Arnold & Porter Helps Secure Major Victory for South Korea in $48.5 Million Arbitration Appeal

Arnold & Porter, in conjunction with barristers from Essex Court Chambers and law firm Peter & Kim, achieved a significant victory for the Republic of South Korea before the Court of Appeal of London and Wales, which unanimously overturned a lower court decision and revived South Korea’s jurisdictional challenge to a $48.5 million arbitral award obtained by U.S. hedge fund Elliott Associates.

The Court of Appeal ruled that the Commercial Court had incorrectly interpreted the Korea-U.S. Free Trade Agreement when it dismissed South Korea’s challenge in August 2024. The Court of Appeal held that the treaty’s scope and coverage provisions impose jurisdictional limitations on South Korea’s offer to arbitrate with investors, contrary to the lower court’s finding.

The dispute stems from Elliott Associates’ claims that South Korea unlawfully intervened in a 2015 merger in which Elliott held a 7.12% stake. A Permanent Court of Arbitration tribunal in The Hague had determined the claims in the underlying arbitration.

South Korea argued that the arbitral tribunal lacked jurisdiction because the treaty’s Article 11.1(1) requirements were not satisfied. The Commercial Court ruled that Article 11.1(1) was not jurisdictional in nature. The Court of Appeal disagreed, finding that these requirements form a gateway to the entire investment chapter and impose limits on South Korea’s consent to arbitration. The case has been remanded to the Commercial Court to hear the merits of South Korea’s jurisdictional challenge. South Korea was awarded its legal fees of the appeal.

Arnold & Porter served as instructing solicitors, led by partners Jane Wessel and Charlotte Mallorie, along with partners Paolo Di Rosa, Jun Hee Kim, and Anton Ware, as well as attorneys from Peter & Kim. Samuel Wordsworth KC, Peter Webster, and Richard Hoyl of Essex Court Chambers argued the case.