out of the Claimant's investment in Samsung C&T Corporation ("SC&T"), a publicly listed Korean company forming part of the Samsung Group.
6. The Claimant alleges that the Respondent improperly intervened in the shareholder vote held by the National Pension Service (the "NPS") in connection with the approval of the merger of Samsng C&T ("SC&T") and Cheil Industries Inc. ("Cheil"), notwithstanding the damage that the merger (the "Merger") would allegedly cause to SC&T's shareholders, including the Claimant and the NPS itself. According to the Claimant, the Respondent's intervention, which ensured that the Merger would proceed, constitutes breaches of the minimum standard of treatment and the national treatment standard under the Free Trade Agreement between the Republic of Korea and the United States dated 30 June 2007 (the "Treaty"). The Claimant contends that the breaches caused it a substantial loss for which it seeks compensation in this arbitration.
7. The Respondent submits that the Tribunal lacks jurisdiction over the Claimant's claims and that the claims are inadmissible. The Respondent further argues that the Claimant has failed to prove a breach of the Treaty, and that it is not entitled to any compensation as the alleged losses are not attributable to the Respondent, and as it has failed to show that it has suffered any loss or damage.
...
XI. AWARD
995. For the foregoing reasons, the Tribunal determines as follows:
a. The Respondent has breached the Treaty;
b. The Respondent is ordered to pay the Claimant compensation for the losses caused to the Claimant by the Respondent's breach in the amount of USD 53,586,931.00;
c. The Respondent is ordered to pay the Claimant pre-award interest at a rate of 5 percent on the sum in sub-paragraph (b) above, compounded yearly from 16 July 2015 until the date of this Award;
d. The Respondent is ordered to pay the Claimant post-award interest at a rate of 5 percent, compounded yearly, from the date of this Award until payment of the sum in sub- paragraph (b) above in full;
e. The Parties are to bear their own costs of arbitration;
f. The Claimant is ordered to pay the Respondent the legal costs incurred by the Respondent in relation to these proceedings in the amount of USD 3,457,479.87, with interest at the rate of 5 percent, compounded yearly, payable from 30 days of the date of this Award;
g. The Respondent is ordered to pay the Claimant the legal costs incurred by the Claimant in relation to these proceedings in the amount of USD 28,903,188.90, with interest at the rate of 5 percent, compounded yearly, payable from 30 days of the date of this Award; and
h. All other claims and requests for relief are dismissed.
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Footnotes omitted