Bribery in Investor-State Arbitration: All or Nothing for Investors? - Part 5, Chapter 44 - Practice of International Litigation - 2nd Edition
Lawrence W. Newman
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Lawrence W. Newman has been a Partner in the New York office of Baker & McKenzie since 1971, when, together with the late Professor Henry deVries, he founded the litigation department in that office. He is the author/editor of four works on international litigation/arbitration.
Michael Burrows, Formerly, Of Counsel, Baker & McKenzie, New York.
Business investors who put money into foreign countries face certain risks, which can be mitigated in part by bilateral investment treaties (BITs) and free trade agreements such as the North American Free Trade Agreement (NAFTA). These agreements permit investors to seek relief from expropriation and similar actions by a host state that causes them losses. Unfortunately, corruption among governmental officials in many countries is much too common and contracts sometimes turn out to have been obtained through bribery of those officials.
The consequences of the presentation of convincing evidence that a contract was obtained through illegality can be dramatic. Because bribery and similar corruption are contrary to the laws of just about every jurisdiction in the world and also violate international public policy norms, contracts obtained by such means are generally treated as unenforceable. We discuss below the consequences and implications of such unenforceability.