"ISDS Dismissal Appeal" Chinese Investor Files Another Cancellation Request Against Korean Government

Government: "Cancellation Process Also Best Effort to Win"

The Ministry of Justice submitted a request to annul the ruling on the 28th, opposing the decision by the International Centre for Settlement of Investment Disputes (ICSID) that dismissed all claims in the international investment dispute (ISDS) case filed by Chinese national investor Min Mo against the Korean government.

According to the Ministry of Justice on the 30th, after receiving an illegal loan and losing collateral due to failure to repay it, the Chinese investor who filed international arbitration against the Korean government lost the case and has now submitted a request to annul the ruling. With the commencement of the annulment procedure, the ICSID internal annulment committee will once again review the appropriateness of the arbitral tribunal's ruling.

In October 2007, Min established a corporation in Korea and borrowed 380 billion KRW from domestic financial institutions. However, he failed to repay the loan on time, and Woori Bank exercised its collateral rights and sold Min’s shares to a foreign company. Subsequently, after losing related civil lawsuits and being sentenced to six years in prison by the Supreme Court on charges including embezzlement, Min filed for arbitration with ICSID in 2020, claiming that the Korean government violated the fair and equitable treatment obligations under the investment agreement. However, on May 31 of this year, the arbitral tribunal dismissed all of Min’s claims demanding approximately 264.1 billion KRW (initially about 2 trillion KRW) in damages from the Korean government.

The arbitral tribunal accepted the Korean government’s argument that Min made an illegal investment because he created a domestic corporation to obtain a large loan to purchase a building in China, and during this process, he was found to have given money and gifts to bank employees, which led to criminal punishment; therefore, the shares in question are not subject to protection.

The arbitral tribunal ordered Min to pay the Korean government’s litigation costs of 4.9126 billion KRW plus interest. However, with the annulment lawsuit filed, the enforcement of the ruling has been temporarily suspended. The Ministry of Justice stated, “In the forthcoming annulment procedure, we will continue to do our utmost in cooperation with related ministries to ensure that the principle that ‘investments illegal under domestic law are not protected under ISDS’ is upheld and that our government prevails.”