US Coupang investment company ISDS notice... Is the ‘national pension role theory’ emerging?

“If the shareholder class action lawsuit is won, the argument of an American investment company will lose its persuasiveness.”

National Pension Service invested 200 billion won in Coupang… Are you actively exercising your shareholder rights?

When Coupang investment companies in the United States submitted a letter of intent to arbitrate an International Investment Dispute (ISDS), taking issue with the Korean government's investigation, the large-scale information leak appears to be turning into a trade dispute.

Accordingly, the outcome of the class action lawsuit filed by domestic and foreign Coupang investors has become more important than before. Although it is strictly a separate matter, it is intertwined in that it proves the background and core of the losses suffered by investors.

Considering that the National Pension Service is a shareholder that invested more than 200 billion won in Coupang, attention is focused on whether the National Pension Service will file a class action lawsuit.

According to related industries on the 26th, Coupang investment companies Greenox and Altimeter recently requested the Office of the U.S. Trade Representative (USTR) to investigate the Korean government's Coupang-related actions and provide appropriate trade relief measures.

The investment companies stated the reason, saying that investors suffered enormous losses as the Korean government launched an intensive investigation targeting Coupang following the leak of Coupang's personal information.

In addition, investment companies submitted a letter of intent to arbitrate in International Investment Disputes (ISDS) to the Korean government, stating that they would file an arbitration claim under the Korea-U.S. Free Trade Agreement (FTA).

These investment companies claimed, "Prime Minister Kim Min-seok urged government regulators to 'take the same resolve as they used to eradicate the mafia' in relation to law enforcement regarding Coupang's information leak incident."

ISDS is a legal remedy through which foreign investors can claim compensation for damages from the government of the investment host country when they incur investment losses due to the actions of the government.

If an agreement is not reached within a certain period of time after the letter of intent to arbitrate is submitted, a formal arbitration procedure will be initiated.

As the information leak incident escalated into a commercial problem, the importance of the results of the class action lawsuit filed by Coupang shareholders became greater than before.

SJKP, the U.S. branch of Daeryun Law Firm, announced last month that it would officially file a consumer class action lawsuit against Coupang Inc in New York federal court.

In addition, We the People Law Firm also filed a class action lawsuit against Coupang Inc and its key executives, including Chairman Kim Beom-seok, in the federal court in western Washington, USA, on behalf of domestic shareholders this month.

Currently, the class action lawsuit filed by shareholders and the ISDS are separate in terms of legal procedures, but the core point is 'shareholder damage'.

The Coupang shareholders who filed the class action claim that they suffered losses due to Coupang's information security failure, and that the U.S. headquarters also exercises substantial management rights and is not free from responsibility.

If they actually win, this means that the American investment company's argument that it 'suffered a loss due to the Korean government's investigation' will lose its persuasiveness.

SKJP U.S. attorney Dong-hoo Son explained, "The class action lawsuit on behalf of victims is aimed at relieving specific damages to individuals in accordance with private contract and tort law, and focuses on the company's compliance with security obligations and governance failures. ISDS aims to protect investors' property rights based on international law and examines whether the Korean government's administrative measures are discriminatory or harsh."

He added, "If the company's security failure and gross negligence are clearly proven in the class action lawsuit and a large-scale compensation judgment is issued, it could serve as decisive evidence supporting the legitimacy of the fine imposed by the Korean government in ISDS."

As a result, attention is expected to focus on whether the National Pension Service will participate in the lawsuit.

The National Pension Service is also a stakeholder holding Coupang stocks worth approximately 218.1 billion won as of the end of 2024.

Lee Young-gi, a lawyer at We the People Law Office, said, "In the case of the National Pension Service, it recently revealed that it will exercise shareholder rights for ESG, which was advocated in the President's work report." He added, "If pension funds such as the National Pension Service, which are institutional investors who suffered greatly from the decline in Coupang's stock price, participate, it will be easy to prove the sharp decline in the stock price."

joongjp@yna.co.kr

sijung@yna.co.kr

 

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