SOUTH KOREA Law and Practice Contributed by: Junu Kim, Woojae Kim, Hangil Lee and Sarthak Malhotra, Bae, Kim & Lee LLC
Bae, Kim & Lee LLC Centropolis B 26 Ujeongguk-ro Jongno-gu Seoul 03161 Korea Tel: +82 2 3404 0000 Fax: +82 2 3404 0001 Email: bkl@bkl.co.kr Web: www.bkl.co.kr/law?lang=en
1. Overview 1.1 National Position
Korea remains open to new agreements: several BITs are signed but not yet in force (including with Brazil, Colombia, DR Congo, Tanzania and Serbia). Overall, Korea’s policy is one of continued engagement with ISDS, tempered by tighter drafting and institutional co-ordination on dispute management. 1.2 Arbitration Conventions Korea is a party to the significant arbitration conven- tions. It signed the Washington Convention on 18 April 1966, ratified it on 21 February 1967, and the Con- vention came into force for Korea on 23 March 1967. Additionally, Korea signed and ratified the New York Convention on 8 February 1973. When ratifying the New York Convention, Korea made a commercial res- ervation, limiting its application to disputes considered commercial under Korean law, which may arguably affect the enforceability of certain non-ICSID (Interna- tional Centre for Settlement of Investment Disputes) investment awards. Korea does not require separate implementing legislation for these conventions to take effect domestically, so they have the force of law with- out additional enactment. 1.3 Prevalence of Investor–State Arbitration Investor–state arbitration is the dominant method of resolving treaty-based disputes involving Korea, con- sistent with Korea’s extensive treaty network and its adherence to the ICSID and New York Conventions. The majority of disputes involving Korea have been handled under the rules of ICSID or UNCITRAL (Unit- ed Nations Commission on International Trade Law), with institutions such as the PCA (Permanent Court of Arbitration) administering them. This demonstrates
Broadly, Korea supports investor–state arbitration as part of its foreign investment policy, but has adopted a more cautious posture in recent years. Debate intensi- fied during the negotiation of the Korea–United States Free Trade Agreement and after several high-profile cases against the state (eg, Lone Star, Elliott, Mason). Rather than retreating from ISDS (investor–state dis- pute settlement), Korea has continued to conclude investment treaties that include it, typically with more detailed safeguards (eg, express linkage of fair and equitable treatment to customary international law, fork-in-the-road and waiver provisions, denial-of- benefits clauses, and regulatory carve-outs). Korea has not announced a blanket policy to exclude ISDS or to terminate its treaties. Instead, it has selec- tively modernised and consolidated instruments, allowing a number of older bilateral investment trea- ties (BITs) to be replaced by comprehensive free trade agreements (FTAs) or newer frameworks. Examples include the replacement of several Central American BITs by the Korea–Republics of Central America FTA, the replacement of the Switzerland BIT within the EFTA–Korea FTA framework, the replacement of the Israel BIT by the Israel–Korea FTA, and the replace- ment of the India BIT by the Korea–India CEPA. Some legacy BITs have been terminated (eg, Guatemala), but this reflects modernisation rather than a wholesale withdrawal from ISDS.
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