South Korea Wins Final Arbitration Battle Against Chinese Investor

An ad hoc committee of the International Center for Settlement of Investment Disputes (ICSID) has rejected a Chinese investor's application to overturn an earlier award in favor of the South Korean government. The decision concludes a dispute involving claims worth 264.1 billion won (approximately 196 million to 197 million US dollars). The committee dismissed the application filed by investor Fengzhen Min on Saturday morning and ordered him to pay the South Korean government about 1.51 billion won in costs for the annulment proceedings, plus interest.

The dispute began in 2007 when Min established Pi Korea to secure 380 billion won in loans from a South Korean bank, guaranteed by Woori Bank, to acquire and develop an office building in Beijing. After the firm failed to repay the loans, the bank sold shares held as collateral. Min challenged this in South Korean courts but lost a civil case at the Supreme Court in 2017. He was also convicted in a separate matter involving improper payments to bank employees during the loan process.

In 2020, Min filed an investor state dispute settlement (ISDS) claim, arguing that the bank's actions and South Korea's judicial proceedings violated the investment treaty between the two nations. While the initial damages claim was approximately 2 trillion won, it was later reduced to 264.1 billion won. In May 2024, an arbitral tribunal dismissed the claims, ruling that the investment was part of an illegal scheme and therefore not protected under the treaty. Min sought an annulment in September 2024, claiming the tribunal misinterpreted the law and denied him a fair opportunity to present his case.

The South Korean government stated that the victory establishes the principle that investments made in violation of domestic law are not protected under investment treaties. President Lee Jae Myung commented on the ruling via X, stating that the government will respond resolutely to unfair complaints in the future.