The purpose of this study is to analyze problems of arbitration in North Korea and provide the solutions for the protection of foreign investors. This paper compares the dispute resolution clause in the laws related to foreign investment and analyzes investment claim cases in order to comprehend the causes why arbitration system is not proper in North Korea. The following problems are found through this study. North Korea is unable to guarantee the impartiality of arbitral institution, the independence of the arbitrator and a member state of International Convention. In addition, it can not resolve the organizational contradiction among the dispute resolution clause in laws. Therefore, to overcome these obstacles, North Korea should improve arbitration system as follows: First, foreign investors are to be granted fair arbitral awards through international arbitration institutions such as AAA, ICC and so on. Second, when signing to Washington Convention, ISDS system may be applied in North Korea. Third, three countries, Korea, China and North Korea, promote a partnership of establishing international arbitration centers for the purpose of investment disputes resolution. Next, North Korea establish joint research organization with other countries to revise investment laws. Finally, after installing online arbitration system, it will improve the investment climate for advancement of legal system.