Seoul: An ad hoc committee of the International Center for Settlement of Investment Disputes (ICSID) has rejected a bid by Chinese investor Fengzhen Min to annul a previous ruling in favor of the South Korean government in an investor-state dispute valued at 264.1 billion won (US$196 million), as confirmed by the justice ministry on Sunday.

According to Yonhap News Agency, the ICSID ad hoc committee dismissed Min's annulment application entirely at approximately 5:25 a.m. Saturday (Korea time). Additionally, the committee mandated that the Chinese investor pay the South Korean government about 1.51 billion won in annulment proceeding costs, along with interest.

The justice ministry highlighted that the decision upholds the principle that investments made in breach of domestic laws do not merit protection under the investor-state dispute settlement (ISDS) system. The dispute originated from loans Min secured from a South Korean bank for the acquisition and development of a Beijing office building.

In 2007, Min founded Pi Korea in South Korea and procured 380 billion won through project financing loans organized and guaranteed by Woori Bank. When the company defaulted on the loans, the South Korean bank liquidated shares in the company held as collateral, leading Min to initiate a civil lawsuit, which he ultimately lost at the Supreme Court in 2017.

Min filed an ISDS claim with the ICSID in 2020, alleging that the bank's share sale and South Korea's judicial proceedings breached the investment treaty between South Korea and China. The damages claim, initially valued at about 2 trillion won, was reduced to 264.1 billion won during the proceedings.

In May 2024, the arbitral tribunal determined that Min's company establishment and share acquisition constituted an illegal scheme to obtain the loans, and ordered the Chinese investor to pay the South Korean government approximately 4.9 billion won in legal costs, plus interest. Min sought an annulment in September 2024, contending that the tribunal misinterpreted the investment treaty and domestic law, and failed to allow him adequate opportunity to present his case.