Republic of Korea v Elliott Associates: jurisdictional preconditions under investment treaties

On 17 July 2025, the Court of Appeal (Civil Division) handed down a significant judgment in Republic of Korea v Elliott Associates, L.P. [2025] EWCA Civ 987, offering authoritative guidance on jurisdictional preconditions in investment treaty arbitration. The ruling provides important clarification on how specific treaty provisions—particularly under the KORUS Free Trade Agreement—limit the scope of arbitration consent, with implications for future investor-state disputes.

Background to the dispute

The case arose from Elliott Associates’ claim that the Republic of Korea had breached its obligations under Chapter 11 of the KORUS FTA. The dispute stemmed from Elliott’s investment in Samsung C&T Corporation and the alleged role of the Korean government in facilitating a controversial merger between Samsung C&T and Cheil Industries in 2015, which Elliott argued unfairly diluted its shareholding.

Elliott initiated arbitration proceedings, contending that Korea had violated the National Treatment and Minimum Standard of Treatment provisions. Korea, however, challenged the tribunal’s jurisdiction, arguing that its conduct did not fall within the scope of "measures adopted or maintained" by a Party as defined in Article 11.1(1) of the KORUS FTA.

Following an unfavourable outcome before the arbitral tribunal, Korea applied to the English courts to set aside the award under section 67 of the Arbitration Act 1996, arguing that the tribunal had no jurisdiction to hear the claim in the first place. The High Court rejected Korea’s application, finding that the tribunal was entitled to interpret its own jurisdiction.

Korea appealed to the Court of Appeal, raising fundamental questions about the interaction between treaty interpretation and arbitration jurisdiction.

The Court of Appeal’s reasoning

In a carefully reasoned judgment delivered by Lord Justice Phillips, the Court allowed Korea’s appeal and remitted the case to the Commercial Court for a full hearing on the jurisdictional challenge. The decision turned on the interpretation of Article 11.1(1) of the KORUS FTA, which the Court found to be a jurisdictional threshold that must be met before a claim can proceed to arbitration.

“The ordinary meaning of the words used in Article 11.1(1) indicates that the treaty offer to arbitrate is limited to claims involving measures adopted or maintained by a Party relating to investors or their investments,” Lord Justice Phillips stated.

Relying on the interpretative principles established in the Vienna Convention on the Law of Treaties (VCLT), the Court emphasised the importance of giving effect to the plain text, context, and object of treaty provisions. The judgment held that the scope of the arbitration offer, under Article 11.16 of the KORUS FTA, was inherently conditioned by Article 11.1(1). As a result, the tribunal lacked jurisdiction unless the alleged conduct met the definition of a "covered measure."

This distinction is not merely procedural but strikes at the heart of state consent. As Phillips LJ noted, “If Article 11.1 is not satisfied, the respondent State has not consented to arbitration of the dispute.”

Implications for investment treaty arbitration

The Court of Appeal’s ruling is of considerable precedential importance. It reaffirms that jurisdictional gateways in investment treaties must be strictly observed and that tribunals cannot assume jurisdiction beyond the limits of state consent. Legal practitioners have described the ruling as a reaffirmation of state sovereignty in the face of increasingly expansive interpretations of investor rights.

A spokesperson from One Essex Court, which acted for Korea, commented: “This is an important decision that confirms the need to respect jurisdictional limits expressed in investment treaties.”

More broadly, the judgment brings English law into alignment with arbitral practice under other treaties, including NAFTA, where tribunals in Methanex v USA and Bayview v Mexico similarly treated preliminary definitions as jurisdictional thresholds. It also signals to future claimants that failure to satisfy treaty conditions at the outset could result in dismissal of their claims before they reach the merits stage.

The Court’s approach is expected to influence other common law jurisdictions that host enforcement or set-aside proceedings, particularly in cases involving treaties with detailed jurisdictional clauses.

What comes next

The case will now return to the Commercial Court, which must assess whether Elliott’s claims genuinely involve a “measure” as defined by Article 11.1(1) of the KORUS FTA. That hearing will determine whether the arbitration can proceed at all.

If the court finds that the condition was not met, the tribunal’s jurisdiction will be nullified, and the arbitral award set aside.

This judgment underscores the increasing scrutiny applied by national courts to investor-state arbitration and highlights the delicate balance between protecting investor rights and respecting the jurisdictional boundaries established by treaty language.