Originally from Search for Truth in Arbitration: Is Finding the Truth What Dispute Resolution Is About? - ASA Special Series No. 35

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The subject of this contribution brings to mind Tolkien’s Lord of the Rings, in which we read the tale of miner-dwarves who dug too deeply in their quest for mithril and unwittingly unleashed a terrible “daemon from ancient times”, the “Balrog”.2

Our readers may justifiably wonder what this fictional creature has to do with international arbitration. The reason is simple: in their search for the truth (also called fact-finding), international arbitrators sometimes unearth matters trailing behind them an unpleasant, sometimes even sulphurous, aroma. In this sense, and the comparison with dwarves ends here, arbitrators sometimes find themselves in a predicament similar to that of the dwarves who unwittingly awoke a Balrog: what should they do if faced with a monstrosity?

International arbitration is the preferred and usual method of resolution of disputes arising from international commerce. The range of users is thus very broad, so that from a purely statistical perspective, one may assume that parties to international arbitration are more or less representative of mankind as a whole. Without taking an unduly pessimistic view of human nature, and again based on statistical probabilities, this means that arbitrators are likely to face a broad range of human activities, including those of a less than savoury character. Some of these activities may even fall foul of criminal law3 or of other legislation vectoring important public interests. This is all the more true as recent years have seen a marked increase of mandatory national legislation and international instruments that are directly relevant to the international business community. To take only a few examples, the following topics come to mind: the fight against corruption, organised crime, money laundering, cartels and traffic of cultural property, as well as increasingly stringent environmental regulations.4

This contribution is a brief overview of the issues that may arise when arbitrators unearth or suspect that the case referred to them involve violations of this type of regulation.5 We do not presume to offer a full set of ready-to-use principles. Our objective is far more modest and, at the same time, perhaps more ambitious: we shall simply endeavour to ask the right questions. We shall begin with some words on the object of our study: what do we mean by "Balrog"? This done, we shall examine the impactthat the discovery or suspicion of a "Balrog" may have on the arbitral proceedings, on the award and, finally, on the arbitrators themselves.