Author

Mr Gustavo Laborde

Principal - Laborde Law

Arbitrator Corruption

II. Distinction

2.

Corruption is to be distinguished from other instances where the arbitrator is not or may not be neutral.2

3.

Plain bias, unprompted by any inducement of personal gain, does not amount to corruption. An arbitrator who is more receptive to the arguments of a party is not corrupt for this reason alone. Nor is an arbitrator necessarily corrupt for holding unauthorised communications with a party.3

4.

A conflict of interests, in the absence of inducement, does not by itself amount to corruption either. A conflict of interests only shows that an arbitrator may prove unable to be neutral by reason of incompatible interests. Unlike corruption, there is no conscious decision to disregard the duty of neutrality.4

III. Personal gain

5.

The notion of personal gain is to be broadly construed. It includes actual and prospective monetary and non-monetary rewards.5

6.

Monetary rewards, such as a bribery payment, are the quintessential example of corruption. Monetary rewards include not just actual payments but also the promise or prospect of future payments.

7.

Non-monetary rewards include any other form of compensation, including the prospect of future arbitral appointments.

IV. Proof of corruption

8.

The corruption of an arbitrator must typically be established as any other fact in an arbitral or court proceedings. However, considering the practical difficulties to prove corruption of an arbitrator, a presumption of corruption may be appropriate in some circumstances.6

V. Presumption of corruption

9.

The proof of certain facts may justifiably give rise to a presumption of corruption. For instance, an unexplained payment to an arbitrator in relation to an arbitration.7

10.

A conflict of interests may also give rise to a presumption when an arbitrator stands to secure a personal gain from the outcome of the case but deliberately fails to disclose this circumstance. For example, the presumption would attach to an arbitrator who knowingly failed to disclose significant business dealings with a party which are likely to be affected by the outcome of the arbitration.8

VI. Effects

11.

Corruption will have different effects depending on the time at which it is unearthed.

12.

If the arbitration proceedings are still ongoing, corruption is likely to have a double effect.

13.

First, it will typically result in the removal of the corrupt arbitrator from the arbitral tribunal.9 In institutional arbitration, a request to remove an arbitrator due to corruption is usually to be brought before the institution administering the case.10 In ad hoc arbitration, this request is generally to be submitted before the appointing authority.11

14.

Second, it may require the repetition of procedural steps that took place before the removal or resignation of the corrupt arbitrator, often at the discretion of the tribunal.12 In the Croatia v. Slovenia arbitration, for instance, the five-member tribunal considered13, but finally decided not to repeat the oral hearings following the resignation of two of the arbitrators after evidence emerged of ex parte communications between one arbitrator and the agent for Slovenia.14

15.

If the award has already been rendered, it may be set aside due to corruption as a matter of national and international law.15 Under the ICSID Convention, corruption is specifically listed as a ground for annulment of the award.16 Whilst corruption is not expressly listed as a ground for annulment in the New York Convention or the UNCITRAL Model Law, under both instruments an award may be set aside or refused recognition and enforcement for being “contrary to the public policy” of the country in question.17

16.

Allegations of arbitration corruption remain rare. In ICSID arbitration, for instance, corruption on the part of a tribunal member has never been invoked or dealt with as a ground for annulment.18 Unusually, in November 2019 a Peruvian judge ordered the pre-trial detention of fourteen arbitrators for allegedly accepting bribes to favour Brazilian company Odebrecht in arbitrations opposing the company against the Peruvian State.19

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