In September 2017, the Korean Government announced the implementation of a selective 25 percent discount for mobile fees for new subscribers as part of its policies to lower the overall burdens of mobile fees for households. As of August 2017, more than 40 percent of the shares of the three telecommunication companies, SK Telecom, KT and LG Uplus, were held by foreign investors.
Even though the Korean Government's artificial plan to cut mobile fees gained popularity on the political agenda, it might be considered by foreign investors as unfair in light of globally accepted standards and seek some legal measures such as investor-state dispute settlement (ISDS). Hence, domestically popular plans of the Korean Government need to be revisited in terms of global standards and possible legal measures including ISDS.
Under the Korea-US Free Trade Agreement, each state has the right to protect investors from one another due to the investor-state dispute settlement clause. If an American investor faces losses due to the Korean Government's policy measures, the investor can file a claim against the Korean government with the International Centre for Settlement of Investment Disputes (ICSID).
In this context, the three big Korean mobile carriers strongly opposed the Korean Government's plan to cut mobile fees to protect foreign investors. Instead, at their own initiative, they improved their data fee policies to provide more data capacity without a broadband speed limit for their consumers.
Unaffected by investment arbitration for a long time, Korea became the subject of its first investment treaty claim in 2012. Subsequently, related ISDS cases have emerged involving both Korea as a respondent state and Korea as home state of an investor. ISDS plays an important role in the investment determination of most companies investing abroad. On the one hand, if ISDS does not work well, it will discourage investors to invest abroad. On the other hand, the size of ISDS awards may result in the chilling effect of ISDS on public interest regulation such as environmental, public health and transportation policies.
In this context, Korea's international investment agreements need to be discussed.