South Korea wins appeal in legal dispute with Elliott over Samsung merger

South Korea won its latest appeal on Thursday in its ongoing dispute with US hedge fund Elliott Management regarding the 2015 merger of two Samsung affiliates. The decision came shortly after South Korea’s Supreme Court acquitted Samsung Electronics Chairman Jay Y Lee in a related case, according to Reuters.

 

In 2023, the Netherlands-based Permanent Court of Arbitration had directed the South Korean government to pay approximately $100 million in damages to Elliott. The hedge fund had initiated legal proceedings, contesting the role of South Korea’s National Pension Service (NPS) in approving the $8 billion merger between Samsung C&T—where Elliott was a minority shareholder—and Cheil Industries.

 

South Korea had attempted to overturn the tribunal’s ruling at the High Court in London, arguing that the arbitration panel lacked jurisdiction under the free trade agreement with the US. The challenge was dismissed last year. However, the Court of Appeal has now allowed South Korea's appeal and referred the case back to the High Court to assess the question of the arbitration tribunal’s jurisdiction.

 

South Korea’s top court clears Samsung Chairman in 2015 merger fraud case

 

The appellate court ruling followed a few hours after Samsung’s Chairman Jay Y Lee was acquitted of charges related to the 2015 merger between Samsung C&T and Cheil Industries. South Korea’s Supreme Court upheld a 2024 Seoul court decision that cleared Lee of accounting fraud and stock manipulation, eliminating a long-standing legal threat for the executive of the country's biggest company, Samsung Electronics.

 

The lower court had previously dismissed the prosecution's allegations that the merger was orchestrated to consolidate Lee's control over the conglomerate. Prosecutors had appealed the decision, which the Supreme Court has now confirmed.

 

While widely anticipated, the ruling comes at a pivotal time for Lee, who has faced persistent scrutiny regarding his capacity to lead Samsung Electronics—currently the world’s largest memory chip maker and the second-largest smartphone manufacturer. Lee’s legal troubles have stretched nearly a decade, originating after the 2014 heart attack of his father, Lee Kun-hee, which left him in a coma and set the stage for Jay Y Lee’s eventual leadership.

 

Business lobby groups welcome court’s decision

 

South Korean business associations have welcomed the Supreme Court’s ruling. The Korea Enterprises Federation stated that the verdict lifts a significant legal burden from Samsung, especially amid intensifying global competition in high-tech sectors such as AI and semiconductors, as well as trade-related economic challenges from the US.

 

Lee, now 57, had previously served 18 months in prison for a separate bribery conviction connected to former President Park Geun-hye. He was later pardoned by President Yoon Suk Yeol, with the Justice Ministry citing the need for Lee to contribute to resolving the country’s economic difficulties.