The retrial hearing for the cancellation lawsuit concerning the "Elliott case," in which the Korean government was ordered to pay approximately 130 billion won in damages, has been scheduled from December 2 to December 4. The trial, to be held at the Commercial Court in the United Kingdom, is highly likely to proceed in private. Attention is focused on whether the arbitration award could be overturned.
Issue ① Substantive Jurisdiction
The Korean government's key argument in this lawsuit is that "the government's exertion of pressure on the National Pension Service does not constitute a 'measure' by the government that is subject to investor-state dispute settlement (ISDS) under the Korea-US Free Trade Agreement (FTA)." Therefore, the arbitration tribunal itself lacked jurisdiction over this case, and the damages award should be annulled. The first and appellate courts in the UK reached different conclusions on this issue. The first-instance court dismissed the case, finding that the Korean government's arguments regarding its actions did not pertain to the 'jurisdiction' of the arbitration award. Accordingly, it ruled that this was not a matter of 'substantive jurisdiction' under the UK Arbitration Act and dismissed the Korean government's cancellation lawsuit.
In contrast, the appellate court overturned the first-instance decision and remanded the case, stating that it was necessary to re-examine whether the Korean government's argument was valid. Article 11.1 of the Korea-US FTA stipulates the jurisdiction of the arbitration tribunal. The appellate court focused on whether the Korean government's claim constituted a matter of 'substantive jurisdiction.' Choi Seungjae, Professor of Law at Sejong University (Judicial Research and Training Institute, 29th class), explained, "The first-instance court viewed that the jurisdictional issue applied only to Section 1 and was unrelated to Article 11.16 'Arbitration Claims' in Section 2. However, the appellate court partially accepted the Korean government's argument, finding that the opening of Chapter 11 of the Korea-US FTA, as referenced by the first-instance court, indeed defines the tribunal's jurisdiction. Thus, the grounds for annulment raised by the Korean government appear to have been regarded as a matter of 'substantive jurisdiction' under the UK Arbitration Act."
Issue ② Principles of Interpreting International Treaties
The appellate court further stated, "When interpreting international treaties, the principles of interpretation under the Vienna Convention must be followed, and reliance should not be placed on domestic UK legal considerations." It added that the parts of the first-instance decision that relied on UK domestic law should be reinterpreted according to unified international law standards. This, too, is expected to be a key issue in the retrial hearing.
However, it is still expected to be difficult for the Korean government to achieve a final victory. An international arbitration expert explained, "UK courts tend to respect the decisions of arbitration tribunals unless there are exceptional circumstances," adding, "It remains to be seen whether the Korean government's arguments will be accepted in the substantive retrial hearing."
Kim Jisoo, Legal Times Reporter
※This article is based on content supplied by Law Times.
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