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Cardozo Journal of Conflict Resolution

Abstract

First, the paper will analyze the issue of corruption in international investment arbitration. Second, the paper will examine the deployment of corruption as a defense strategy by host states in international investment arbitration. Next, it will address the jurisdictional consequences of proving corruption in the making of the investment. Further, it will describe the distinctive features of relevant ICSID awards and key issues that led to the dismissal of claims. The paper will also estimate the possible implications of the awards to future ICSID claims affected by bribery and try to predict the outcome of the MOL v. Republic of Croatia arbitration. Finally, this paper will discuss whether ICSID tribunals will give unfair advantage to host states if they are going to follow previous case law in denying appropriate protection to corrupt investors. Although it may seem unfair to make states go through an expensive and perhaps politically costly arbitration proceeding, the paper will argue that the state's involvement in alleged unlawful acts has to be taken into account by the ICSID arbitral tribunals. In that regard, the paper will propose that the ICSID tribunals should allow the host states to invoke corruption as a defense only if the host states demonstrate their commitment to fighting domestic corruption by taking all possible efforts to prosecute and punish their corrupt public officials.

Disciplines

Banking and Finance Law | Dispute Resolution and Arbitration | International Trade Law | Jurisdiction | Law

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