U.S. Investors Demand Investigation of South Korea Over Coupang’s Data Breach Response

TLDR

• Two U.S. investors filed arbitration claims against South Korea under the U.S.-Korea Free Trade Agreement (KORUS).
• The investors allege South Korea’s actions towards Coupang following a data breach were discriminatory.
• The investors have requested the U.S. Trade Representative (USTR) to investigate and potentially impose sanctions.
• South Korea denies any discriminatory actions and stresses that the issue is not related to trade.
• The USTR has up to 45 days to decide on a formal investigation, potentially leading to tariffs and countermeasures.

Two major U.S. investors in Coupang Inc. have petitioned the U.S. government to investigate South Korea’s actions toward the e-commerce company. The investors, Greenoaks and Altimeter, claim the South Korean government’s response to a recent data breach was discriminatory.

Investors Request U.S. Government Action

The investors allege that the South Korean government has unfairly targeted Coupang following a data breach that affected 33 million customers. They argue that the government’s actions, which include financial and customs investigations, go beyond typical regulatory enforcement.

“Our main concern is the scale and speed of the government’s response,” said Marney Chee, a partner at Covington, representing Greenoaks. The investors have formally asked the U.S. Trade Representative (USTR) to investigate South Korea’s actions.

They seek trade remedies, including potential tariffs and sanctions, over what they view as discriminatory conduct. This could escalate the matter into a trade dispute between the two countries, possibly invoking U.S. trade law and the KORUS treaty.

South Korea Denies Discriminatory Actions

South Korean President Lee Jae Myung responded to the allegations, stating that the country will address the issue fairly in accordance with the law. He emphasized South Korea’s sovereignty and rejected the idea that the government was targeting Coupang. “The data leaks and the company’s response should be separated from trade issues,” said Yeo Han-koo, South Korea’s Trade Minister.

Despite South Korea’s position, the investors argue that the government’s actions have severely impacted Coupang’s business. Since the data breach disclosure in November, Coupang’s New York-listed shares have fallen by 27%. The investors are pushing for a resolution to restore fair and predictable business conditions for U.S. companies in South Korea.

The formal notice sent under KORUS has triggered a 90-day consultation period before arbitration proceedings can begin. Meanwhile, the USTR has up to 45 days to decide whether to investigate South Korea’s actions formally. If the investigation proceeds, it could lead to public comments, hearings, and potential U.S. countermeasures, including tariffs on South Korean products.

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