Public pension funds (PPFs), which can be outlined as massive pool of capital owned and managed instantly or not directly by governments to finance public pension techniques (see OECD), are lately named “essentially the most influential capital on the planet” – a November 2023 examine by Pondering Forward Institute reported that PPFs make up 52.8% of the world’s largest 100 asset homeowners, bigger than the belongings beneath administration of sovereign wealth funds (SWFs) (On the distinction between each types of state-owned funding automobiles, see right here). International SWF already noticed in 2021 that PPFs “have gained in significance and exercise to such an extent that they’re as we speak related in behaviour to SWFs”. It’s thus not surprising that PPFs will begin getting concerned in transnational dispute settlement proceedings and appeal to scrutiny with respect to their company identification and their formal ties with the state, as has been the case with SWFs (see right here and right here). Notably, in June 2023, an UNCITRAL tribunal interpreted the Funding Chapter of the 2007 Korea-US Free Commerce Settlement (KORUS) to permit the US hedge fund Elliott Associates to sue the Republic of Korea for the business determination of a Korean PPF in reference to a 2015 merger tainted by corruption on the highest governmental degree.
This weblog submit examines a contentious facet of the Elliott Associates v. Korea Award, i.e., whether or not the train of shareholder voting rights by Korea’s Nationwide Pension Service (NPS) within the context of a merger vote certified as “measures adopted or maintained by” Korea beneath KORUS. The tribunal dominated that NPS was a de facto state organ, and its actions have been subsequently “attributable to the Korean state”. This reasoning underpinned the tribunal’s train of jurisdiction over an basically intercompany dispute arising from a business act, which arguably broadened the treaty’s protection. Key to this end result was the tribunal’s conflation of attribution assessments beneath KORUS and regulation of state accountability with out clear justification. The award is presently topic to set-aside proceedings in the UK, exactly on the correctness of the tribunal’s discovering on subject-matter jurisdiction. Moreover, Korea is going through a separate, ongoing UNCITRAL arbitration introduced by one other US hedge fund additionally arising from NPS’s actions in the identical merger vote, making this evaluation timelier than ever.
