Ansung Housing v. China, the time-barred analysis

Article 9(7) of the China-Korea BIT bears repeating:

Notwithstanding the provisions of paragraph 3 of this Article, an investor may not make a claim pursuant to paragraph 3 of this Article if more than 3 years have elapsed from the date on which the investor first acquired, or should have first acquired, the knowledge that the investor had incurred loss or damage.

1) Dies a Quo

According to Ansung, it could ascertain its loss or damage under Article 9(7) “only after its expectation was completely frustrated”. Nevertheless, the tribunal states the Spence v. Costa Rica that “the limitation clause does not require full or precise knowledge of the loss or damage….such knowledge is triggered by the first appreciation that loss or damage will be (or has been) incurred. It neither requires nor permits a claimant to wait and see the full extent of the loss or damage that will or may result.”

The Claimant’s further argument is that a continuing omission by a host State is recognized as a breach, for example in Pac Rim v. El Salvador, and that damages for such a continuing breach may be measured from different times after the first incident of that omission. However, even assuming Ansung might wish to claim damages from a date later than the first knowledge of China’s continuing omission – that could not change the date on which Ansung first knew it had incurred damage, the tribunal confirms.

2) Dies ad Quem

Turning to the dies ad quem for the applicable three-year limitation period, the Tribunal finds that, the end date is the date on which an investor deposits its request for arbitration with ICSID. Article 9(7) instructs that an investor “may not make a claim pursuant to paragraph 3 of this Article” more than three years after the dies a quo. Paragraph 3 of Article 9, in turn, instructs that “the dispute shall be submitted, at the option of the investor, to [as relevant here] ICSID.”

Claimant points out that Article 9(5) of the Treaty requires an investor to take the preliminary step of giving the Contracting Party a written notice of intent. However, Article 9(5) notice of intent is not “submitted…to ICSID,” as required by Article 9(3). The tribunal also stated that the date on which ICSID registers the request for arbitration is, by definition, subsequent to the date the dispute is “submitted…to ICSID.”

Consequently, Ansung submitted its claim after more than three years had elapsed from the date on which Ansung first acquired knowledge of loss or damage. The claim is time-barred and, as such, is manifestly without legal merit.

3) MFN Treatment

Ansung’s alternative defense is that, because China has entered into other bilateral investment treaties with third States that do not prescribe a temporal limitation for an investor initiating an arbitration claim against the host State, Ansung is entitled to invoke the MFN Clause in Article 3(3) of the China-Korea BIT to disregard the three-year limitation period in Article 9(7) of the Treaty.

The Tribunal’s conclusion in relation to the MFN Clause in Article 3(3) of the China-Korea BIT also becomes clear by reference to Article 3(5) of the Treaty. This Article offers specific MFN protection in relation to an investor’s “access to courts of justice and administrative tribunals and authorities.” In marked contrast to those domestic avenues, such express reference to international dispute resolution is conspicuously absent in the MFN Clause in Article 3(3).

For the reasons set forth above, the Tribunal dismisses with prejudice all claims made by Claimant.