• Journal of Arbitration Studies
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• v.28 no.4
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• pp.173-191
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• 2018

MFN provisions in investment agreements have been a tool for equitable treatment between foreign investors with different nationalities. This non discriminatory principle has been pursued by the host states for further investment promotion. However, it may be abused to bring the situation of so called "ISDS forum shopping" which might harm the stability and predictability of investment agreements by unexpectedly extending the scope of obligations. While some investment arbitral tribunals have interpreted the scope of MFN provision very broadly to allow the ISDS forum shopping, both procedural and substantive provisions have been invoked. To prevent any chaos of unclear boundary of MFN provision, some explicit MFN restrictions which would limit the scope of MFN provision are needed. Indeed, some investment agreements have included these MFN restrictions. Specifically, MFN restrictions deal with both procedural or substantive provisions to prevent ISDS forum shopping. According to the lessons from the recent examples of MFN restrictions, there must be a careful consideration on the benefits and costs of having a certain type of MFN restriction as the parties can be the host state and the home state of their investors at the same time.

• Journal of Arbitration Studies
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• v.17 no.2
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• pp.141-165
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• 2007

This study aims to make a contribution to the promotion of trade and economic development of South Korea, and, at the same time, call attention to the increasing trend of investment agreements concluded within Free Trade Agreements (FTA) by examining theoretically FTAs and dispute resolution and investigating systematically the conclusion procedure of agreements, and the system, institutions, and jurisdiction of dispute resolution, and presenting these findings to the government and investors involved. The most problematic aspect in the legal process of arbitration involving disputes over investment is that of arguments concerning the right of jurisdiction. When a dispute arises, even though an investor files for arbitration at an ICSID institution, the parties become involved in another energy-consuming argument even before proceeding to the hearing and decision of the original plan in cases in which the respondent of the dispute files an objection to the decision rights of the arbitral tribunal. As the main basis for this type of plea, the point of non-existence of jurisdiction is first raised where the applicable dispute does not fall under the range of investments defined in individual investment contracts or investment agreements such as a Bilateral Investment Treaty (BIT). To avoid an open-ended definition of investment for the range of investments, articles concerning investments in the FTA and NAFTA between Canada and the USA adopt the limited closed-list method. Article 96 of the FTA between Japan and Mexico applied the same abovementioned method of limited form of definition regarding range of investments and concluded BITs between member countries of APEC applied a similar method as well. Instead of employing the previously used inclusive definition, the BITs concluded between countries of Latin America and the USA are equipped with limited characteristics of an investment. Furthermore, to correspond with this necessary condition the three following requirements are needed : 1) fixed investment funding; 2) expected profits resulting from such investments; 3) and the existence of fixed risk bearing.

• Asia Marketing Journal
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• v.15 no.3
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• pp.79-95
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• 2013

New product innovation is a process of embodying new knowledge in a product and technology licensing is getting popular as a means to innovations and introduction of new product to the market in today's competitive global market environment. Incumbents often rely on technology licensing to access new product opportunities created by other firms. Prior research has examined various aspects of technology licensing agreements such as specific contract terms of licensing agreements, e.g., distribution of control rights, exclusivity of licensing agreements, cross-licensing, and the scope of licensing agreements. This study aims to provide answers to an important, but under-researched question: why do some incumbents initiate more licensing agreement for exploratory learning while others do it for exploitative learning along the innovation process? We attempt to extend our knowledge of licensing agreements from an organizational learning perspective. Technology licensing as a specific form of interfirm linkages can be initiated with different learning objectives along the process of new product innovation. The exploratory stages of the innovation process such as discovery or research stages involve extensive searches to create new knowledge or capabilities, whereas the exploitative stages of the innovation process such as application or test stages near the commercialization are more focused on developing specific applications or improving their efficiency or reliability. Thus, different stages of the innovation process generate different types of learning and the resulting technological resources. We examine when incumbents as licensees initiate more licensing agreements for exploratory learning objectives and when more for exploitative learning objectives, focusing on two factors that may influence a firm's formation of exploratory and exploitative licensing agreements: 1) its past radical and incremental innovation experience and 2) its internal investments in R&D and marketing. We develop and test our hypotheses regarding the relationship between a firm's radical and incremental new product experience, R&D investment intensity and marketing investment intensity, and the likelihood of engaging in exploratory and exploitive licensing agreements. Using data collected from various secondary sources (Recap database, Compustat database, and FDA website), we analyzed technology licensing agreements initiated in the biotechnology and pharmaceutical industries from 1988 to 2011. The results of this study show that incumbents initiate exploratory rather than exploitative licensing agreements when they have more radical innovation experience and when they invest in R&D activities more intensively; in contrast, they initiate exploitative rather than exploratory licensing agreements when they have more incremental innovation experience and when they invest in marketing activities more intensively. The findings of this study contribute to the licensing and interfirm cooperation studies. First, this study lays a foundation to understand the organizational learning aspect of technology licensing agreements. Second, this study sheds lights on how a firm's internal investments in R&D and marketing are linked to its tendency to initiate licensing agreements along the innovation process. Finally, the findings of this study provide important insight to managers regarding which technologies to gain via licensing agreements. This study suggests that firms need to consider their internal investments in R&D and marketing as well as their past innovation experiences when they initiate licensing agreements along the process of new product innovation.

• Journal of Arbitration Studies
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• v.24 no.1
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• pp.25-44
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• 2014

Conflict between transnational environmental issues and foreign investment in capital-importing states can be commonly found. Actually, several investor-state dispute arbitration cases like Bilcon v. Canada, S.D. Myers v. Canada, and Metalclad v. Mexico concerned environmental matters. States are worried about their measures for securing the environment might be deemed to go against international investment agreements and foreign investors also are anxious because of excessive regulations. Against this backdrop, stakeholders attempt to strike a balance between securing foreign investment and preserving the environment. This article argues that the investment chapter of the Korea-US FTA tries to solve environment-investment collision in investor-state disputes. Before analyzing the provisions of the investment chapter most relevant to environmental issues, this article points out the most typical types of environmental clauses included in international investment agreements. The investment chapter of the Korea-US FTA has provisions which effectively prevent measures from becoming useless when those measures are legitimate measures relevant to environmental matters. This does not mean that the Korea-US FTA completely solves the conflict between environmental issues and the protection of foreign investment, but still it paves the way for a prudent solution which would hash out this thorny problem.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.44
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• pp.239-255
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• 2009

The purpose of this article is to examine the Utilization of Umbrella Clauses in Investor-State Contract Disputes. To accomplish the purpose, this article analyzes the ICSID case of SGS v. Pakistan and SGS v. Philippines. Umbrella clauses have become a regular feature of international investment agreements and have been included to provide additional protection to investors by covering the contractual obligations in investment agreements between host countries and foreign investors. In particular, two recent ICSID decisions, SGS v. Pakistan and SGS v. Philippines, have brought to the forefront the question of whether the umbrella clause applies to obligations arising under otherwise independent investment contracts between the investor and the host State. In focusing on the SGS decisions, this article will give some useful guidelines to Government and Academia under currently prevailing environment of the Free Trade Agreement("FTA") in Korea.

• Journal of Arbitration Studies
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• v.18 no.2
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• pp.149-171
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• 2008

The purpose of this paper is to examine the Measures against Risks in International Investment Agreement: focusing on Umbrella Clause and MIGA. Umbrella Clauses have become a regular feature of international investment agreements and have been included to provide additional protection to investors by covering the contractual obligations in investment agreements between host countries and foreign investors. The meaning of umbrella clauses is one of the most controversial issues with which international arbitral tribunals have been recently confronted with while adjudicating investment disputes brought before them MIGA issues guarantees against non-commercial risks for investments, such as: currency transfer restrictions, expropriations, war and civil disturbances and breach of contract by host governments, and the case that the investor obtains an arbitration award or judical decision for damages and is unable to enforce it after a specified period. Furthermore, MIGA undertakes a wide range of mediation activities designed to remove obstacles to the flow of foreign direct investment in its developing member countries.

• Journal of Arbitration Studies
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• v.17 no.1
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• pp.3-32
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• 2007

This age is called the age of global trade, and the World Trade Organization is a forerunner in promoting the global free trade through multilateral negotiations as the global level. On the other hand, regional economic cooperation such as North American Free Trade Agreement(NAFTA) is appearing, saying that promotion by WTO takes too much time. As is known to everybody, Europe is on the way of integrating member states through EU not to mention economic cooperation. Even in Asia such tendency is shown through ASEAN, Korea, China and Japan in Northeast Asia share geographical proximity, many common historical experiences, and similar cultural norms and values although they have disparities in stages of development, trade and economic policies, and financial and legal frameworks. Under the situation, efforts have been made between three countries of Korea, China and Japan for the conclusion of investment agreements including FTA. If the conclusion of the FTA between the three countries would be realized, it would promote regional trade and investment, contributing to economic growth in the Northeast Asian region. The writer in this paper reviewed the settlement of private commercial dispute including investment dispute arising from the FTA and investment agreements. The investment dispute is quite different from an ordinary commercial dispute arising from commercial transactions in view of disputing parties, applicable laws and rules, etc. Therefore it is a problem of vital importance that the parties interested in investment under the FTA as well as the relevant investment agreement should understand and cope with the settlement mechanism of investment disputes arising therefrom. The ICSID Convention provides facilities for the conciliation and arbitration of disputes between member countries and investors who qualify as nationals of other member countries. All contracting states of the ICSID Convention are required by the Convention to recognize and enforce the ICSID arbitral awards. The New York Convention(formally called "United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards") is also applicable for the enforcement of arbitral awards to be rendered under the FTA. As to applicable rules, the UNCITRAL Arbitration Rules may be required for the settlement of investment disputes under the FTA. This Rules has adopted by the internationally recognized arbitral organizations although it was developed primarily for use in ad hoc arbitration. The promotion of arbitral cooperation may be realized through agreements between arbitral institutions. Especially under the NAPTA system, a central common system was established to resolve jointly private commercial disputes arising from such free trades by the initiative of arbitral organizations among the member countries. It is called Commercial Arbitration and Mediation Center for the Americas(CAMCA), which may be a good example for the settlement promotion of the private commercial disputes between Korea and other relevant countries.

• The Journal of Asian Finance, Economics and Business
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• v.9 no.2
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• pp.313-324
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• 2022

The Chinese outward foreign direct investment (OFDI) involves various bilateral trade agreements and regional agreements signed between China and other countries. This study examines the impact of Chinese OFDI in ASEAN-5 countries through ASEAN-China Free Trade Agreement (ACFTA) namely Indonesia, Malaysia, Philippines, Singapore, and Thailand from 2000 to 2016. This study attempts to address three research objectives. The first is to examine the motives for China's investment in ASEAN-5. The second is to explore the different impacts of China's investment across countries. The third is to investigate whether the OFDI conducted by state-owned enterprises (SOEs) will produce different impacts on the firm's efficiency score. Using the DEA approach, this study finds evidence that the overall Chinese OFDI is relatively efficient. We find that the estimated efficiency score of this OFDI has improved in pre- and post ACFTA where a higher overall efficiency score was reported when comparing pre- and post ACFTA signing for both SOEs and NSOEs. Finally, China's parent firms' efficiencies showed higher scores among NSOEs compared to SOEs after the signing of ACFTA for all ASEAN countries except Malaysia. We highlight that the country's institutional infrastructure, earlier investment presence, and diplomatic ties help in shaping an effective trade agreement.

• Journal of Arbitration Studies
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• v.22 no.3
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• pp.187-213
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• 2012

The purpose of this article is to examine Fair and Equitable Treatment in International Investment Agreements. Most BITs and other investment treaties provide for FET of foreign investments. Today, this concept is the most frequently invoked standard in investment disputes. It is also the standard with the highest practical relevance: a majority of successful claims pursued in international arbitration are based on a violation of the FET standard. The concept of FET is not new but has appeared in international documents for some time. Some of these documents were nonbinding others entered into force as multilateral or bilateral treaties. Considerable debate has surrounded the question of whether the FET standard merely reflects the internationalminimum standard, as contained in customary international law, or offers an autonomous standard that is additional to general international law. As a matter of textual interpretation, it seems implausible that a treaty would refer to a well-known concept like the "minimum standard of treatment in customary international law" by using the expression "fair and equitable treatment." Broad definitions or descriptions are not the only way to gauge the meaning of an elusive concept such as FET. Another method is to identify typical factual situations to which this principle has been applied. An examination of the practice of tribunals demonstrates that several principles can be identified that are embraced by the standard of fair and equitable treatment. Some of the cases discussed clearly speak to the central roles of transparency, stability, and the investor's legitimate expectations in the current understanding of the FET standard. Other contexts in which the standard has been applied concern compliance with contractual obligations, procedural propriety and due process, action in good faith, and freedom from coercion and harassment. In short, meeting the investor's central legitimate concern of legal consistency, stability, and predictability remains a major, but not the only, ingredient of an investment-friendly climate in which the host state in turn can reasonably expect to attract foreign investment.

• Journal of Arbitration Studies
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• v.22 no.2
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• pp.31-52
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• 2012

Although political uncertainty exists between China and Taiwan, the two countries have been expanding their economic exchange since the 1980s. That economic exchange is not limited to trade, and its investment segment is constantly expanding. The investment was one-sided by Taiwan in the past, but since a change in policy by the Taiwan government in 2009, Chinese capital is able to flow into Taiwan for direct investment. These kinds of policy changes related to investment between the two countries require follow-up actions such as profit protection for investors, elimination of investment limitations, simplification of investment procedures, and establishment of an investment dispute resolution system. The main topic of this study is the resolution mechanism for investment disputes between China and Taiwan. At present, an individual investment dispute between two countries is settled according to each country's own regulations for dispute resolution. However, these two countries have not prepared dispute resolution regulations related to cases of investment disputes between Chinese or Taiwanese investors and the Chinese or Taiwanese government, or between the Chinese government and the Taiwanese government. Moreover, they do not have any agreements related to investment disputes. Therefore, in this paper, I enumerate the regulations related to investment dispute resolution between China and Taiwan, and then I point out the problems and suggest solutions for improvement. Also, through this study, I would like to contribute to establishing and implementing an investment dispute resolution mechanism between South Korea and North Korea.