Future of Investment Arbitration in East Asia: Experience ...
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Kap-You (Kevin) Kim Bae Kim & Lee LLC Future of Investment Arbitration in East Asia: Experience and Prospect 1 Lessons learned and looking ahead: 30 years of investment arbitration in Asia IBA 2016 Annual Conference 21 September 2016
Transcript of Future of Investment Arbitration in East Asia: Experience ...
Kap-You (Kevin) Kim
Bae Kim & Lee LLC
Future of Investment Arbitration in East Asia:Experience and Prospect
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Lessons learned and looking ahead: 30 years of investment arbitration in Asia
IBA 2016 Annual Conference21 September 2016
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Source: U.S. Department of State (2016)
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ISDS Experience of East Asian Countries
4Source: Global Arbitration Review (Nov. 2013)
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IndonesiaCases as respondent State: 7Cases as home State: 0
Year Case Sectors Outcome Home State
2004 Cemex v. Indonesia Cement Settled Singapore
2011 Rafat v. Indonesia Banking State won U.K.
2011 Al Warraq v. Indonesia Banking State won Saudi Arabia
2012 Churchill Mining and Planet Mining v. Indonesia
Coal mining Pending U.K.Australia
2014 Nusa Tenggara v. Indonesia
Cooper and gold mining
Discontinued Netherlands
2015 IMFA v. Indonesia Coal mining Pending Inida
2016 Oleovest v. Indonesia Food products Pending Singapore
Source: UNCTAD (2016)
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MalaysiaCases as respondent State: 3Cases as home State: 3
Year Case Sectors Outcome Home State
1994 Gruslin v. Malaysia (I) Unknown Settled Belgium
1999 Gruslin v. Malaysia (II) Financial service activities
State won Belgium
2005 MHS v. Malaysia Other industry (Treasure hunting)
State won U.K.
Year Case Sectors Outcome Host State
2001 MTD v. Chile Construction Investor won Chile
2003 Telekom Malaysia v. Ghana
Telecommunica-tion
Settled Ghana
2011 Ekran v. China Real estate Settled China
Source: UNCTAD (2016)
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PhilippinesCases as respondent State: 5Cases as home State: 0
Year Case Sectors Outcome Home State
2002 SGS v. Philippines Service (Import supervision)
Settled Switzerland
2003 Fraport v. Philippines (I) Construction State won Germany
2011 Fraport v. Philippines (II) Construction State won Germany
2011 Baggerwerken v. Philippines
Construction Pending Beligum
2016 Shell Philippines v. Philippines
Natural gas development
Pending Netherlands
Source: UNCTAD (2016)
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Viet NamCases as respondent State: 4Cases as home State: 0
Year Case Sectors Outcome Home State
2004 Trinh Vinh v. Vietnam Real property Settled Netherlands
2010 McKenzie v. Vietnam Construction State won U.S.
2011 Dialasie v. Vietnam Construction State won France
2011 RECOFI v. Viet Nam Food products / Wholesale trade
Pending France
Source: UNCTAD (2016)
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LaosCases as respondent State: 2Cases as home State: 0
Year Case Sectors Outcome Home State
2012 Sanum Investments v. Laos
Gambling and betting activities
Settled Macao, China SAR
2012 Lao Holdings v. Laos (I) Gambling and betting activities
Pending Netherlands
MyanmarCases as respondent State: 1Cases as home State: 0
Year Case Sectors Outcome Home State
2000 Yaung Chi v. Myanmar Food industry State won Singapore
Source: UNCTAD
Source: UNCTAD (2016)
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South KoreaCases as respondent State: 3Cases as home State: 2
Year Case Sectors Outcome Home State
2012 LSF-KEB v. Korea Financial service / real estate activities
Pending Belgium
2015 Hanocal and IPIC International v. Korea
Energy /oil Withdrawn Netherlands
2015 Dayyani v. Korea Manufacture of electrical equipment
Pending Iran
Year Case Sectors Outcome Host State
2014 Ansung Housing v. China
Construction Pending China
2015 Samsung v. Oman Energy / construction Pending Oman
Source: UNCTAD (2016)
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JapanCases as respondent State: 0Cases as home State: 2
Year Case Sectors Outcome Host State
2015 JGC v. Spain Energy Pending Spain
2016 Eurus Energy v. Spain Electricity, gas, steam and air conditioning supply
Pending Spain
Source: UNCTAD (2016)
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ChinaCases as respondent State: 2Cases as home State: 4
Year Case Sectors Outcome Home State
2014 Ansung Housing v. China
Construction Pending South Korea
2011 Ekran v. China Real estate Settled China
Year Case Sectors Outcome Host State
2007 Tza Yap Shum v. Peru Trade Investor won Peru
2010 China Heilongjiang v. Mongolia
Mining Pending Mongolia
2012 Ping An v. Belgium Finance State won Belgium
2014 Beijing Urban Construction v. Yemen
Construction Pending Yemen
Source: UNCTAD (2016)
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MongoliaCases as respondent State: 4Cases as home State: 0
Year Case Sectors Outcome Home State
2007 Alstom Power v. Mongolia
Energy Settled Italia
2007 Paushok v. Mongolia Mining and oil Pending Russia
2010 China Heilongjiang v. Mongolia
Mining Pending China
2011 Khan Resources v. Mongolia
Mining State won Canada / Netherlands /British Virgin Islands
Source: UNCTAD (2016)
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31 cases against East Asian states
11 cases by East Asian investors
• East Asian states won in 11 cases
• East Asian investors won in 2 cases
• Settled in 9 cases / 1 withdrawal
• 1 discontinued / 18 pending cases
Implication?
Any impact on the future BIT/FTA plan of East Asian states?
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Status of International Investment Agreements
in East Asia
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20 BITs (19 with ISDS clauses)
IndonesiaCases as respondent State: 6Cases as home State: 0
MalaysiaCases as respondent State: 3Cases as home State: 3
23 BITs & 2 FTA (14 with ISDS clauses)
PhilippinesCases as respondent State: 4Cases as home State: 0
18 BITs(17 with ISDS clauses)
Viet NamCases as respondent State: 4Cases as home State: 0
22 BITs & 1 FTA(22 with ISDS clauses)
Source: UNCTAD (2016)
In force
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LaosCases as respondent State: 2Cases as home State: 0
9 BITs(9 with ISDS clauses)
MyanmarCases as respondent State: 1Cases as home State: 0
5 BITs(4 with ISDS clauses)
MongoliaCases as respondent State: 4Cases as home State: 0
17 BITs(17 ISDS clauses)
Source: UNCTAD (2016)
In force
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ChinaCases as respondent State: 2Cases as home State: 4
110 BITs, 10 FTAs, 1 TIT(59+ ISDS clauses)
South KoreaCases as respondent State: 3Cases as home State: 2
90 BITs, 15 FTAs, 1 TIT(91+ with ISDS clauses)
JapanCases as respondent State: 0Cases as home State: 1
20 BITs, 11 EPA & 1 TIT(25+ with ISDS clauses)
Source: UNCTAD (2016)
Source: Korea Ministry of Foreign Affair (2016)
Source: UNCTAD (2016)
In force
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Recent Trend
of International Investment Agreements
in East Asia
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Source: Global Arbitration Review (Nov. 2013)
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More investment agreements between Asian states
(example)
Korea-China BIT (2007)
Korea- China- Japan TIT (2014)
Korea-China FTA (investment chapter) (2015)
Korea-China Regional Comprehensive Economic Partnership (tentative)
Trans-Pacific Partnership Agreement (TPPA)(tentative)…
** ISDS clauses in all these treaties Overlap issue?
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Less new BITs in East Asia
• Saturation of the market?
already achieved the desired level of investment promotion and protection?
• Experience of investment disputes?
investment arbitration cases
Philippines: No more BITs after SGS v. Philippines (except for FTAs)
• Toward more regional and multi-lateral treaties…
FTA, TIT, TPPA, etc.
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Future of Investment Arbitration
in East Asia
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Treaty Factors
Members: Singapore, Brunei, New Zealand, Chile, United States, Australia, Peru, Viet Nam, Malaysia, Mexico, Canada, Japan
Potential members: Colombia, Philippines, Thailand, Taiwan, South Korea, Indonesiaand more?
Working draft (as of 20 January 2015)
- Arbitral tribunal is required to transmit its proposed decision or award on liability to the disputing parties for the parties’ comments.
- Possibility of the creation of an appellate body to review awards
- All the current signatories (except for Australia) support the inclusion of an ISDS provision under the TPPA
< Trans-Pacific Partnership Agreement (TPPA) >
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Proposed in the texts of “EU-Viet Nam FTA,” “EU-Canada CETA,” “TTIP” Investment Tribunal System
First instance tribunal & appeal tribunal
Institutionalized system with independent and permanent judges
Criticisms:
Efficiency, ease of access, choice/appointment/remuneration of judges
Interpretative coherence
Coexisting dispute settlement mechanisms such as ICS and ISDS in their IIAs
< EU’s proposal of new Investment Court System >
Treaty Factors
Source: UNCTAD World Investment Report (2016)
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Other Factors (public opinion, etc.)
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ISDS claim Against Korean Government
Lone Star v. R.O.K
• 2006 Korea and Belgo-Luxemburg Economic Union BIT
• ISDS claim against Korea(ICSID Arbitration)
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“… it can be observed that investment treaty arbitration continues to feature in the Asia-Pacific region. The fact that investors from the Republic of Korea and China utilised ISDS in 2014 is a testament of its legitimacy and attraction. It may be the start of several more to come in this region.”
- Global Arbitration Review (18 May 2015)
Investor-State Arbitration and Korea
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First ISDS claim notice by Korean investor
• Notice to bring ISDS claim against Mongolia (2012)
• Settled through amicable consultation
Investor-State Arbitration and Korea
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First ISDS arbitration claim by Korean investor
• ISDS Claim against a North African State (2013)
• Ad hoc arbitration
• Currently pending
Investor-State Arbitration and Korea
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First treaty-based ICSID arbitration by Korean investor
• 2007 Korea-China BIT
• A Korean company’s investment to a golf course in China
• Government’s breach of assurances to provide lands
• Currently pending
Ansung v. PRC (2014)
Investor-State Arbitration and Korea
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Second ISDS notice by Korean investor
Notice to bring ISDS claim against Vietnam (2014)
• Korea-Vietnam BIT (2004)
• A Korean contractor’s investment to berth construction in Vietnam
• Lawsuit between the contractor and the project owner
• Government’s undue influence over the lawsuit
• Sent a “Notice of Intent to Arbitrate”
• Resolved through amicable consultation
Investor-State Arbitration and Korea
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• 2003 Korea-Oman BIT
• Investment: Deposit in connection with the bid for a refinery improvement project
• Discriminatory treatment by Oman towards the claimant in connection with the bidding process to undertake improvements to the Sohar refinery in northern Oman run by the state-owned Oman Refineries and Petroleum Industries Company (ORPIC) in 2013.
Samsung v. Oman (2015)
Second treaty-based ICSID arbitration by Korean investor
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Q & A
