Originally from World Arbitration And Mediation Review (WAMR)

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TRIBUNAL FINDS THAT CONTRACTS

ARISING OUT OF BRIBESWILL BE
DEEMED VOID AB INITIO AND
UNENFORCEABLE TO EQUITABLE OR
LEGAL PROTECTION:WORLD DUTY FREE
COMPANY V. THE REPUBLIC OF KENYA1

Claimant, World Duty Free, entered into a contract with respondent,
Republic of Kenya (Kenya), to construct, maintain, and operate two dutyfree
complexes at two airports within the territorial boundaries of Kenya. In
order to obtain this contract, the claimant was compelled to make a
“personal contribution” of (U.S.) $2,000,000 to the then President of Kenya.

A central element of the proceedings involved the classification of this
payment. World Duty Free (WDF) alleged that, although it felt like a bribe,
it believed the payment formed part of the Kenyan system of “Harambee,”
in which a payment of this sort is both acceptable and customary. Kenya
argued that the payment fell outside the parameters of the Harambee system
and, instead, constituted a bribe. Kenya further claimed that, because bribes
were unacceptable at the international and domestic levels, any contract
arising out of a bribe is void ab initio. Thus, because the Claimant’s request
for damages was based on a void contract, it should be dismissed.

The Tribunal canvassed international, English, and Kenyan law to arrive
at a near unanimous position, repudiating any form of bribery in
transactions. Having established that bribery was unacceptable, the Tribunal
went on to render the contract void and denied WDF’s requests to be
granted relief for Kenya’s breach of contract.