(Reuters) – South Korea said on Tuesday it would challenge an arbitration ruling that ordered it to pay U.S. hedge fund Elliott Investment Management $108.5 million in a case involving the merger of two Samsung Electronics (OTC:SSNLF) affiliates.

The U.S. activist fund had sued over the role played by South Korea’s National Pension Service in approving an $8 billion merger between the two Samsung (KS:005930) companies, arguing the terms had been unfairly unfavourable to the one in which Elliott had been a stake owner.

The Permanent Court of Arbitration in the Hague last month found in favour of Elliott, though the compensation ordered was much less than the $770 million the hedge fund had sought.

South Korea will argue that the Hague-based tribunal did not have jurisdiction to make the ruling under a free trade agreement it has with the United States, and will challenge the ruling at a UK arbitration body, the Justice Ministry said in a statement.

It did not name the UK arbitration body.

The ministry also said it will argue that the Hague-based tribunal made an error in calculating damages owed to Elliott, and that the compensation ordered was wrongly inflated by more than 6 billion won ($4.8 million).

Elliott did not immediately respond to a request for comment on Tuesday.

($1 = 1,260.1300 won)