CA-2024-002080 - [2025] EWCA Civ 905

For the above reasons I would allow the appeal. As anticipated by the Judge, this would entail that Korea’s application under section 67 of the 1996 Act be referred back to the Commercial Court for determination on its merits, by the Judge if he is available.

I agree. The sole issue on this appeal is the correct interpretation of Chapter 11 of the KORUS FTA, and specifically whether Article 11.1(1) imposes conditions on the offer to arbitrate in Article 11.16. There is no dispute that, if it does, section 67 of the 1996 Act is engaged.

The principles to be applied in interpreting a treaty are well established. As the Judge explained, they are set out in Articles 31 and 32 of the VCLT. Those provisions have been considered by courts in this jurisdiction on numerous occasions, including most recently by this court in Czech Republic v Diag Human and Stava [2025] EWCA Civ 588 (in the context of a bilateral investment treaty) and in VietJet Aviation v FW Aviation [2025] EWCA Civ 783 (in the context of a double tax treaty). It is not necessary to review them again. However, it is worth reiterating that the required focus is on the “ordinary meaning” of the words used, interpreted in their context and in the light of the object and purpose of the treaty.

The ordinary meaning of the words “This Chapter” in Article 11.1(1) are clear. For the reasons given by Phillips LJ, that their effect is indeed to make the offer to arbitrate in Article 11.16 subject to the provisions of Article 11.1(1) is supported both by the context (including other provisions in Section A of Chapter 11) and by considerations of object and purpose. In particular, I would emphasise that it is only in Article 11.1(1) that a restriction can be found confining the offer to arbitrate to investments made in the territory of one of the States.

Further, I do not attach the same significance as the Judge to the fact that Article 11.16 also extends to breaches of investment authorizations and agreements. The proviso in Article 11.16(1) in any event places limits on what sorts of disputes under an investment agreement are subject to the offer to arbitrate, so the risk of disputes under investment authorizations and agreements being determined in different fora exists irrespective of whether Article 11.1(1) also applies. The application of Article 11.1(1) is simply a further qualification. And while it may be that determining whether Article 11.1(1) applies involves issues that might be regarded as ones that are integrated with the merits of the dispute, that will be fact-dependent and cannot of itself determine the correct interpretation of the Treaty.

I agree with both judgments.