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최경규 ( Gyoung Gyu Choi ),조성곤 ( Sung Kon Cho ),김규란 ( Han Ah Kim ) 한국국제통상학회 2013 국제통상연구 Vol.18 No.3
This paper provides an in-depth analysis of the first ISD arbitration case against the Korean Government filed by a foreign investor and also presents the future policy implications of this case. Lone Star Funds, a US-based Belgian private equity firm has filed an Investor-State Dispute (ISD) arbitration claim, alleging that the Korean Government has violated its various obligations under the Korea-Belgium BIT. Specifically, Lone Star argues violation of the ``obligation of fair and equitable treatment`` due to direct damages caused by a delay in the Korean financial authorities` approval of the sale of KEB shares and ``indirect expropriation``via the imposition of capital gains tax in violation of the Korea-Belgium Bilateral Tax Treaty. However, the Financial Services Commission argues that it was proper legal process to wait for the Supreme Court decision in Lone Star`s stock manipulation case before approving the sale of KEB. The problem lies in the fact that each arbitration case involves different evaluations of the relevant governmental measure against the investor and that indirect expropriation arguments may lead to reverse discrimination against domestic investors. By adopting international standards and adequate guidelines in the domestic legal and regulatory system, the Korean Government will be better able to enhance legal stability and predictability in promoting foreign investment. Measures such as increased cooperation between the public and private sectors and clarification of international minimum treatment for adoption of more uniform standards should be encouraged. Going forward, the Korea-US FTA Commission`s further discussion on sensitive matters may even allow the minimization of dispute claims.