Investment treaty practiceModel BIT
Does the state have a model BIT?
Korea has a model BIT; however, it is not impossible to change. It is not disclosed to the public in its entirety and is not a comprehensive treaty document. Therefore, it serves the purpose of an internal guideline for government officials when entering into a new BIT or FTA, rather than a form treaty that has been pre-approved by the legislature.Preparatory materials
Does the state have a central repository of treaty preparatory materials? Are such materials publicly available?
In principle, treaty preparatory materials are not disclosed to the public, and treaties themselves are not disclosed until after they take effect. However, since 1994, the Ministry of Foreign Affairs has regularly made public disclosure of historic documents related to diplomatic activities under the Rules on Preservation and Disclosure of Diplomatic Documents promulgated by the Ministry of Foreign Affairs on 28 July 1993.
Diplomatic documents are eligible for disclosure as historical records 30 years after their preparation. Also, pursuant to the Official Information Disclosure Act, which has been in force since January 1998, a diplomatic document may be disclosed in certain forms prior to the lapse of 30 years from its preparation if there is a specific request for disclosure of such document by an individual.
Unlike diplomatic documents, parliamentary records are disclosed and can be found at the National Assembly’s website (see: www.assembly.go.kr/main.acl). If the National Assembly requests the examination and inspection of the relevant materials prior to the execution of a treaty as an exception, such materials are subject to a ‘non-disclosure’ inspection, and the relevant lawmakers should not disclose matters examined through such inspection to the public.
The MOTIE runs a separate website for FTAs, where the status of the execution of certain FTAs can be learned; for example, whether it is at the negotiation stage or the research stage (see: www.fta.go.kr).
While extensive preparatory materials may be available on Korean-language websites of government agencies and departments, translated versions of the materials or databases may not be as readily available on English-language websites. Additionally, because the preparatory materials or guidelines are most likely created in the Korean language, many English translations of such materials carry a disclaimer of potential unintended errors or inaccuracies in translation.Scope and coverage
What is the typical scope of coverage of investment treaties?
Investment treaties typically define who is considered an investor, and include specific requirements of affiliation to the party states, as well as what qualifies as an investment and the types of protections afforded the contracting parties.
Generally, an investment is defined as the investment of an investor that is a national or registered entity of the territory of the party states, which existed as of the date of effectuation of the treaty or was established, acquired or expanded thereafter. For example, article 11.28 of the ROK-United States FTA provides that:
the investor of a Party means a Party or state enterprise thereof, or a national or an enterprise of a Party, that attempts to make, is making, or has made an investment in the territory of the other Party; provided, however, that a natural person who is a dual national shall be deemed to be exclusively a national of the State of his or her dominant and effective nationality.
Similar language is used in the majority of bilateral investment treaties Korea has entered into to describe the qualifications of an investor.
The definition of an investment, as used in BITs, is generally defined broadly. Most of the earlier treaties are less descriptive in defining what qualifies as an investment yet are encompassing of any asset that may carry monetary value. Those treaties more recently entered into in the past 20 to 30 years, and those that have been amended in recent years, are slightly more descriptive yet use general terms to include both tangible and intangible property and rights, both movable and immovable, and for intellectual property rights and trade secrets.
Treaties delve into the types of protections available to investors from the contracting states, in extensive detail.Protections
What substantive protections are typically available?
National treatment is generally included. In this regard, whether investments made prior to the execution of the treaty can also be protected is debated, and depends on whether the matter is specifically addressed in the BIT or relevant treaty. However, most of the FTAs that Korea has entered into are drafted to include pre-treaty investments by including the language ‘with respect to establishment and acquisition’. Yet it is important to review the specific language of each treaty, for in relation to the ROK-China BIT, investments with respect to the ‘establishment and acquisition’ are excluded from the covered investment, excluding investments made prior to the treaty.
Most-favoured-nation treatment, minimum standard of treatment, losses and compensation thereof, subrogation, expropriation and compensation, full protection and security and fair and equitable treatment are the commonly allotted protections. There are often provisions for settlement of disputes among foreign investors into Korea in addition to provisions for dispute settlement between the contracting state and the investor. Additionally, provisions for repatriation or transfer of profits and proceeds from the investment out of the state where the investment was made are clearly stated.
The umbrella clause is also typically included in Korea’s investment treaties. However, based on the disclosed excerpts of the Korean model BIT, there is a provision that the BIT shall be applicable only to agreements entered into with a central government, under the influence of the ROK-United States FTA:
Each contracting party shall observe the provisions of this Agreement as well as any specific investment agreement between an authority at the central level of government of a party and investors of the other contracting party that may have entered into force.
What are the most commonly used dispute resolution options for investment disputes between foreign investors and your state?
Foreign Investors have typically brought arbitration disputes against the government of Korea under ICSID or UNCITRAL Rules.Confidentiality
Does the state have an established practice of requiring confidentiality in investment arbitration?
No. Owing to the relative lack of past investment arbitration cases involving Korea, no established practice pertaining to confidentiality exists. Further, most of the BITs (and FTAs) contain no specific confidentiality provisions and therefore the confidentiality requirement should be subject to the rules governing the procedure that the parties choose; for example, ICSID Rules, UNCITRAL Rules or ICC Rules. However, despite these rules, there is a high demand from the Korean public for transparency and disclosure of the procedure in the investment arbitration cases.Insurance
Does the state have an investment insurance agency or programme?
Yes. Korea has a state-affiliated investment insurance agency called the Korea Trade Insurance Corporation (K-sure), formerly known as the Korea Export Insurance Corporation. State-backed investment insurance is not contingent on the existence of an investment treaty.