Prof. Dr. Richard H. Kreindler is a Partner of Shearman & Sterling LLP in Frankfurt. He is a member of the New York and Paris Bars. He is an Honorary Professor of Law at the University of Münster, Germany. He is a graduate of Harvard, Munich, Columbia and Münster.
What may be the legal consequences in the investment treaty arbitration context of proven corruption, particularly bribery, on the determination of whether the arbitral tribunal has jurisdiction? Do the proven “unclean hands” of the claimant investor necessarily lead to the absence of jurisdiction or admissibility? Do the proven “unclean hands” of the respondent host State alter the analysis? While every case will of course depend upon the specific circumstances, whether considered as an issue of the merits or as a preliminary pre-merits issue certain general observations can be made.
I. BRIBERY UNDER INTERNATIONAL LAW
In order to address the legal consequences of alleged or proven bribery with respect to jurisdiction in investment treaty arbitrations, one must first ask whether bribery offends international law, as the legal standard applicable, e.g., pursuant to the ICSID Convention or the Energy Charter Treaty (ECT).
There can be little doubt that bribery offends customary international law and general principles of law respectively. Customary law and general principles of law form part of the corpus of international law pursuant to Article 38(1) of the ICJ Statute. This is evidenced by a wide range of international conventions, which condemn and interdict bribery, as well as the national laws of various States. Thus, a number of instruments negotiated, signed, and ratified under the aegis of the Organization for Economic Co-operation and Development (OECD) have the express aim and purpose of prohibiting acts constituting bribery.