Originally from Alternatives to the High Cost of Litigation

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On Dec. 19, 2016, International Monetary Fund Managing Director Christine Lagarde was convicted of criminal negligence for failing, as French finance minister, to appeal an adverse arbitration award against a French government- owned company. See Landon Thomas Jr., Liz Alderman & Aurelien Breeden, “I.M.F. Stands by Christine Lagarde, Convicted of Negligence,” N.Y. Times B1 (Dec. 20, 016)(available at http://nyti.ms/2h3qySj). She had faced similar charges for agreeing to refer the company’s dispute to arbitration in the first place, but was acquitted.

Lagarde’s criminal prosecution and conviction, as well as other measures governments have taken in recent months, suggest increasing peril for arbitral tribunals and government officials involved in international arbitration, particularly when it involves states or state-affiliated parties.

The conviction, which was reported on the front pages of newspapers around the world, may affect how sovereign governments and government officials respond to arbitration claims and awards made against them in the future.