Jin Hae Seo v. Republic of Korea, HKIAC Case No. HKIAC/18117
HKIAC · Investment (ICSID and treaty) · Republic of Korea · 27 Sep 2019
Why it matters
This case clarifies the temporal and nationality requirements for 'covered investment' under the KORUS FTA. The tribunal held that an investment made before the treaty's entry into force and before the investor acquired the relevant nationality is not protected unless the investor expanded the investment after both events. Minor improvements (about 2% of initial capital) were insufficient to qualify as an expansion, preventing treaty shopping.
Summary
Jin Hae Seo, a US citizen who naturalized in 2013, owned property in Seoul since 2001. In 2016, her property was expropriated as part of a redevelopment project. She claimed Korea violated the KORUS FTA by failing to pay adequate compensation and denying fair and equitable treatment. Korea raised preliminary objections, arguing the tribunal lacked jurisdiction because the property was not a 'covered investment' under the FTA. The tribunal agreed, finding that the investment was made before the KORUS FTA entered into force (2012) and before Seo became a US citizen. Under Article 11.28, a 'covered investment' must exist at the time of the treaty's entry into force or be established, acquired, or expanded thereafter by an investor of the other party. Since Seo's investment predated both the treaty and her US nationality, it could only qualify if she expanded it after both events. The tribunal found that minor renovations (totaling about KRW 7.4 million, or 2% of the original purchase price) did not constitute an expansion. Thus, the tribunal lacked jurisdiction and dismissed the claims. The decision underscores that treaty protections cannot be retroactively acquired through nationality changes and minor post-treaty activities.
The detail
Parties: Jin Hae Seo v. Republic of Korea, HKIAC Case No. HKIAC/18117
Case number: italaw/cases/7470
Outcome: Tribunal upheld Respondent's preliminary objection no. 1, finding no jurisdiction over Claimant's claims; claims dismissed; each party to bear own legal fees and half of tribunal and HKIAC costs.
Applicable law: KORUS FTA (Free Trade Agreement between United States and Republic of Korea), UNCITRAL Arbitration Rules (2013), Korean Urban Improvement Act
Issues in play: Definition of 'covered investment' under KORUS FTA Article 11.28; whether Claimant's property qualified as an investment made after the treaty's entry into force and after she acquired US nationality.
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