Journal of Arbitration Studies (한국중재학회지:중재연구)

The Korean Association of Arbitration Studies (한국중재학회)
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A Comparative Study on the Prohibition of Performance Requirements in International Investment Agreements

국제투자협정에서 「이행요건」 부과금지에 관한 비교연구

  • Hong, Sung-Kyu (Major in International Business & Commerce, Korea National University of Transportation)
  • 홍성규 (한국교통대학교 경영.통상.복지학부(국제통상 전공))
  • Received : 2019.04.10
  • Accepted : 2019.05.31
  • Published : 2019.06.01
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Abstract

Since imposing Performance Requirements (PRs) on investors have been conducted as a means to protect a host state's domestic industry in the short run, with its effect on improving the international balance of payments, it has been implemented mostly in developing countries. From the viewpoint of investors, however, PRs hinder free competition and investment activities and have the effect of distorting international trade activities; therefore, they are expected to bring detrimental effects on the host state's economic development in the long run. PRs provided by International Investment Agreements (IIAs) and WTO-TRIMs, too, included many abstract regulations which are grounded on the host state's economic efficiency in the past; however, those PRs are gradually being more concretely specified, shifting to a form of prohibition with the goals of increasing the protection on investors and realizing investment liberalization. Accordingly, when Korea freshly concludes IIAs or revises them afterwards, one should focus more on following the points regarding PRs. First, to protect Korean companies' investment activities, it is advantageous to list the contents of prohibited PRs extensively and concretely and create a stipulation. Second, it is necessary to list the contents of the PRs prohibited and add the phrases for prohibiting "any other similar requirements" explicitly, as well so as to cover the PRs that can appear newly. Third, as in the cases associated with PRs, issuable matters are mostly either the range of applying PRs or the conditions of applying them (relevance or detrimental effects); therefore, it is necessary to classify the cases accumulated by issues and analyze them thoroughly. In conclusion, as this study has analyzed the theoretical characteristics of PRs provided in IIAs and related cases and suggests exquisite theory regarding PRs, it not only lays fundamental grounds for follow-up research but also gives useful and practical guidelines for the parties concerned and the arbitrators according to the ISDS procedure.

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