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Allegations of Corruption in the Underlying Claim: What Remedies are Available to the Arbitral Tribunal? - WAMR 2015 Vol. 9, No. 3
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19689
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Originally from World Arbitration and Mediation Review (WAMR)
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This panel will address the fundamental issue of what arbitrators can and should do when there are allegations – and proof – of corruption in the underlying claim. Specifically, the panelists will discuss and assess available remedies. Questions addressed will include: What duties to report does the tribunal have in case of alleged or suspected corruption? How should a tribunal respond to a pending investigation by domestic courts? What should the tribunal do if corruption is found? Should the case be dismissed? How does the law of State responsibility, succession, and attribution apply in this context? How should a Tribunal consider issues of unjust enrichment and compensation?
PROF. GIORGETTI: Welcome to the second session of this workshop. Our first panel discussed the most important issues of proving corruption, and what kind of evidence is needed and required. We now will address the fundamental question of what kinds of remedies are available to the arbitral tribunal once corruption is proven or is alleged. This is, of course, a fundamental question, in terms of what is the best policy to obtain the specific desired outcome in these kinds of situations. And it also really is a matter of the rule of law and the basic principle of justice.
Several panelists have already mentioned the World Duty Free v. Kenya case, which is probably one of the most famous and outrageous cases of international corruption, where the tribunal found it had no jurisdiction. Kenya had raised the corruption issue as a defense, and the claimant’s director himself had submitted a statement that he had paid a bribe of $2 million to the then President of Kenya, President Moi, and, in return, he received a suitcase of corn, which meant that the investment was agreed upon.
The corruption allegations were upheld by the tribunal, and, indeed, they were outcome-determinative. The tribunal concluded that contracts obtained by corruption cannot be upheld, because they are contrary to UK and Kenyan law, as well as contrary to international and transnational public policy. The claims were thus dismissed in their entirety.
I think we all agree that this is somehow the right outcome for the investor. We do not want to provide a platform when a contract was obtained by corruption, but we mentioned already that corruption is a two-way operation. There is a giver and a taker, and it takes two to tango. And, as Professor Reisman noted at the beginning, the malaise that resulted in looking at Kenya, the tribunal highlighted that Kenya had not instituted proceedings against President Moi, and it found that highly disturbing, but said that the absence of such proceedings did not stop Kenya from raising the issue of corruption. The tribunal also rejected arguments that the corruption of the President was attributable to the State and that personal donations were actually a cultural norm in Kenya and used to secure the bribe from the main contract. The tribunal essentially concluded that what President Moi had done was illegal under local law, but that it did not benefit the State.
CHARLES N. BROWER has been a Judge of the Iran-United States Claims Tribunal for 30 years, has served as Judge ad hoc of the Inter-American Court of Human Rights, and currently serves also as Judge ad hoc of the International Court of Justice. He is also a member of 20 Essex Street Chambers in London. He has served as Acting Legal Adviser to the United States Department of State and as Deputy Special Counsellor to the President of the United States. Judge Brower in 2009 was awarded the American Society of International Law’s Manley O. Hudson Medal for “pre-eminent scholarship and achievement in international law . . . without regard to nationality”; in 2010 received the Stefan A. Riesenfeld Award of the University of California Berkeley School of Law (Boalt Hall) in recognition of “outstanding achievements and contributions in the field of international law”; in 2013 received the American Bar Association’s Section of International Law’s Lifetime Achievement Award; and in 2013 received the Pat Murphy Award of the Institute for Transnational Arbitration of the Center for American and International Law “For Exceptional Civic Contributions and Extraordinary Professional Achievements in International Arbitration.” In October 2014 he became the first inductee into the Legal Media Group Euromoney “Hall of Fame” for “significant contributions to commercial arbitration during his career.” In February 2015 he was honored with a Lifetime Achievement Award from Global Arbitration Review at its awards ceremony held in Washington, DC.
JOHN R. CROOK teaches international arbitration at George Washington University Law School and is a judge on NATO’s Administrative Tribunal. He currently presides or is a tribunal member in several investment disputes, including cases administered by ICSID, the Permanent Court of Arbitration, and conducted ad hoc. He was a Commissioner on the Eritrea-Ethiopia Claims Commission, which successfully addressed extensive claims following the two countries’ 1998-2000 war. Crook served for nearly three decades in the US State Department’s Office of the Legal Adviser, including as US Agent at the Iran-US Claims Tribunal. He was deeply involved in creating the UN Compensation Commission, and appeared several times before the International Court of Justice. From 2000-2004, he was General Counsel of the Multinational Force and Observers, which operates a 1700-soldier peacekeeping force in the Sinai Desert. Crook writes extensively on dispute settlement and is a member of Board of Editors of the American Journal of International Law. He is past vice-president of the American Society of International Law.
PROFESSOR CHIARA GIORGETTI is an Associate Professor of Law at Richmond University School of Law and serves as the Faculty Director of the School of Law's LL.M. Program. She teaches and writes in the areas of international law, international arbitration, and international dispute resolution. Professor Giorgetti has authored over a dozen publications on these topics, including two edited volumes: The Rules, Practice and Jurisprudence of International Courts and Tribunals (Brill 2012) and Litigating International Investment Disputes (Brill, 2014), a third book, Challenges and Recusals of Judges and Arbitrators in International Courts and Tribunals, is forthcoming. Prior to joining the Richmond Law faculty in 2012, Professor Giorgetti practiced international arbitration with White & Case, LLP in Washington, D.C. and with Lalive in Geneva, Switzerland. Professor Giorgetti also worked extensively with the UN in New York and Somalia, served as a consultant for various international organizations and non-governmental organizations and taught advanced international
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