▲ The justice ministry holds a press briefing on Sept. 13, 2026, to notify that South Korea has won an investor-state dispute against a Chinese investor. (Yonhap)

(ATTN: UPDATES with president's remarks in last 2 paras)

SEOUL, Sept. 13 (Yonhap) -- An ad hoc committee of the International Center for Settlement of Investment Disputes (ICSID) rejected a Chinese investor's bid to overturn an earlier award in favor of the South Korean government in an investor-state dispute worth 264.1 billion won (US$196 million), the justice ministry said Sunday.

The ICSID ad hoc committee dismissed Chinese investor Fengzhen Min's annulment application in its entirety at around 5:25 a.m. Saturday (Korea time), according to the ministry.

The committee also ordered the Chinese investor to pay the South Korean government about 1.51 billion won in costs for the annulment proceedings, plus interest.

"The decision reaffirmed the principle that investments made in violation of domestic law are not entitled to protection under the investor-state dispute settlement (ISDS) system," the ministry said.

The dispute stemmed from loans Min received from a South Korean bank in connection with the acquisition and development of an office building in Beijing.

In 2007, Min established Pi Korea in South Korea and raised 380 billion won through project financing loans arranged and guaranteed by Woori Bank.

When the firm failed to repay the loans, the South Korean bank sold shares in the company it had received as collateral, prompting Min to file a civil lawsuit. Min ultimately lost the case at the Supreme Court in 2017.

The Chinese investor filed an ISDS claim with the ICSID in 2020, arguing that the bank's sale of the shares and South Korea's civil and criminal judicial proceedings violated the investment treaty between South Korea and China.

The damages claim, initially worth about 2 trillion won, was reduced to about 264.1 billion won during the proceedings.

In May 2024, the arbitral tribunal found that Min's establishment of the company and acquisition of its shares were part of an illegal scheme to secure the loans and ordered the Chinese investor to pay some 4.9 billion won in legal costs to the South Korean government, plus interest.

However, Min sought an annulment in September 2024, arguing that the tribunal had misinterpreted the investment treaty and domestic law, and had failed to give him sufficient opportunity to present his case.

Commenting on the final legal victory, President Lee Jae Myung wrote on his X account that the government will "respond resolutely to any unfair complaints in the future."

"Investment made in violation of South Korean law cannot be protected just because (it was made by a) foreign investor," the president said, adding the point was endorsed by the court.

(END)

[ⓒ K-VIBE. 무단전재-재배포 금지]