(LEAD) S. Korea prevails in 264.1 bln-won investor-state dispute against Chinese investor

Seoul, South Korea reported on September 13 that an ad hoc committee of the International Center for Settlement of Investment Disputes (ICSID) has dismissed a Chinese investor's appeal to overturn a previous ruling in their favor. The dispute, valued at 264.1 billion won (US$196 million), involves a Chinese investor named Fengzhen Min and a South Korean bank.

The ICSID committee upheld the earlier decision that investments made in violation of domestic law are not protected under the investor-state dispute settlement (ISDS) system. Min's company failed to repay loans from a South Korean bank, leading to the bank selling shares in the company and initiating legal proceedings. Min was later found guilty in a South Korean court in 2017 and subsequently filed an ISDS claim with the ICSID in 2020, alleging that the bank's actions violated the investment treaty between South Korea and China.

The arbitration tribunal ruled in favor of the South Korean government in May 2024, ordering Min to pay about 4.9 billion won in legal costs plus interest. However, Min appealed, arguing that the tribunal had misinterpreted the investment treaty and domestic law. President Lee Jae Myung responded to the final decision, stating that the government will respond firmly to any unfair complaints in the future.