We are pleased to announce a forthcoming TDM special issue on “Corruption and Arbitration.”.
Edited by Prof. Dr. Richard Kreindler (Shearman & Sterling LLP) and Carolyn B. Lamm (White & Case LLP) this special issue will analyze new trends, developments, and challenges respecting the intersection between on the one hand allegations, suspicions or findings of corruption and on the other hand decisions by arbitral tribunals regarding jurisdiction, admissibility and the merits of commercial and investment disputes.
It has been some 40 years since an acute focus was placed, perhaps for the first time, on how an arbitral tribunal can, should or must conduct itself in the face of suspected or manifest illegality of the parties. The award in ICC Case No. 1110 (1963), rendered by Gunnar Lagergren, cast a sharp focus on issues of arbitration, including competencecompetence and severability of the arbitration agreement, in the face of a suspected or manifestly illegal contract.
Since that time, in the commercial realm various awards, court rulings and commentaries have addressed corruption or bribery in the formation and performance of contracts containing an agreement to arbitrate. Emanating from various jurisdictions and legal cultures, they have displayed as many elements of anecdotalism as of convergence, and by no means given rise to a complete consensus or reconcilability of views.
In parallel, particularly over the last decade, in the investment dispute realm ever more ICSID and other arbitral tribunals have had to grapple with issues of corruption, including ones related to the particular treaty basis for “consent” to arbitrate such disputes. Not surprisingly, here too there has not been a uniformity of approaches although certain trends have indeed begun to emerge.
The evolution in thinking respecting the arbitrator's rights and duties in connection with corruption has been accompanied by a profusion of new or amended bodies of national arbitration legislation and adoption of the UNCITRAL Model Law in whole or part in certain active arbitration locales. In addition, over the last several years a number of states have acceded to multilateral conventions condemning illegal contracts, corruption, bribery of public officials, etc. These accessions have arguably contributed to, or confirmed, the development of certain national and transnational concepts of public policy in abhorrence of corruption. Prominent among such conventions are the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the 1999 Conventions of the Council of Europe, and the 2000 United Nations Convention against Transnational Organized Crime. Most recently, the UK Bribery Act enacted in 2011 comprehensively addressed the issue of bribery overseas by UK and multinational companies.
Against this background, the Special Issue intends to identify, critique and reconcile the different strands where possible and desirable, both from the arbitrator's and the party's perspective. The potential scope of the subject is indeed vast and possible topics for submission might include:
- How can, should or must an arbitral tribunal act in the face of suspected corruption in a contract or an investment underlying the parties' dispute? How should a tribunal act in the face of corruption which is admitted or otherwise manifest?
- Should the nature of the would-be illegality make a difference to the tribunal's assessment of its own jurisdiction? Of the separability of the agreement to arbitrate? Of arbitrability?
- When should the issue of jurisdiction hinge on whether the corrupt act arguably tainted the contract or investment ab initio, as opposed to an illegality arising or becoming apparent only in the course of later performance?
- Given suspected or manifest corruption, which standards of substantive law should apply as to whether and how to proceed respecting jurisdiction, admissibility, separability, arbitrability and the merits of the dispute? How should tribunals address differences in national law respecting the activities of agents, intermediaries and lobbyists? How should they reconcile national law with possibly competing “transnational public policy” or “international public policy”?
- What challenges exist in terms of attribution of corrupt actions or knowledge of such actions to a state party in commercial arbitration, in investment arbitration, including in the context of the 2001 ILA Draft Articles on Responsibility of States?
- How should burden of persuasion, burden of proof and the standard of proof be approached when faced with allegations or suspicions of corruption? What standard or standards should apply when and why? -- Can the rights and duties of the arbitrator to investigate corruption, including on his or her own initiative, be meaningfully identified? What about when such action collides or might collide with investigative efforts already undertaken or which might still be undertaken by national criminal authorities?
- What justifications, excuses and defenses may exist to estop a party from invoking corruption on the part of the other party? What of the “unclean hands” doctrine and similar approaches?
- What should be the legal consequences of a finding of corruption in commercial arbitration, in investment arbitration? When is it a question of jurisdiction, when of admissibility and when of the merits?
- At the enforcement stage, what tensions may exist, where corruption has been alleged or proven, between the (un)enforceability of an arbitral award at the seat and the (un)enforceability of the same award in a foreign court? What limits should apply to de novo review by the foreign reviewing court?
- What tools do arbitrators have, or not have, to investigate allegations of corruption, particularly when third parties may be involved?
This special issue will be edited by:
Prof. Dr. Richard Kreindler, Partner, Shearman & Sterling LLP (View profile)
Carolyn B. Lamm, Partner, White & Case LLP (View profile)
Contact details here.
Publication is expected in January 2013. Proposals for papers should be submitted to the editors by July 31, 2012.
This TDM special issue will certainly also provide an opportunity to share views and position on certain hot current issues concerning the ethics of international arbitration: obligations of disclosure of conflicts of interest by arbitrators, obligations of independence and impartiality of arbitrators... These conflict of interest issues are indeed currently hotly debated within AAA / ICDR and other ADR centers in North America
The common sense view that no Attorney could sit as an arbitrator, let alone as a sole arbitrator, in a case while his law firm keeps counseling and entertaining business relations with one of the parties to the arbitration, without prior disclosure and acceptance by the other parties to the arbitration.
Indeed, everyone has in mind a current high profile case in which an American arbitral institution has been confronted with an egregious conflict of interest involving a huge Canadian law firm. The arbitrator has resigned, but the arbitral institution had refused before his resignation to dismiss him and to challenge the conflicted partial award the Arbitrator had rendered while his major law firm was completing a 600 millions USD deal with one of the parties, the other party being unaware of such a huge transaction.