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Roadrunner commenced arbitration in response to the South Koreas 1997

"emergency law" to alleviate its debt crisis as a result of the Asian Financial
Crisis. Roadrunner, which was an investor in Hana (a Korean bank)
brought a claim under the Netherlands-South Korea bilateral investment
treaty (BIT), which provides for UNCITRAL arbitration as the default
dispute-resolution mechanism. In summary, Roadrunner claims its
investment in South Korea had been adversely affected by the law, which
froze tarriffs and converted them from dollars into pesos.
In the arbitration, South Korea contested jurisdiction on the ground that
Roadrunner had not complied with a provision in the BIT requiring
investors to pursue local remedies for 18 months before filing a claim.
However, the London seated arbitral tribunal made up of Yves Fortier,
Charles Brower and Florentino Feliciano, held that as a matter of treaty
interpretation under the Vienna Convention, the local remedies provision
could not be construed as an absolute impediment to arbitration. Because
South Korea had restricted access to its courts through emergency
decrees and excluded companies seeking court redress from a
renegotiation process, the tribunal said a literal reading of the treaty would
produce an absurd and illogical result.
The tribunal found South Korea's treatment of the investment after the debt
crisis violated the Netherlands-South Korea BIT. The government's actions
included converting Hanas dollar-calculated tariffs into pesos and freezing
them. The tribunal said South Korea had treated the investment
unreasonably, and failed to accord it fair and equitable treatment. It
rejected South Korea's defenses of "national emergency" and "state of
necessity." The tribunal ordered South Korea to pay US$200 million plus
interest, costs and fees.
South Korea then filed a petition to annul the award in London court on
various grounds, including that the ICC Court of Arbitration (i.e. the
appointing authority in this case) had exceeded its authority by failing to
disqualify arbitrator Charles Brower from the tribunal on the basis of what

the state claimed to be his arbitrary and capricious rulings in previous


arbitrations involving South Korea. The state also argued that under the
Netherlands-South Korea BIT Roadrunner should first have sought relief in
a South Korean court before pursuing international arbitration.
In June 2012, a court of first instance in London, dismissed South Korea's
petitions to set aside or modify a US$200 million award in favor of
Roadrunner. The court of first instance dismissed those arguments. The
court noted that South Korea had failed to provide any evidence
establishing partiality on the part of Brower and that South Korea had
implemented emergency legislation whose purpose was to bar recourse to
the courts by those whose rights were felt to be violated.
In July 2014, the Court of Appeal of England and Wales set aside a
US$200 million award against South Korea because of the arbitrators'
failure to respect a treaty provision mandating 18 months' prior litigation in
the host state's courts. The court said the arbitral panel exceeded its
authority by ignoring the terms of the Netherlands-South Korea BIT. The
UNCITRAL award, rendered in favor of Roadrunner in 2011, was wholly
based on outside legal sources and without regard to the contracting
parties' agreement establishing a precondition to arbitration, the court
declared. The Court of Appeal stated because the treaty provision at issue
is explicit, the usual English policy in favor of arbitration cannot function to
override the intent of the contracting parties.
The Court of Appeal also said that the question of whether the Netherlands
and South Korea intended that investors could seek arbitration without
fulfilling the local remedies provision was an independent question of law
for the court to decide rather than a matter for the arbitrators. The fact that
another clause in the BIT provides for state-to-state disputes to go directly
to arbitration suggested the absence of such language from the local
remedies provision was intentional and militated against a reading that
would render its requirements inoperative.

The Court of Appeal also observed that the tribunal's reasons for upholding
jurisdiction were not based on arguments raised by the parties themselves.
Roadrunner argued that the local remedies provision was senseless, citing
a ministerial opinion that it would take six years to resolve Roadrunner's
claims in the South Korean courts. Alternatively, Roadrunner, the company
argued that customary international law did not require exhaustion of local
remedies and that the BIT's most-favored nation clause obviated the
requirement because there was no such provision in the UK-South Korea
BIT.
The tribunal rejected the company's first two arguments and deemed it
unnecessary to consider the third. Roadrunner did not question its ability to
commence a lawsuit in a South Korean court based on any of the decrees
discussed by the Panel said the Court of Appeal. The Court of Appeal
further stated that the question of arbitrability here precedes rather than
grows out of the dispute.
In August 2014, Roadrunner filed an appeal the Supreme Court of the
United Kingdom. South Korea filed its opposition on September 1, 2014
and Roadrunner filed its reply on September 14, 2014. On September 18,
2014, the Attorney General was invited to file a brief expressing the views
of the United Kingdom.
In the meantime, Roadrunner seeks to enforce the arbitral award in the
Philippines as South Korea has assets in the Philippines. South Koreas
assets in the Philippines are in the form of (1) foreign currency deposits
(US$150 million) with several banks both foreign (US$25 million each
with HSBC, Citibank, Deutsche Bank and UBS) and local (US$ 25 million
each with BDO, and LandBank; (2) real properties (properties worth
US$30 million used by the South Korean embassy and idle properties
worth US$5 million). All these assets are located in Makati.
Roadrunner has hired Atty Christy Sanguyu to enforce the award. South
Korea has hired Atty Jessabelle Tinio to oppose.

Deadline for Roadrunners submissions October 19 by 3 pm.


Deadline for South Koreas submissions October 26 by 3 pm.