SOUTH KOREA Law and Practice Contributed by: Junu Kim, Woojae Kim, Hangil Lee and Sarthak Malhotra, Bae, Kim & Lee LLC
2. Investment Treaties, Free Trade Agreements and Investment Laws 2.1 Bilateral and Multilateral Investment Treaties Korea has ratified more than 85 BITs and a wide range of FTAs that include investment chapters. Its treaty partners cover all major regions. • Asia: China, Japan (including the China–Japan– Korea Trilateral Investment Treaty), India (replaced by the Korea–India CEPA), Indonesia (including the 2023 CEPA), Vietnam (BIT and FTA), the Philip- pines, Thailand, Malaysia, Myanmar, Laos, Cambo- dia, Bangladesh, Pakistan, Sri Lanka, Kazakhstan, Kyrgyzstan, Uzbekistan, Armenia. • Europe: United Kingdom, France, Germany, Italy, Spain, Portugal, the Netherlands, Belgium–Luxem- bourg (terminated), Switzerland (replaced by the EFTA FTA), Austria, Denmark, Finland, Sweden, Norway, Iceland, Czech Republic, Slovak Repub- lic, Poland, Hungary, Lithuania, Latvia, Romania, Bulgaria, Croatia, Greece. • Middle East and North Africa: Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Oman, Iran, Israel (replaced by the Korea–Israel FTA), Jordan, Egypt, Libya, Lebanon, Tunisia, Algeria, Morocco, Mauri- tania. • Sub-Saharan Africa: Nigeria, Kenya, South Africa, Cameroon, Senegal, Burkina Faso, Rwanda, Zimbabwe, Tanzania (not yet in force), Democratic Republic of Congo (not yet in force). • Latin America and the Caribbean: Argentina, Brazil (signed but not yet in force), Mexico, Chile, Peru, Uruguay, Paraguay, Bolivia (terminated), Costa Rica, El Salvador, Guatemala, Honduras, Nica- ragua, Dominican Republic, Panama, Colombia (signed but not yet in force), Guyana, Jamaica, Trinidad and Tobago. • North America and Oceania: United States (KORUS FTA), Canada, Australia, New Zealand, Brunei, Singapore. • Multilateral agreements: ASEAN–Korea Investment Agreement, EFTA–Korea FTA (Iceland, Liech- tenstein, Switzerland), Korea–US FTA (KORUS), Korea–EU FTA, Korea–Central America FTA, Regional Comprehensive Economic Partner-
• Key issues: Whether indirect shareholders qualified as protected investors under the treaty; scope of investment. • Outcome: In 2024, the tribunal awarded USD43 million. Following the dismissal of a set-aside action in Singapore, Korea has complied with the award. Fengzen Min v Republic of Korea (ICSID Case No ARB/20/26) • Facts: A Chinese investor alleged discriminatory treatment under the Korea–China BIT. • Key issues: Early dismissal of manifestly unmerito- rious claims (ICSID Rule 41 (5)). • Outcome: In 2024, the tribunal dismissed the claims in favour of Korea. 1.6 Reaction to Awards Made Against the State Korea’s overall attitude has been to comply with investment treaty awards, but it has also exercised its right to challenge them where appropriate. The adverse awards to date are in Dayyani v Korea , Lone Star v Korea , Elliott v Korea and Mason v Korea . In Dayyani v Korea , enforcement was complicated by international sanctions against Iran, rather than by Korea’s unwillingness to pay. Korea subsequently obtained a licence from the US government to transfer the award amount, and the payment process is ongo- ing. A follow-on arbitration is also pending. In Lone Star v Korea , Elliott v Korea and Mason v Korea , Korea has pursued annulment or set-aside pro- ceedings. The grounds raised have included a lack of jurisdiction and an excess of authority by the tribunal. For example, in Mason , Korea announced its inten- tion to seek annulment in Singapore on jurisdictional grounds. In Elliott , Korea initiated set-aside proceed- ings before the UK courts (the seat of arbitration). In Mason , however, the government eventually complied with the award. Korea’s approach, therefore, demonstrates a willing- ness to respect adverse awards, while simultaneously actively testing their validity through annulment or set- aside proceedings where it considers there are serious jurisdictional or procedural defects.
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