International Tribunal Rules in Favor of Mason Capital, Orders South Korea to Pay $32 Million

An international tribunal has instructed South Korea to compensate New York hedge fund Mason Capital Management with over $32 million. According to the Ministry of Justice, this ruling from the Netherlands-based Permanent Court of Arbitration (PCA) follows a dispute arising from the 2015 merger of two Samsung affiliates.

The compensation, amounting to 43.8 billion won ($32 million), is the outcome of an investor-state lawsuit filed by Mason Capital Management over the merger of the Samsung affiliates. The Justice Ministry confirmed the directive from the international tribunal on Thursday.

The dispute originates from the 2015 merger of two Samsung Group affiliates, Samsung C&T and Cheil Industries, where a ratio of 0.35 Cheil shares was offered for every Samsung C&T share. 

Mason, holding a 2.18 percent share in Samsung C&T at the time, objected to the merger, asserting that it undervalued Samsung C&T shares. The lawsuit was filed in 2018, with Mason alleging that the South Korean government had unfairly intervened in favor of the merger, accusing the Park administration of exerting excessive influence in the state-run National Pension Service, a major shareholder in Samsung C&T.

Mason Capital initially sought $200 million in damages, alleging government interference, particularly by South Korea’s largest pension fund, the National Pension Service (NPS), in the merger between Samsung C&T and Cheil Industries. 

The hedge fund argued that its investors suffered financial losses due to this influence, with the approval of the $8 billion merger being a key point of contention.

The Netherlands-based Permanent Court of Arbitration (PCA) recently issued its decision, nearly six years after Mason Capital initiated the investor-state dispute settlement process against the South Korean government. 

While Mason Capital’s claim was for $200 million, the tribunal’s ruling ordered over $32 million compensation, representing about 16 percent of the amount demanded. Additionally, the PCA mandated the South Korean government to pay Mason Capital around $11 million in fees and interest. This verdict also includes interest on delayed payments, as reported by Yonhap news agency.

This ruling mirrors a similar case involving U.S. hedge fund Elliott, in which the Permanent Court of Arbitration (PCA) previously directed South Korea to pay approximately $108.5 million. Both cases are related to the same Samsung merger, suggesting a broader legal dispute surrounding the corporate transaction.

Following the verdict, the South Korean Ministry of Justice announced that it would conduct further analysis of the decision and outline future actions. However, Mason Capital has yet to immediately comment on the outcome. 

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