Commercial Court holds that a controlling shareholding can provide standing to claim as an investor under a BIT

United Kingdom

In The Republic of Korea v Dayyani & Ors [2019] EWHC 3850 (Comm), the Commercial Court dismissed a jurisdictional challenge to an arbitral award. The court had to analyse whether the respondents could be considered “investors” for the purposes of the applicable bilateral investment treaty (BIT). It held that there was no requirement that the “investor” needed to own or have a direct legal interest in the property or asset that constituted the “investment”.


The respondents (the “Dayyanis”) were Iranian citizens, They owned an Iranian company which was the final preferred bidder for Daewoo, a Korean company majority-owned by the Korean government. Because of UN sanctions against Iran, the Dayyanis incorporated a separate company in Singapore for the sole purpose of completing the transaction. The Singaporean company entered into a share purchase agreement (SPA) for the acquisition, paying a US$50m deposit which could be forfeited under certain circumstances. After failed negotiations, Daewoo asserted that the SPA had been terminated and the deposit forfeited.

The Dayyanis commenced arbitration proceedings against the Republic of Korea pursuant to the Iran-Korea BIT. Amongst other findings, the arbitral tribunal held that it had jurisdiction because the Dayyanis were Iranian citizens who qualified as “investors” under the BIT. The Republic of Korea challenged this decision before the English court, arguing that the true investor was the Singaporean company as the actual party to the SPA, and therefore the Iran-Korea BIT did not apply.


The Commercial Court dismissed the challenge and decided that under the applicable BIT, shareholders who exercise control over a company can be classified as investors in the company’s assets. The fact that the investments were held directly by the Singaporean company, and only indirectly by the Dayyanis, did not constitute a jurisdictional bar to their claim in these circumstances.


This decision illustrates the English courts’ willingness to adopt a broad interpretation of bilateral investment treaties as well as their traditional supportive approach to arbitration. When entering into a cross-border transaction, parties should consider the possibility that a counterparty’s ownership, and not just its domicile, may be relevant to the scope of available investment treaty claims.

The authors would like to acknowledge the assistance of Carolina Roque, intern at CMS London, in preparing this article.