Arbitral Authority to Address Corruption - Part A

The first tribunals confronted by cases involving corrupt acts were concerned about their taint bringing into disrepute the process of arbitration. A whiff of scandal thus served as a basis for dismissal. Tribunals in later cases have shown a more nuanced approach but often with apprehension about potential suggestions that arbitration could be viewed as helping one party to the corruption profit from, or profit notwithstanding, his bad behaviour. Several recent investment arbitration cases have thrown the problem into sharp relief. Dismissals have rested on several grounds. One approach has been to rely on the language of the investment treaty in question to support dismissal for lack of jurisdiction because a corruptly obtained investment is usually not lawful and thus cannot satisfy treaty requirements that investments be made “in accordance with host state laws.” Another grounding for dismissal of the claim has been the investor’s lack of “clean hands.” Another reason given has been the strong international public policy against corruption as exemplified by the multiple international conventions fighting it and the general international consensus about its insidiously damaging nature. I suggest that none of these bases is a valid ground for depriving a tribunal of the power to hear a case that otherwise falls within its purview. Rather, arbitral tribunals have the inherent authority to ensure that the quasi-adjudicatory process of arbitration is not subverted by allegations of corruption that might or might not prove spurious, but whose early dismissal will tend to hide the problem and potentially exacerbate it. Indeed, suggesting that the international public policy against corruption requires dismissal of a case defies logic, and application of the law of state responsibility requires holding state acts accountable for the acts attributable to the state, which would often (though not always) be the case.

Andrea K. Bjorklund is a Full Professor and the L. Yves Fortier Chair in International Arbitration and International Commercial Law at McGill University Faculty of Law. For Hilary Term 2018 she is a Plumer Fellow at St. Anne’s College and a Visiting Fellow in the Faculty of Law at the University of Oxford. In 2017 she was named one of McGill’s Norton Rose Scholars in International Arbitration and International Commercial Law. In addition to serving as an adviser to the American Law Institute’s project on restating the U.S. law of international commercial arbitration, she is a member of the Advisory Board of the Investment Treaty Forum of the British Institute for International and Comparative Law. She is on the panel of arbitrators of the AAA’s International Centre for Dispute Resolution and on the roster of NAFTA Chapter 19 arbitrators. Professor Bjorklund has a J.D. from Yale Law School, an M.A. in French Studies from New York University, and a B.A. (with High Honors) in History and French from the University of Nebraska.