Two Bites at the Same Apple? ?Derivative' ISDS Proceedings in the Revised Korea-US FTA

• Author: Jaemin Lee
• Position: Professor of International Law at Seoul National University School of Law, Korea. LL.B./LL.M./Ph.D.(SNU), J.D.(Boston College), LL.M.(Georgetown). ORCID: http://orcid.org/0000-0002-4738-6583. The author may be contacted at: jaemin@snu.ac.kr / Address: Seoul National University School of Law 1 Gwanak-ro, Gwanak-gu, Seoul 08826 Korea.
• Pages: 107-130

Jaemin Lee

∗

The 2018 amendment of the KORUS has made an important stride in the investment

chapter of the agreement. In particular, the amendment introduced new provisions

to regulate multiple, subsequent or parallel ISDS proceedings involving the same

governmental measures. The new provisions, however, arguably contain inherent

limitations. They will be able to address only some of the multiple, subsequent or

parallel proceedings. They then leave open a possibility where essentially the same

investor raises a series of ISDS proceedings against essentially the same measures by

an advance planning on the scope of ‘measures’ and/or form of ‘control.’ This means

that the new provisions will not be able to fully prevent multiple, subsequent or parallel

proceedings in the same context or circumstances from taking place, as was originally

intended by the drafters. More detailed wordings and elaborations would have helped

to achieve the objective. Future Joint Committee discussions or additional amendments



Keywords

Investment Arbitration, ISDS Proceedings, ISDS Reform, Korea-US FTA,

Parallel Proceedings, Subsequent Proceedings, Multiple Proceedings

∗ Professor of International Law at Seoul National University School of Law, Korea. LL.B./LL.M./Ph.D.(SNU),

J.D.(Boston College), LL.M.(Georgetown). ORCID: http://orcid.org/0000-0002-4738-6583. The author may be

contacted at: jaemin@snu.ac.kr / Address: Seoul National University School of Law 1 Gwanak-ro, Gwanak-gu, Seoul

08826 Korea.

Two Bites at the Same

Apple? ‘Derivative’ ISDS

Proceedings in the Revised

Korea-US FTA

J. EAST ASIA & INT’L L. Vol. 12/No.1 (2019); 107-130

Publication type : Research Article

Section : Regional Focus & Controversies

DOI : http://dx.doi.org/10.14330/jeail.2019.12.1.06

108 Jaemin Lee

1. KORUS Amendment and the Investment Chapter

The Republic of Korea and the United States of America (“US”) concluded a Free

Trade Agreement (“FTA”) on March 15, 2012.

1

Among many features contained

in the FTA, the investment arbitration (Investor-State Dispute Settlement: “ISDS”)

proceedings set forth in Chapter 11 of the Agreement turned out to be one of the

stickiest and most controversial issues.

2

Since then, many observers have been closely

watching how the ISDS mechanism in the Korea-US FTA (“KORUS”)

3

is applied and

implemented in practice. The level of interest and concern has ratcheted up with the



4

In September 2017, at the request of the Trump Administration of the US, the

two countries initiated negotiations to amend the KORUS.

5

  

     

countries’ domestic procedures, the amended KORUS went into effect on January 1,

2019.

6

Major areas so amended are: (i) enhanced US access to the Korean automobile

market

7

; (ii) improvement of procedures to verify countries of origin under the

1 Office of the United States Trade Representative (USTR), US - Korea Free Trade Agreement, available at https://ustr.

gov/trade-agreements/free-trade-agreements/korus-fta (last visited on Mar. 16 2019).

2 In many countries, the investment arbitration mechanism has become one of the most important issues in any BIT

discussion and negotiation. See UNCITRAL, Report of Working Group III (Investor-State Dispute Settlement Reform)

on the work of its thirty-fourth session (Vienna, Nov. 27-Dec. 1, 2017), U.N. Doc. A/CN.9/930/Add.1/Rev.1, 51st

session (June 25-July 13, 2018). This mechanism began to draw global attention starting from late 1990s. See J.

JACKSON, M. BRONCKERS & R. QUICK, NEW DIRECTIONS IN INTERNATIONAL ECONOMIC LAW: ESSAYS IN HONOUR OF JOHN H.

JACKSON 392-3 (2000).

3 The full text of the Korea-US FTA is available at http://www.fta.go.kr/us/doc/1 (last visited on Mar. 16, 2019).

4 Since 2012, seven cases have been submitted for ISDS proceedings against the government of the Republic of Korea

under various IIAs (as of Mar. 16 2019). Three of them are filed by the US investors under the KORUS. The three

proceedings were all raised in 2018. They are Elliott Associates, L.P. v. Republic of Korea; Mason Capital L.P. and

Mason Management LLC v. Republic of Korea (PCA Case No. 2018-55); and Jin Hae Seo v. Republic of Korea. See

United Nations Conference on Trade and Development (“UNCTAD”), Investment Dispute Navigator, Korea, Republic

of – As Respondent, available at https://investmentpolicyhub.unctad.org/ISDS/CountryCases/111?partyRole=2 (last

visited on Mar. 16, 2019).

5 USTR, Statement on the Conclusion of US-Korea (KORUS) FTA Meetings in Seoul (Jan. 2, 2018), available at https://

ustr.gov/about-us/policy-offices/press-office/fact-sheets/2018/january/statement-conclusion-us-korea-korus-0; For an

overview of the renegotiation, see B. Williams et al., US-South Korea (KORUS) FTA, CRS REP.: IN FOCUS (Dec. 28,

2018), available at https://fas.org/sgp/crs/row/IF10733.pdf (last visited on Mar. 16, 2019).

6 Ministry of Trade, Industry and Energy, Korea’s National Assembly Ratifies Revised KORUS FTA (Dec. 7, 2018),

available at http://english.motie.go.kr/en/pc/pressreleases/bbs/bbsView.do?bbs_cd_n=2&bbs_seq_n=685 (last visited

on Mar. 16, 2019).

7 USTR, Fact Sheet on US-Korea Free Trade Agreement Outcomes, (Sept. 2018), available at https://ustr.gov/about-us/

policy-offices/press-office/fact-sheets/2018/september/fact-sheet-us-korea-free-trade (last visited on Mar. 16, 2019).