President Lee: "Illegal Investments Can't Be Protected... Will Firmly Respond to Unjust Claims" After ISDS Victory Over Chinese Investor

All Annulment Requests by Chinese Investor Fengzhen Min Dismissed
Final Defense Against 264.1 Billion Won Compensation Claim
Initial Claim Amount Reached 2 Trillion Won
Government Recovers 1.5 Billion Won in Legal Costs from Annulment Proceedings

President Lee Jae-myung stated on the 13th that with the government’s final victory confirmed in the annulment proceedings of an international investment dispute (ISDS) filed by a Chinese investor against the Korean government, “Even foreign investors cannot be protected if their investments violate the laws of the Republic of Korea.”

President Lee Jae-myung is speaking at the senior secretaries meeting held at the Blue House on the 11th. September 11, 2026. Photo by Yonhap News Agency

On the same day, President Lee posted on his social media account, X (formerly Twitter), saying, “This ISDS annulment victory affirms the principle established in the international arbitration process,” and added, “I would like to thank all officials at the Ministry of Justice who worked hard to protect the national interest. We will continue to respond firmly to any unreasonable claims in the future.”

This case involved Fengzhen Min, a Chinese national investor, who in 2020 filed an ISDS against the Korean government based on the Korea-China investment agreement. On September 12, the ICSID Annulment Committee dismissed all applications by Fengzhen Min’s side to annul the arbitration award. Accordingly, the Korean government’s original arbitration victory, rendered in May 2024, was also finalized.

To finance the purchase of the Huafu Building in Beijing, China, in 2007, Fengzhen Min established Pi Korea in Korea and secured a project financing (PF) loan of approximately 380 billion won through Korean financial institutions. After defaulting on the loan, the financial institutions sold company shares held as collateral, prompting him to file a civil lawsuit, but he lost the case at the Supreme Court in 2017. In the same year, a guilty verdict for providing money and valuables to financial institution employees during the loan process was also finalized.

Fengzhen Min’s side filed the ISDS claim, asserting that the execution of security interests by the financial institutions and the Korean courts' civil and criminal judicial proceedings constituted “unlawful expropriation,” “denial of justice,” and “violation of the fair and equitable treatment obligation” under the Korea-China investment agreement. The initial claim amount was about 2 trillion won, which was ultimately reduced to about 264.1 billion won.

However, the original arbitration tribunal accepted the Korean government’s argument in May 2024, which held that the establishment of Pi Korea and the share acquisition were part of an illegal scheme to obtain the PF loan through bribes to financial institution officials. As such, it was determined that this investment was not eligible for protection under the Korea-China investment agreement and the claim was fully dismissed. At that time, Fengzhen Min’s side was also ordered to pay approximately 4.9 billion won in legal costs and interest incurred by the government.

Although Fengzhen Min’s side sought to annul the award in September that same year, the Annulment Committee also found no issues with the tribunal’s interpretation of the investment agreement or the procedures. The Annulment Committee ordered Fengzhen Min’s side to pay the government’s legal costs of about 1.51283 billion won and interest for the annulment proceedings as well.

The Ministry of Justice evaluated the decision as reaffirming the principle that “investments violating domestic laws cannot be protected under investment agreements.” The ministry further explained that this outcome blocks attempts to overturn matters already adjudicated in Korea’s civil and criminal judicial processes through the ISDS mechanism, and, by securing victories in both the original arbitration and annulment proceedings, has also prevented the possibility of further arbitration.

This content was produced with the assistance of AI translation services.