In The Republic of Korea v Mohammed Reza Dayyani and others [2019] EWHC 3580 (Comm), the English High Court rejected an application by the Republic of Korea (“Korea“) to set aside an investment arbitration award pursuant to s67 of the Arbitration Act 1996, finding that a London-seated ad hoc tribunal had substantive jurisdiction to hear disputes between Korea and a group of Iranian investors (the “Dayyanis“) arising under a bilateral investment treaty between Korea and the Republic of Iran (the “BIT“). In a decision that will be welcomed by investors, and whilst investment treaty claims will continue to turn on the construction of the specific wording of the relevant treaty, the court interpreted the meaning of “investment” and “investor” widely, extending to contractual rights held indirectly by subsidiaries, whilst also rejecting claims that issues of attribution are jurisdictional matters.

The Background

The underlying arbitration arose out of the failed acquisition by D&A Holding (“D&A“), a Singaporean special purpose vehicle established by the Dayyanis, of Daewoo Electronics (“Daewoo“), a Korean incorporated company. The sellers of Daewoo comprised a consortium of financial institutions, with the largest shareholder being the Korea Asset Management Company (“KAMCO“). KAMCO was in turn part owned by the Korean Government (with a 42.8% stake) and the state-owned Korea Development Bank (with a 28.6% stake).

Pursuant to a Share and Claim Purchase Agreement (the “SPA“), D&A had paid a USD 50 million deposit in respect of the transaction which the sellers claimed was forfeited when the transaction fell through. The Dayyanis commenced arbitration against Korea under the BIT, claiming (among other things) that KAMCO had directed and controlled the sale of Daewoo, that KAMCO’s conduct in respect of the transaction could be attributed to Korea, and that Korea’s conduct breached a duty of “fair and equitable treatment“.

The tribunal ruled in favour of the Dayyanis. Korea subsequently issued a challenge under s67 of the Arbitration Act 1996, contending that the tribunal had lacked substantive jurisdiction to hear the Dayannis’ claims on the basis that (without limitation):

  1. The Dayyanis had not made an “investment” because: (i) neither the SPA nor the deposit constituted “property or assets“; (ii) the SPA and deposit lacked the “objective characteristics” of an “investment“; and (iii) the SPA and deposit had not been “invested” in the territory of Korea.
  2. The Dayyanis did not qualify as an “investor” because the interest in the SPA was held by D&A.
  3. The sellers’ conduct was not attributable to Korea, meaning there was no dispute “arising directly out of an investment between an investor of one Contracting Party and the other Contracting Party“. The dispute was solely between the Dayyanis and a group of sellers to a commercial transaction, meaning that no claims could be brought against Korea under the BIT.

The Decision

Mr Justice Butcher considered each of the above issues in turn.

Was there an “investment“?

The court held that that both the SPA and the deposit fell within the meaning of an “investment“.

The BIT defined “investment” as “every kind of property or asset“. The court considered this definition to be “very wide“, finding that: (i) an “asset” covers something that has economic value, but does not necessarily require a “commercial or exchange value” so as to be marketable, as this would unjustifiably restrict the meaning of “every kind“; and (ii) “property” includes “something which is definable, identifiable by third parties…and [has] some degree of permanence or stability“. The broad definition of “investment” therefore included the SPA, which was a concluded and binding contract granting enforceable rights under Korean law (whether those rights were vested or contingent), and the deposit which “plainly fell” within the meaning of “investment“.

The court rejected Korea’s submission that the SPA and deposit lacked the “objective characteristics” of an investment such as a contribution, an investment risk as opposed to contractual risk, and duration. The court considered that in the absence of express wording imposing limitations on what might qualify as an “investment“, there was no basis upon which the court should read such limitations into the BIT. Further, the court also saw no merit in Korea’s contention that the SPA and deposit had not been “invested in the territory“. Given that the SPA and deposit fell within the definition of “investments“, they had necessarily been “invested” in Korea. The SPA was a contract for the purchase of a Korean company, significant obligations thereunder would be performed in Korea, and the SPA contained a Korean governing law clause with the exclusive jurisdiction of the Seoul Central District Court. Similarly, the deposit was paid into a bank account in Korea.

Accordingly, by focussing on the wording of the BIT itself, the court held that the SPA and the deposit fell squarely within the meaning of an “investment“.

Did the Dayyanis qualify as an “investor“?

The court held that the Dayyanis qualified as “investors“, notwithstanding Korea’s contention that because the “property or assets” (i.e. the SPA and deposit) were owned by D&A, the Dayyanis themselves had no standing.

The court’s reasoning again turned on the construction of the BIT. Absent express wording that the BIT applied only to “direct” investments, which could have been agreed between the contracting states, there was no basis upon which the court could read new limitations into the BIT; to do so would amount to “a rewriting of the treaty“. The court considered the BIT was drafted widely and conferred “a wide enough protection such that a shareholder may be protected in relation to damage to the assets of the company in which the shares are held“, as long as the shareholder exercised a degree of control over that company. The fact that the Dayyanis only held the investments indirectly was therefore not a jurisdictional bar to their claim.

Was the sellers’ conduct attributable to Korea?

The court held that the issues of attribution raised by Korea were not jurisdictional issues falling within the scope of s67 of the Arbitration Act.

The court concluded there was no doubt that Korea was a “Contracting Party” under the BIT, against whom the Dayyanis were entitled to bring claims. Where an investor makes a claim under a treaty alleging that the contracting party is responsible for certain acts, and where the contracting party denies that it had any such responsibility because those acts were not its own, then there is necessarily a dispute between the investor and the contracting party on that issue. By reference to established international law, the court confirmed that a “dispute” means “a disagreement on a point of law or fact, a conflict of legal views or of interests between two persons“.[1] The dispute resolution mechanism in the BIT was sufficiently wide to embrace disputes about whether particular acts were or were not attributable to Korea. As such, arguments of attribution fell within the jurisdiction of the tribunal to determine as such issues were integral to the merits of the underlying claim.


This case will be welcomed by investors for the court’s broad interpretation of the meaning of “investment” and “investor” and its refusal to read new terms into a treaty which are not expressly provided for. Whilst each investment treaty arbitration will turn on its own facts and the interpretation of the relevant treaty (which will be guided by principles of both international law under the Vienna Convention and of English contract law), the definition of “investment” and “investor” in the Korea-Iran BIT is the same (or similar to) definitions contained in other treaties. The court’s decision may therefore encourage more indirect investors to seek to bring claims and will limit the jurisdictional arguments which may be raised by states in this regard. The court’s decision to reject Korea’s challenge and to generally be persuaded by the reasoning of the tribunal in the underlying arbitration is further evidence of the English court’s continued support of the arbitral process.

The court’s finding that issues of attribution are matters of substance, not jurisdiction, is interesting and will help to narrow the range of jurisdictional arguments that states often seek to rely upon to avoid liability in investment treaty arbitrations.


[1] The Mavrommatis Palestine Concessions (Greece v UK) (1924) PCIJ Ser A No. 2.