Originally from The American Review of International Arbitration (ARIA)

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ABSTRACT

Although not a new topic, corruption is gaining greater attention in international arbitration because there is more than ever an awareness of unlawful practices and an increase in the acceptance and use of commercial arbitration involving public entities. This article analyzes the procedural issues that hinder commercial arbitration’s reliability in handling corruption cases, by seeking to define what corruption is and discussing how it intersects with commercial arbitration. The article then explains how the issue of corruption may stimulate discussion on the validity of the arbitration agreement, its confidentiality, the exchange of information with authorities, the duties of arbitration’s stakeholders in that exchange, and thus, also their duty to produce the information. The article concludes by correlating the three issues to show how legal systems rely on arbitration to handle corruption cases effectively, and how, corresponding to that expectation, its efficiency in handling these cases is vital to preserving arbitration’s independence and autonomy and ultimately, its reliability.

I.    INTRODUCTION

The word “corruption” derives from the Latin word “rumpere,” which means to break, breach, or violate. This means that corruption is directly linked to the notion of the violation of rules, laws, or moral values.

However, there is no globally unified definition of corruption.  Relevant international documents on corruption, such as the United Nations Convention Against Corruption (UNCAC), do not provide a uniform definition.

The EU Anti-Corruption Report broadly defines corruption as  “any abuse of power for private gain.”  Corruption has also been defined as an “abuse of a duty owed.”

Although these broad definitions may be considered unclear for certain purposes,  each national law may view different criminal practices as corruption,  which is why, for the purpose of analyzing corruption in the context of international arbitration, these broad definitions will be considered sufficient.

Corruption can be public or private,  and often may involve a combination of both forms, for instance, in circumstances where the owner of private capital provides a public official with an advantage (most often money, or goods, like jewelry or paintings)  in exchange for a favorable public decision and action.  This transaction alone may entail the commission of different crimes, depending on the context and the jurisdiction, such as bribery, trading in influence, embezzlement, misappropriation of funds, and obstruction of justice, among others.

Corruption is, therefore, a capacious umbrella term covering many different actions that may constitute illegal practice.  Emmanuel O. Igbokwe came to the following definition intended to cover the multiple scenarios that can also be used in the context of international arbitration:

Bribery and corruption, as it is understood in this study, is the act of offering, demanding, promising to or receiving of money, anything of value or other undue advantages by a public official or private individual in order for the recipient of the money, thing of value or other undue advantages to actively violate or passively neglect his or her legal and/or moral obligations in order for the offeror of the thing of value to receive a favourable decision either for him- or herself, or for a third party. The act of bribery and corruption also encompasses the direct or indirect offering or solicitation of an undue advantage to exert an improper, real, or supposed influence with a view of obtaining an undue advantage for oneself or any other person or entity. In particular, bribery and corruption is the practice whereby a government official demands or is illegally or immorally offered bribes or illegal and/immoral payments, directly or indirectly, from or by a foreign business entity in return for either the right to operate in a country, a particular industrial sector or a location.