Elliott begins dispute against South Korea over 2015 Samsung merger: official

SEOUL (Reuters) - U.S. activist fund Elliott Management has begun a legal dispute with South Korea over a controversial 2015 merger of two Samsung affiliates after Elliott lost a proxy battle to block it, a South Korean government official said on Tuesday.

"We received the notice and are reviewing it," the justice ministry official said, declining to be identified because he was not authorised to speak to the media.

Elliott is seeking an investor-state dispute settlement (ISDS) that allows a company from one country to bring arbitration proceedings directly against the country in which it has invested.

The dispute stems from 2015 when Elliott took on the Samsung Group, Korea's biggest "chaebol" family conglomerate, to oppose the $8 billion merger of two Samsung affiliates but lost that battle.

Elliott served the South Korean justice ministry a notice of intent in mid-April seeking arbitration of the dispute, the official said, a step before filing with the International Centre for Settlement of Investment Disputes, a forum to resolve such cases.

A South Korean media representative for Elliott had no immediate comment.

Earlier on Tuesday, the Korea Economic Daily newspaper Elliott argued in its dispute notice that it had suffered investment losses because of the merger.

More recently, the New York-based Elliot set its sights on reforming the Hyundai Motor Group, pressing the South Korean auto giant to adopt a holding company structure and improve returns to shareholders.

Under that pressure Hyundai announced last week a plan to cancel $890 million worth of its own "treasury" shares, its first stock cancellation in 14 years.

(Reporting by Joori Roh and Ju-min Park; Editing by Eric Meijer)