This study aims to identify the reason Korean construction companies are increasingly making inroads into emerging countries, to review major risks that Korean companies could face in these markets and to make suggestions for managing those risks.
   In the second chapter, the study examines the changing conditions for the foreign market entry of Korean construction companies. The recent fall in oil prices has caused the financial aggravation of major oil producing countries in which Korean construction companies are concentrated in, leading to a cease in new construction orders or payment delays on completed construction projects. Furthermore, major oil producing countries are increasing their share of PPP (public?private partnership) investment projects in the place of government-funded construction projects, due to the recent decline in government revenues caused by lower oil prices. It seems inevitable that Korean companies, which mostly obtained orders through contracts with foreign companies, will have to expand their share of investment development projects. In
this case, the risks they must consider are likely to jump dramatically compared to EPC (engineering, procurement, and construction management) contracts. Such changes brought about by low oil prices and the consequent higher risks will be unavoidable, especially since Korean companies are seeking more aggressive entry into the construction markets of emerging countries in line with the shrinking Europe and U.S. market shares in the world construction market, and the growing share of emerging countries in Asia, the Middle East and Latin America in the wake of the 2008 financial crisis.
   Amid this changing climate, the study reviews the various risks presented by emerging countries in the third chapter. In emerging countries, certain domestic laws differ from global standards, and the rule of power often holds dominance over the rule of law. Governments are quick to overturn their policies. Such risk can be classified as country risk, which can be handled in various ways. The ISDS (Investor State Dispute Settlement) system is the most effective and powerful tool that can be used, compared with domestic courts, the WTO dispute settlement system, and the international commercial arbitration system. This is because investors have a choice of their own arbitrators with knowledge in the construction industry, can stand on their own, and can argue against the host country’s measures directly. In fact, most of the ISDS is concentrated on emerging countries and construction industries in the broad sense. With 152 countries parties to the convention and equipped with a powerful self-contained implementation system, the ICSID(International Centre for Settlement of Investment Disputes) has handled more than 75% of all ISDS cases.
   In the fourth chapter, this study analyzes leading cases which contain legal issues directly related to country risk. In Chevron vs Ecuador, denial of justice can be more easily handled if there are relevant articles in the BIT (Bilateral Investment Treaties). The arbitrators viewed the BIT articles as special laws to international customary law. In Saipem vs Bangladesh, international commercial arbitration can be turned into a cause of ISDS, if the ward of the international commercial arbitration is annulled by the host country without legal grounds. In Quiborax vs Bolivia, even nationalization or expropriation with public purposes can be illegal if the public purposes are disguised. In Fraport vs Phillippines, it was confirmed that the investor can be protected by provisional measures if the host country commences groundless criminal procedures. With these findings, this study makes a number of proposals for both Korean oversea construction companies and the government. As for companies, more attention must be paid when drawing up contracts, for the place of arbitration is crucial in the case of annulments. Construction companies should also prepare in advance for disputes, by collecting evidence and setting up action plans. As for the government, it is important to provide companies with the lessons of the ISDS awards in a timely manner. Given their limited resources, special attention has to be paid to SMEs. The government should also update existing BITs, as up-to-date BIT articles are the key to winning ISDS cases.