Corruption And International Energy Arbitration - Chapter 18 - Leading Practitioners’ Guide to International Oil & Gas Arbitration

Author(s):

Gordon E. Kaiser

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56 pages

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August, 2015

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Originally from The Leading Practitioners' Guide to International Oil & Gas Arbitration

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I. INTRODUCTION

Arbitrations involving bribery claims are now common and the

number is increasing. There are two reasons. The number of

international arbitrations is increasing whether under BITs and

ICSID rules or under multilateral treaties such as NAFTA or the

Energy Charter Treaty. The biggest factor is a tremendous increase in

the number of investigations being carried out around the world

under domestic antibribery statutes. These investigations are

disclosed well before charges are laid. Many of the companies

involved are publicly listed and securities laws require disclosure.

Often governments in different jurisdictions cooperate. All of this

produces new challenges for arbitrators.

One by-product of these investigations is that much more

information on bribery investigations is now on the public record. Of

all industries, the energy sector, in which corporations are seeking

concessions from different governments to develop new projects, is

the most vulnerable. And virtually all international energy contracts

have arbitration clauses. The escalating number of arbitrations with

bribery claims raises new concerns with respect to the burden of proof,

the production of documents, parallel investigations, acceptance of

counterclaims, amicus briefs, and a host of other issues.

The conclusion to this chapter offers a word of caution based on

recent decisions. Those decisions demonstrate just how creative

claimants and respondents can be in throwing shreds of bribery

evidence from the public record into an arbitration and sending the

panel off on a fishing expedition. Given the prevalence of this tactic

it is important that arbitrators exercise care and develop procedures

to ensure that arbitrations are not sidelined with needless delay and

expense.

The legislative initiative with respect to bribery began in the

United States when the Foreign Corrupt Practices Act (FCPA) was

enacted in 1977.1 Serious enforcement activities only began five years

ago, but the U.S. Department of Justice (DOJ) and the Securities and

Exchange Commission (SEC) have certainly made up for lost time. A

more modest version of the U.S. legislation came in the form of

the Canadian antibribery legislation in 1998.2 However, in 2011 the

United Kingdom (U.K.) Bribery Act arrived on the scene with

extensive extraterritorial reach.3 Even more jurisdictions are now

implementing antibribery legislation. The Mexican Senate approved

an Anticorruption Commission in December 2013, and Brazil

introduced an anticorruption law in January 2014. Ireland will enact

antibribery laws in 2015.

In the US, serious fines are now standard—$800 million in total

fines in 2008, $600 million in 2009, $1.8 billion in 2010, $500 million

in 2011, $260 million in 2012 and $1.5 billion in 2014, twice the 2013

amount.