By Diplomacy Journal Kayla Lee

The Korea-Bahrain Investment Promotion and Protection Agreement (hereinafter the "Agreement") has entered into force on July 31, 2025, following the completion of the necessary domestic procedures by both countries after its signing on December 26, 2024, in Manama, Bahrain, the Ministry of Foreign Affairs said.

On March 21, 2025, Korea notified Bahrain of the completion of its domestic procedures, after obtaining the National Assembly’s consent to ratification on March 13, 2025. Bahrain notified Korea on July 1, 2025, that it had completed its own domestic procedures.

The Investment Promotion and Protection Agreement is a treaty that sets out regulations on the protection of foreign investments in order to protect and promote such investments in the host country. The Korean government had pursued the conclusion of this Agreement with Bahrain since 2014.

Situated in a geopolitically strategic location and serving as a gateway to the Gulf region, Bahrain is known for its high level of openness and business-friendly environment. Through a differentiated development strategy focusing on non-energy sectors, in contrast to its neighboring countries in the Gulf Cooperation Council (GCC), Bahrain has fostered growth in finance, IT, and manufacturing, and is regarded as a key entry point for Korean businesses seeking to expand into the Middle East.

The main elements of the Agreement are as follows.

First, each Contracting Party shall provide fair and equitable treatment, national treatment, or most-favoured-nation treatment to an investment or investor of the other Contracting Party.

Second, each Contracting Party shall pay prompt, adequate, and effective compensation when it expropriates or nationalizes an investment of the other Contracting Party either directly or indirectly.

Third, each Contracting Party shall guarantee the free transfer of all payments relating to an investment including the initial capital, profits, or proceeds from the liquidation of the investment.

Fourth, an investor who suffers loss or damage concerning an alleged breach of an obligation of the host country may submit the dispute to domestic courts of the host country or international arbitration.
Fifth, a Contracting Party may deny the benefits of this Agreement to an investor of the other Contracting Party that is a juridical person who has no substantial business activities in the territory of that other Contracting Party.

Director Lee Song-joo of the Economic Legal Affairs Division at the Ministry of Foreign Affairs stated: “Considering Korea’s position as an outbound investor in Bahrain and the growing importance of Bahrain as a regional hub, the entry into force of this agreement is significant as it provides legal protection against non-commercial risks, such as arbitrary or discriminatory regulatory measures, for Korean companies and nationals operating in Bahrain.”

As of now, Korea has signed Investment Promotion and Protection Agreements with 101 countries, of which 84 are currently in force. The Korean government remains committed to negotiating and updating agreements to reflect changes in the global investment environment and regulatory norms, in order to protect Korean nationals and businesses overseas.