Korean Prime Minister agreed to abolish ISDS

On 12 July 2019, the Prime Minister of South Korea, Mr. Lee Nak-Yon, attended the National Assembly and said that he agreed to abolish ISDS. (Media coverage: YonhapHaniKhan) This remark came out while his responding to a lawmaker, Mr. Song, at the plenary session of the Budget and Accounting Committee.

The Prime Minister gave reasons for his consent: an excessively high cost; a poor predictability of outcome; and the problem of tyranny of a strong man. He added that the government, especially the Ministry of Justice, the Ministry of Industry, Trade and Energy, and the Ministry of Foreign Affairs were discussing how to reform ISDS, and would consult with the National Assembly when a government plan was developed.

As for the UNCITRAL working group, he said that the Korean government’s solution would be prepared in consideration of the national interest and submitted in due time. Interestingly, both the Prime Minister and Mr. Song said the due date is the end of July, not July 15th (This is because the Korean government was granted from the UNCITRAL an extension on the July 15 deadline).

It is the first time that the senior government official officially mentions the repeal of ISDS. Back in 2012, Mr. Lee signed a letter of Korean politicians to the U.S. political leaders (including the President Obama), but at that time he belonged to the opposition party. 

The inquiry of the lawmaker Mr. Song and the response of the Prime Minister stems from the campaign of Korean civil society groups, especially the press conference of June 26th  at the National Assembly, and subsequent media coverage (here, herehere and here). When Mr. Song asked the Prime Minister about ISDS, he reiterated what the civil society groups explained at the press conference and subsequent op-ed. 

Mr. Song demanded, exactly as the CSOs did, the Korean government to present solutions which went beyond the US did in the re-negotiation of NAFTA and the new model BIT of the Netherlands. NAFTA 2.0, or USMCA, eliminates ISDS between the US and Canada and limits the application of ISDS between the US and Mexico. The Dutch new model BIT imposes an obligation upon foreign investor to comply with domestic laws and regulations of the host state, including laws and regulations on human rights, environmental protection and labor laws.