Republic of Korea v Elliott Associates: High Court sets aside arbitral award in part over NPS attribution

In a significant investment treaty decision handed down on 23 February 2026, Lord Justice Foxton in the Commercial Court partially allowed South Korea’s section 67 challenge under the Arbitration Act 1996 to a Permanent Court of Arbitration award rendered on 20 June 2023. The award had found in favour of Elliott Associates, LP (“EALP”), a US hedge fund, for breaches of the USA–Korea Free Trade Agreement (“the Treaty”) in connection with the 2015 merger of Samsung C&T and Cheil Industries.

EALP held a 7.12% stake in Samsung C&T and vigorously opposed the proposed merger on the basis that its terms were financially disadvantageous to Samsung C&T shareholders. The National Pension Service (“NPS”), managing the National Pension Fund, held the casting vote. Evidence before the court established that President Park personally instructed the Blue House and the Ministry of Health and Welfare (“MHW”) to ensure a favourable NPS vote, in part motivated by EALP’s high-profile foreign opposition to the merger. The NPS Investment Committee duly voted in favour, the merger proceeded, and EALP suffered loss assessed at USD 48,490,428.

The arbitral tribunal upheld EALP’s claims, finding both that the NPS was a de facto state organ whose acts were attributable to Korea, and that the conduct of the Blue House and MHW independently constituted treaty-violating measures. Korea challenged the award on jurisdictional grounds under section 67, contending that Article 11.1(3) of the Treaty set a jurisdictional threshold going to the tribunal’s substantive jurisdiction.

The jurisdictional threshold and attribution

Article 11.1(3) of the Treaty confines its investment protections to “measures adopted or maintained by” a Party, defined to mean measures of central, regional or local governments and authorities (limb (a)) or non-governmental bodies exercising delegated governmental powers (limb (b)). Foxton LJ conducted a de novo review, applying the Vienna Convention on the Law of Treaties and closely analysing the ILC Articles on State Responsibility.

On the question of the NPS as a de facto state organ under limb (a), the court applied the “complete dependence” test drawn from the ICJ’s Bosnian Genocide case and the investment treaty jurisprudence in Almas v Poland and Unión Fenosa Gas v Egypt. Notwithstanding that the NPS was a statutory creature exercising important public functions, Foxton LJ concluded it was not a de facto state organ. The NPS possessed separate legal personality under the Civil Act, operated with significant day-to-day independence, managed its own budget and pursued defined fund objectives rather than the general wishes of the state. Its employees were assimilated to public officials only for limited criminal law purposes. These features were inconsistent with the “exceptional circumstances” required to override the strong presumption of separateness recognised in La Générale des Carrières et des Mines v FG Hemisphere Associates.

Under limb (b), the court equally rejected attribution: the NPS’s exercise of share-voting rights arising from its ownership of Samsung C&T shares was a private-law right, not a sovereign or governmental power delegated to it by the state. Any private shareholder could have cast the same vote. The travaux préparatoires confirmed that “powers” in the Treaty referred to “regulatory, administrative or other governmental powers”.

Displacement of ILC Article 8

The court held that Article 11.1(3) operates as a lex specialis which displaces the broader principle of attribution in Article 8 of the ILC Articles (conduct directed or controlled by a state). This conclusion aligned with the Mason Award, rendered against Korea in parallel proceedings, and with the Al Tamimi v Oman decision. Foxton LJ noted, however, that this displacement did not open an easy route to evasion of Treaty obligations, because instructions given by state organs to non-state actors are themselves capable of constituting “measures” attracting the Treaty’s protections.

The scope of “measures” and the “relating to” requirement

The court confirmed, consistently with the Mason Award and the Singapore International Commercial Court’s decision in the parallel Mason proceedings, that the word “measures” carries a broad meaning extending to any act or omission of the state, without requirement of formality or sovereign character. The concerted instructions issued by the President, Blue House and MHW to procure a favourable NPS vote plainly qualified.

The court was equally satisfied that those Blue House measures “related to” EALP’s investment. The intervention directly and foreseeably affected EALP as a member of an identifiable, limited class of Samsung C&T shareholders. Beyond that, the evidence demonstrated that EALP’s prominent foreign opposition to the merger had itself galvanised the Korean administration’s intervention: EALP was squarely within the sights of the President and Minister when issuing their instructions.

Outcome and partial set-aside

Korea’s section 67 challenge succeeded in part. The court set aside those findings dependent on the NPS being a de facto state organ, together with the tribunal’s associated breach findings in relation to NPS measures. However, the court was not persuaded that the tribunal’s causation analysis could be read as resting independently on the Blue House measures alone: the passages addressing causation at paragraphs 814 and 821 of the award expressly relied upon NPS attribution. Accordingly, the issues of causation and damages were remitted to the arbitral tribunal for reconsideration in light of the surviving findings concerning the Blue House and MHW measures.

The judgement offers careful guidance on severability of awards under section 67, applying the principle articulated in Czech Republic v Diag Human and the Singapore Court of Appeal’s formulation in CBX and CBY v CBZ that one part of an award may stand independently only where it neither depends upon, nor would have been decided differently but for, the parts set aside. Foxton LJ observed, with characteristic candour, that tribunals adjudicating investment treaty claims on alternative jurisdictional bases would be well-served by structuring their causation and quantum findings in a manner capable of surviving a successful partial challenge before a supervisory court.

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