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First Page

195

Last Page

224

Document Type

Article

Abstract

The widespread growth of corruption in international business transactions has created a crisis of legitimacy for international arbitration. Because international contracts regularly provide for resolution of disputes by arbitration, the deep-rooted presence of fraud, bribery, money laundering and other illicit activity raises challenges to arbitrators about their proper role in resolving disputes tainted by corruption. In cases of corruption, parties may refrain from presenting facts and evidence that reveal their deceptive practices. Arbitrators need to be more interventionist in these kinds of cases than they have been in traditional arbitration practice. Following the Introduction in Part I, Part II of this Article provides a background on corruption in international arbitration cases. Part III focuses on a flawed arbitration where a court overturned an $11 billion award against Nigeria, finding the traditional arbitration process seriously out of step with the need for arbitration to serve as a bulwark against corruption. The Court found instead that “the arbitration was a shell that got nowhere near the truth.” Arbitrators have sometimes hesitated to intervene beyond issues put to them by the parties for fear of exceeding their mandate or of appearing to lack impartiality. But there is an enormous need for them to confront corruption head on. Part IV deals with practical steps that international arbitrators can and should take to ensure arbitral legitimacy in resolving disputes infected by corruption. Arbitrators should not be reluctant to raise issues sua sponte, and seek additional documents and facts when parties are not forthcoming. If counsel for one side responds incompetently, arbitrators need to actively pursue more information that may bring forward the underlying facts. They should not impose a high standard of proof because this could create an unreasonable burden given that the parties involved in corruption cases will most likely attempt to conceal pertinent information. Moreover, red flags and circumstantial evidence should be seriously pursued and may in certain circumstances establish sufficient proof of corruption. Finally, arbitrators should work toward determining how to find more flexible, nuanced ways to balance the consequences of a finding of corruption when both parties played a knowing role in that corruption. Part V concludes by summarizing ways in which arbitrators can help maintain arbitral legitimacy in cases tainted by corruption.

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