South Korea has won its appeal against US hedge fund Elliott regarding a 2015 merger involving two Samsung affiliates.

The UK Court of Appeal has returned the case to the High Court for further review of the arbitration tribunal’s jurisdiction.

The dispute originated from the US$8 billion merger between Samsung C&T and Cheil Industries, which was approved by South Korea’s National Pension Service.

Elliott, a minority shareholder in Samsung C&T, claimed the merger caused financial losses and was awarded US$100 million in 2023 by the Permanent Court of Arbitration.

South Korea previously challenged the tribunal’s jurisdiction under a free trade agreement with the US, but its appeal was rejected by the High Court last year.

The appeal ruling came just as South Korea’s Supreme Court cleared Samsung Chairman Lee Jae-yong of charges tied to the merger, resolving a major legal battle.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Elliott’s aggressive activism represents a new era of global hedge fund influence

Elliott Management’s battle with Samsung showcases how modern activist investors operate on multiple fronts simultaneously to maximize pressure on targeted companies.

Founded by Paul Singer in 1977 with just $1.3 million, Elliott has grown into a $40 billion activist powerhouse that’s outperformed industry averages with 13.4% annual returns over four decades compared to the hedge fund industry’s 4.7% average 1.

The Samsung case followed Elliott’s established playbook: taking a minority stake in Samsung C&T, then leveraging legal systems across multiple countries to contest corporate decisions that it viewed as disadvantageous to shareholders 2.

This approach reflects Elliott’s global reputation as “the world’s most feared investor,” willing to engage in lengthy disputes—even against sovereign nations, as demonstrated by its 15-year legal battle with Argentina that resulted in a $2.4 billion payout 3.

The firm’s confrontational tactics have included seizing an Argentine naval vessel as collateral and conducting extensive private investigations into executives’ personal lives to gain negotiating leverage 4.

Elliott’s influence extends beyond individual companies to reshape entire markets, as its campaigns against Samsung and other Korean firms have driven corporate governance reforms throughout South Korea’s economy 5.

2️⃣ South Korea’s dual legal victories signal shifting power dynamics in investor-state disputes