REPUBLIC OF KOREA v MASON CAPITAL L.P. & Anor

Facts

The Republic of Korea (ROK) applied in the Singapore International Commercial Court, in Originating Application No 15 of 2024 together with Summons No 61 of 2024, to set aside a final award dated 11 April 2024 made in PCA Case No. 2018-55. The award was in favour of Mason Capital LP and Mason Management LLC (together, Mason), a US investment fund and its general partner (the GP).

Mason held a 2.18% stake in Samsung C&T Corporation (SC&T). In 2015 SC&T and Cheil Industries announced a merger on a ratio that Mason and other SC&T shareholders considered unfair to SC&T. ROK's National Pension Service, SC&T's largest shareholder, voted for the merger, which was approved. Mason began an arbitration seated in Singapore under the Korea-US Free Trade Agreement (FTA), alleging that the President, officials at the Blue House and the Ministry of Health and Welfare had improperly procured the pension service's vote. The tribunal found that ROK had breached the FTA and ordered it to pay damages of approximately US$32m.

ROK raised five grounds: that the impugned acts were not "measures adopted or maintained" by it, that they did not relate to Mason or its investment, that the GP was not an investor with an investment, that the GP lacked standing because the shares were registered to a Cayman fund, and that the tribunal breached natural justice by refusing to admit two later Korean court judgments.

Issues

1. Whether the measures and relating-to requirements in Art 11.1.1 of the FTA were jurisdictional, and if so whether they were satisfied
2. Whether the GP was an investor that owned or controlled an investment, making the Investor Objection a ground to set aside the award
3. Whether the Standing Objection was jurisdictional and a ground for setting aside
4. Whether the tribunal breached natural justice by declining to admit the later Korean court judgments

Holding

The court dismissed ROK's application to set aside the award. Mason was awarded costs of £324,469.38, US$1,409,898.72 and S$34,629.91; its Singapore counsel's fees and disbursements were allowed in full, but its foreign counsel's fees were reduced to US$1,200,000 from the US$1,841,585 claimed.

Reasoning

On the first issue, the court construed the FTA under the Vienna Convention on the Law of Treaties. Art 11.16 was a self-contained gateway for submitting all claims to arbitration and set out every jurisdictional limit, while Art 11.1 merely described the scope of the chapter, as similar scope articles did elsewhere in the treaty. A claimant only had to allege facts amounting to breach of a Section A obligation and resulting loss. The diplomatic notes exchanged by the US and ROK were admitted but were not a subsequent agreement, since the FTA provided its own interpretive mechanism through a Joint Committee. In any event the alleged acts were measures: the word needs no formality, and illegality under domestic law or later prosecution of the officials did not take the acts outside it. Intervention in a merger also had a legally significant connection to shares in the merging companies, so the acts related to Mason's investment.

On the second issue, the court accepted that whether the claimant is an investor is jurisdictional and reviewed it afresh. Under Cayman law the fund had no legal personality and its property was held by the GP, so even if registration gave the fund rights under Korean law, those rights were held by the GP. The GP also had sole control of the fund and voted the shares. The shares had the characteristics of an investment. The court did not need to decide whether ROK was time-barred for not challenging the tribunal's preliminary ruling earlier.

On the third issue, standing was satisfied by the GP asserting a claim on its own behalf for its own loss, which its notice of arbitration did; whether it actually suffered loss was a matter for the merits.

On the fourth issue, both refusals were reasonable case management decisions. The first request came almost a year after the judgment was issued, with no explanation, and the second came when the draft award was close to completion. Neither judgment was likely to have changed the outcome, as the tribunal's key causation findings about which NPS committee would have voted were not challenged by them. On costs, Mason's foreign counsel's fees were about three times ROK's, a disparity that could not be fully justified.

From the judgment