“Scope-and-Coverage as a Jurisdictional Gateway” – The New Rule from Republic of Korea v Elliott Associates LP [2025] EWCA Civ 905

1. Introduction

The England and Wales Court of Appeal has delivered a landmark ruling that reshapes how English courts treat jurisdictional challenges to investor-State awards. In Republic of Korea v Elliott Associates LP the Court held that the “Scope and Coverage” clause (Art 11.1(1)) in Chapter 11 of the KORUS Free Trade Agreement (KORUS FTA) is not merely a substantive qualification of treaty protections but a jurisdictional gateway. Accordingly, whether the impugned State conduct amounts to a “measure … relating to investors or their covered investments” is a question that can be re-argued de novo in an English s.67 Arbitration Act 1996 application.

The judgment overrules the High Court decision of Foxton J, parts company with the Singapore International Commercial Court’s reasoning in Korea v Mason Capital LP and aligns English law with a long line of NAFTA and investment-treaty tribunals (e.g. Methanex, Bayview, Grand River).

2. Case Background

Parties: Republic of Korea (appellant) and Elliott Associates, LP (respondent, US hedge fund).
Underlying Dispute: Elliott alleged that high-level Korean officials pressured the National Pension Service to vote in favour of the 2015 Samsung C&T/Cheil merger, harming Elliott’s shareholding and breaching KORUS Art 11 protections (National Treatment & Minimum Standard of Treatment).
Arbitral Proceedings: UNCITRAL tribunal seated in London found jurisdiction, upheld Elliott’s claims and awarded c.US$48 m.
Korea’s Court Challenge: Sought to set aside the award under Arbitration Act 1996 s.67 (excess of substantive jurisdiction), arguing that Elliott’s claim did not meet Art 11.1(1)’s requirements.
High Court (Foxton J): Dismissed the challenge, treating Art 11.1(1) as non-jurisdictional.
Appeal: Court of Appeal (Phillips LJ, Falk LJ, Bean LJ) reversed, allowing Korea’s appeal.

3. Summary of the Judgment

The Court of Appeal holds that:

Article 11.1(1) applies to the whole of Chapter 11, including Section B’s offer to arbitrate (Art 11.16/17).
Compliance with Art 11.1(1) is therefore a condition precedent to State consent; failure goes to the tribunal’s substantive jurisdiction.
The High Court erred by invoking English “national policy” and domestic categorisation principles when construing an international treaty.
Interpretation must follow Vienna Convention on the Law of Treaties (VCLT) Arts 31-32; under that approach “This Chapter” means exactly that.
Consequently, Korea’s s.67 challenge is remitted to the Commercial Court for a fresh merits determination.

4. Analysis

4.1 Precedents Cited and Their Influence

Methanex v USA (NAFTA, 2002 & 2005) – described Article 1101 as the “gateway” to Chapter 11 jurisdiction; crucial in showing international consensus.
Bayview Irrigation District v Mexico (ICSID AF, 2007) – confirmed 1101’s dual function (substantive & jurisdictional).
Canadian Cattlemen, Grand River, Apotex – successive NAFTA awards reaffirming the gateway model.
Domestic authority: Swissbourgh v Lesotho (SGCA) and Diag Human v Czech Republic (EWCA 2025) – neutrality in treaty interpretation and limits of s.67.
Mason Capital LP v Korea (UNCITRAL, 2024) and SICC decision 2025 – presented an opposing view, ultimately rejected.

4.2 Court’s Legal Reasoning

Textual Analysis: “This Chapter” in Art 11.1 appears multiple times; none are qualified to “This Section”. Reading “Chapter” as “Section” in the first occurrence but not the others is linguistically untenable.
Contextual Elements:
- Art 11.11 (Denial of Benefits) and Art 11.14 (Subrogation) both regulate rights “under this Chapter” and plainly limit access to arbitration – evidencing interaction between Sections A and B.
- Art 11.2(3) excludes Financial Services measures from Chapter 11 entirely; that exclusion must reach the dispute-settlement mechanism.
Object & Purpose: The treaty aimed to create a coherent investor-protection regime; limiting arbitration to matters actually covered preserves the bargain.
Rejection of “National Policy” Lens: Domestic inconvenience of a de novo hearing cannot alter the treaty’s meaning.
Alignment with International Practice: Uniform ITA awards and subsequent diplomatic notes from both States support the gateway interpretation.

4.3 Impact on Future Cases & the Law

Arbitration Act 1996 s.67 Challenges: Parties can now invoke “scope-and-coverage” clauses in investment treaties as jurisdictional objections subject to full rehearing in England.
Treaty Drafting: States may draft “scope” clauses more precisely or segregate them if they intend them to be non-jurisdictional.
Forum Competition: Divergence with SICC (unless overturned on appeal) could lead to strategic seat selection; parties favouring less intense judicial review may avoid London.
Precedential Value: The decision will guide interpretation of other FTAs/BITs using similar wording (“this Chapter applies to…”).
Convergence with ITA Practice: Strengthens comity between English courts and investment tribunals by recognising the same jurisdictional architecture.

5. Complex Concepts Simplified

Section 67 Arbitration Act 1996: Allows a party to ask an English court to overturn an arbitral award if the tribunal lacked power to decide (e.g., no valid consent).
Substantive vs. Procedural Provisions: “Substantive” clauses grant rights/obligations (e.g., fair treatment); “procedural” clauses explain how disputes are resolved (e.g., arbitration agreement).
Scope-and-Coverage Clause: A treaty article (often first) that defines what actions or measures are covered by the chapter.
Jurisdictional Gateway: A legal threshold that must be crossed before a tribunal/court can hear the merits – if unmet, there is no valid arbitration.
Vienna Convention on the Law of Treaties (VCLT): The global rulebook for interpreting treaties; prioritises ordinary meaning, context, and purpose (Art 31), with supplementary aids only if necessary (Art 32).

6. Conclusion

The Court of Appeal has set a clear precedent: where an investment treaty states that an entire chapter “applies to” certain measures, that provision forms part of the State’s offer to arbitrate. Compliance with the clause is a jurisdictional condition, justiciable under s.67. This ruling brings English courts into line with established investment-arbitration jurisprudence, reinforces textual fidelity in treaty interpretation, and signals to investors and States that London will scrutinise arbitral jurisdiction with rigour but according to international, not domestic, principles.