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Gov't drops appeal in court battle over $32M payout to Mason Capital

Published: 18 Apr. 2025, 12:29 Updated: 18 Apr. 2025, 14:09

The Ministry of Justice at the government complex in Gwacheon, Gyeonggi [YONHAP]

The government decided on Friday not to appeal a court ruling that rejected its attempt to overturn an international arbitration order requiring it to pay $32 million to U.S.-based hedge fund Mason Capital.

The decision means the government will pay the $32 million to Mason Capital, as well as delay interest calculated at 5 percent annually from July 17, 2015. According to Yonhap News, Seoul owes Mason approximately 86 billion won ($60.5 million), including interest on the delay.

The Ministry of Justice said that “after multiple rounds of in-depth discussions with the government’s legal counsel and external experts,” it has been decided not to appeal the March 20 ruling by the Singapore International Commercial Court dismissing the Korean government’s request to annul the Mason investor-state dispute settlement compensation.

Mason, a former shareholder of Samsung C&T, filed a $200 million ISDS claim against the Korean government in September 2018. The hedge fund argued that the 2015 merger between Samsung C&T and Cheil Industries was executed at an unfair exchange ratio that disadvantaged shareholders.

Mason alleged that the administration of former President Park Geun-hye exerted undue influence on the National Pension Service, pressuring it to vote in favor of the merger, ultimately resulting in financial losses for the fund.

In April of last year, the court upheld part of Mason’s claim, ordering the Korean government to pay $32 million, roughly 16 percent of the damages Mason had sought.

Three months later, in July 2024, the government filed a suit with the Singaporean court to annul the ruling.

Seoul argued that under the Korea-U.S. FTA, an investor must “own or control” the relevant asset. It claimed that Mason acted only as an asset manager for shares in Samsung C&T and that the actual ownership rested with a separate fund in the Cayman Islands.

Based on this, the Korean government asserted that Mason lacked standing as a claimant and that the arbitral tribunal erred in awarding damages.

However, the court concluded that the hedge fund had both ownership and control rights and was therefore eligible to bring an ISDS claim.

The court dismissed the Korean government's request on March 20 of this year, saying that Mason qualified as a legitimate investor under the FTA because the U.S.-based general partner held ownership or control over the Samsung C&T shares ultimately owned by the Cayman Islands fund.

It also stated that the actions of former President Park and others were sufficiently connected to both Mason and its investment.

“The decision [to not appeal] reflects not only legal considerations, but also the potential costs and additional interest that would arise from proceeding with an appeal,” said the Justice Ministry in a press release on Friday. “We will continue to respond with the national interest as our top priority.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.

BY YANG SU-MIN [[email protected]]