President Lee Jae-myung stated on September 13 that the government’s victory in the international investment dispute settlement (ISDS) case confirms that foreign investors cannot receive protection for investments that violate domestic laws.
In a post on his X account, President Lee emphasized that the principle established in the ISDS cancellation procedure is that foreign investors are not entitled to protection for investments that violate South Korean laws.
He expressed gratitude to officials at the Ministry of Justice for their efforts to protect national interests and reiterated his commitment to firmly respond to unjust claims.
The ISDS case mentioned by President Lee involves a cancellation request filed by Chinese investor Peng Jianmin against the South Korean government based on the Korea-China Investment Agreement. This case originated from an ISDS event initiated on August 3, 2020.
Previously, Peng Jianmin established Baekik Investment Co., Ltd. (Pye Korea) to secure a project financing loan for the purchase of Huafu Building in China. After defaulting on the loan, the financial institution disposed of the shares of the company used as collateral, leading Peng Jianmin to file a civil lawsuit, which he lost.
Separately, after being convicted in a criminal trial for bribery involving financial institution employees during the loan process, Peng Jianmin raised the ISDS claim, challenging the execution of the collateral and the civil and criminal proceedings. The claim amount was approximately 2 trillion won, ultimately reduced to about 264.1 billion won.
The arbitration tribunal ruled in May 2024 that Pye Korea was established to obtain an improper project financing loan through bribery, citing the government’s argument that the establishment of the company and acquisition of shares constituted illegal investment not protected under the agreement. The tribunal dismissed all of Peng Jianmin's claims and ordered him to pay approximately 4.9 billion won in litigation costs to the government.
In response, Peng Jianmin filed a cancellation request with the International Centre for Settlement of Investment Disputes (ICSID) in September of that year.
The Ministry of Justice has been collaborating with external experts, including domestic and international law firms and academia, through an international investment dispute response team composed of relevant government departments.
On September 12, nearly two years later, the ICSID cancellation committee ruled to dismiss all of Peng Jianmin's requests and ordered him to pay approximately 1.5 billion won in litigation costs to the government.
* This article has been translated by AI.
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