The Chinese Government recently had a case against Malaysian investor and Chinese companies also filed against the Belgium Government and Mongolian Government regarding their investment to the International Arbitrage Court. A Malaysian company Ekran Berhad against China (Ekran Berhad v. People's Republic of China) is the first case ever filed against the Chinese government before the ICSID. There can be two points from the three cases that we have to pay attention. One of them is that the Chinese companies were active and assertive enough to use ISD settlement whether the Contracting Parties are a developed or non-developed countries. And the other one is that the Korean investors need to study on measures of the Chinese Government including local governments and their consistency to the investment treaties.
The paper suggests that Korean and Chinese investors should have different attitudes on the utilization of ISD settlement and its possibility. From the Korea’s perspective, it is preferred to be defensive. The reason that Korea has tried not to resolve trade and investment disputes with China through international organizations is not that we had no disputes at all but that we were afraid of a reprisal action. On the other hand, China might have an active and assertive attitude to use ISD settlement. China has signed more than 140 BITs with other countries since the early 1980s, and recently concluded FTAs and BITs includes ISD Settlement. Beyond that, the Chinese Government had a case against Malaysian investor and also Chinese companies filed against the Belgium Government and Mongolian Government regarding their investment to the International Arbitrage Court. Therefore, it is very likely that the Chinese Government and state-owned companies supported by the government have a high possibility to file against the Contracting Party because of the breach of the treaty.
It seems that ISD must be reasonable when disputes occurs between countries which has similar economic or political power like between developed countries or between developing countries. However, ISD is not always useful and reasonable when the disputes occur between developed country and developing country which has unbalanced power, and even between developed countries which can be applied to economic or political reasons. The paper considers that Korea and China just has the relations like power unbalanced. By understanding merits and demerits of ISD and its timely utilization might be able to play an key role to develop future two countries investment.