Corruption in Foreign Investment-Contracts and Dispute Settlement between Investors, States, and Agents

in The Journal of World Investment & Trade
Restricted Access
Get Access to Full Text
Rent on DeepDyve

Have an Access Token?



Enter your access token to activate and access content online.

Please login and go to your personal user account to enter your access token.



Help

Have Institutional Access?



Access content through your institution. Any other coaching guidance?



Connect

The Journal of World Investment & Trade

Law • Economics • Politics

References

1 Transparency International, Corruption Perceptions Index (2005); Patrick Glynn, Stephen J. Kobrin, Moises Nairn, The Globalization of Corruption, in Kimberly Ann Elliott (ed.), Corruption and the Global Economy (hereinafter Corruption and the Global Economy), 7 (1997); Arnold J. Heidenheimer, Michael Johnston, Victor LeVine, Political Corruption. A Handbook, (hereinafter Political Corruption), Part m, 443 (1989). On positive and harmful effects of corruption in the developing world David H. Bayley, The Effects of Corruption in a Developing Nation, and J.S. Nye, Corruption and Political Development. A Cost-Benefit Analysis, in Political Corruption, 935 and 963. 3 Transparency International, Preventing corruption on construction projects. Risk assessment and proposed actions for project owners 2 (2005), www.transparency.org. ^ History of corruption has become a well-documented field of study during the last years. Only for some examples cf Jakob van Klaveren, Corruption as a Historical Phenomenon and Linda Levy Peck, Corruption and Political Development in Early Modem Britain, both in Political Corruption, 73 and 219. 5 Corruption and the Global Economy (1997).

Patrick Glynn, Stcphcn J. Kobrin, and Moises Nairn, The Globalization of Corruption, in Corruption and the Global Economy, 7. 27 of the cases deal with corruption in foreign direct investments FDI-processes in a strict sense (Ice No. 6401, HUBCO v. Wadpa, Himpurna v. PLN, American Bell v. Iran, Mexico v. Metaldad, Wena v. Egypt, Ice No. 1110, 3913, 3916, 4145, 5622, 6248, 6286, 6497, 7047, 8113, 8891, 9333, Westman v. E(;T, Lunik v. Soliman, The Claude Reymond Award, The Jurgen Dohm Award, Geneva Chamber of Commerce and Industry Award of 02/23/1988, Corvetina v. Clough, State Agency A v. Respondent X, Coetzee v. Paltex, Luchetti v. Peru, World Duty Free v. Republic of Kenya). For examining corruption cases in the Fm context, it may also be helpful, beyond the Fm cases according to this definition, to look at other types of contracts. Similar problems may arise particularly in the context of purchase contracts for public procurement. It must be remembered that society develops new patterns of illegal behaviour on a constant basis, and that corruption is frequently linked to other types of crime such as price-fixing, insider trading, tax evasion, illegal rebates, antitrust, environmental crime, money-laundering, smuggling, illegal armament trade, and fraud. Considering some of these problems may be helpful because similar problems arise in contracts linked to these crimes. 5 corruption cases without an FDI context are therefore included (Ice No. 6474, Oil Fields of Texas v. Republic of Iran, SGS v. Pakistan, Beta v. Alpha, Ice No. 7664) as well as 2 cases that deal with similar problems such as smuggling and money laundering (Soleimany v. Soleimany, Ice No. 2730, Ice No. 5943). The cases will be quoted in the course of the article.

OECD, Code of Liberalization of Capital Movements, Annex A, I; European Council Directive 88/361 of 24 June 1988 for the implementation of Art. 67 of the Treaty, I, and Explanatory Note 1; Giorgio Sacerdoti, Bilateral Treaties and Multilateral Instruments of Investment Protection, Hague Academy Collected Courses 269, 251, 306 (1997) (hereinafter Bilateral Treaties); Paul E. Comeaux, N. Stephan Kinsella, Protecting Foreign Investment Under International Law. Legal Aspects of Political Risk xix (1997). M. Sornarajah, The International Law on Foreign Investment 4 (1994), Christoph Schreuer, Das Internationale Investitionsrecht, in Neuhold, Hummer, Schreuer (ed.), Osterreichisches Handbuch des Volkerrechts (4th edition 2004). �° This limit is used by the OECD and the IWF, Heinz Rindler, Der Schutz von Auslandsinvestitionen durch die MIGA 5 (1999). 11 Bilateral Treaties 277, Gudrun Zagel, Auslandsinvestitionen in Lateinamerika 17 (1999). 12 Influence peddling is addressed in Art. 12 of the Criminal Law Convention on Bribery of the Council of Europe and in Art. 18 of the UN Convention against Corruption.

�� Art. 2 of the Council of Europe's Civil Law Convention on Corruption has a definition similar to the OECD, but including private recipients of bribes: In the Council of Europe's Criminal Law Convention on Corruption, bribery in the private sector is covered in Art. 7 and 8. The United Nations Convention refers to corruption in the private sector in its Art. 12, the African Union Convention on Preventing and Combating Corruption in its Art. 4. The Inter-American Convention Against Corruption if the Organization of American States (OAS) only refers to public officials (cf. Art. vi). 14 A rare exception is Ice case no. 6248 of 1990, 19 Y. B. Counn. Arb. 124 (1994) (hereinafter Ice No. 6248). �5 Bruce Seymour, Illicit Payments in International Business: National Legislation, International Codes of Conduct, and the Proposed United Nations Convention, in Norbert Horn (ed.). Legal Problems of Codes of Conduct for Multinational Enterprises, 219, 221 (1980). ls In 1988, an amendment was passed that accepted as affirmative defence evidence that the payment is legal in the host country. However, the 1998 amendments broadened the US jurisdiction in corruption cases and included payments to secure "any proper advantage" and payments to officials of international organizations. 17 The US failed to establish a consensus about international corruption within the UN Ecosoc's Commission on Transnational Cooperation and in the Committee on an International Agreement on Illicit Payment in the late 1970s. The only successful, though isolated, initiative was that the 1976 OECD Declaration on International Investment and Multilateral Enterprises included a clause on corruption. 18 Mark Pieth, International Cooperation to Combat Corruption, in Corruption and the Global Economy 119. 19 Bruce Seymour, Illicit Payments in International Business: National Legislation, International Codes of Conduct, and the Proposed United Nations Convention, in Norbert Horn (ed.), Legal Problems of Codes of Conduct for Multinational Enterprises, 219, 227 (1980).

2(1 For national legislation http://www.occd.org/document/30/0,2340,en_2649_34855_2()27102_)_t [ ), OO.html. 21 Patrick Glynn, Stephen J. Kobrin, and Moiscs Nairn, The Globalization of Corruption, in Corruption and the Global Economy 7, 18; Philip M. Nichols, Regulating Transnational Bribery in Times of Globalization and Fragmentation, 24 Yale J« 257 (1999). zz Patrick Glynn, Stephen]. Kobrin, and Moises Nairn, The Globalization of Corruption, in Corruption and the Global Economy 22. z3 Roundtable explores anti-corruption measures, Press release of the Commonwealth News and Information Service, Issue 214, 15 December 2004. z^ Mark Pieth, International Cooperation to Combat Corruption, in Corruption and the Global Economy 119, 124. zs Christoph Schreuer, Das internationale Investitionsrecht, in Neuhold, Hummer, Schreuer (ed.), Osterreichisches Handbuch des Volkerrechts, 4th edition 2004.

26 Wolfgang Hetzer, Korruptionsbekampfung in Europa, Njw 3746 (2004). 27 Although, the OECD Convention mentions that private law can also be a means to combat corruption: Art. 3 (4) reads: "Each Party can consider the imposition of additional civil or administrative sanctions upon a person subject to sanctions for the bribery of a foreign public official." Cf. also the Revised Recommendation of the Council on Combating Bribery in International Business Transactions, u, which reads: "...That each Member country examine the following areas and, in conformity with its jurisdictional and other basic legal principles, take concrete and meaningful steps to meet this goal: ... vi) civil, commercial, and administrative laws and regulations, so that bribery would be illegal". However, in the text of the recommendation there is no further reference to this objective.

28 Bilateral Treaties 308. z9 Examples are Ice No. 7664 (Frontier AG v. Thompson), a case linked to the Elf scandal, Himpurna v. PLN, which included alleged bribes to high ranking Indonesian politicians including President Habibie, and Ice No. 6401, where bribes to the Philippine President Marcos were an issue. 3o Ice No. 6401, HUBCO v. WAPDA, Himpuma v. PLN, American Bell v. Iran, Mexico v. Metaldad, Ice No. 1110, Ice No. 4145, Ice No. 5622.

31 Ice 7047, State Agency A v. Respondent X, Beta International Corp. v. Alpha International SA, Frontier AG v. Thompson, Ice No. 5943. 3z KBc v. Pertamina, Ice No. 6286, Westman v. SECT, Corvetina v. Clough. " Wena Hotels v. Egypt, Icc No. 8113, Oil Fields of Texas v. Iran. 3a European Commission - Eurostat: European Union Foreign Direct Investment Yearbook 2001 (2002). 35 There are only very few atypical corruption cases: Ice 6286 deals with the dissolution of a consortium due to one of the member's illegal conduct. In the recent case Luchetti v. Peru, ICSID Ax.B/03/04, the tribunal had to decide on its jurisdiction on the base of the Peru-Chile Bis. This treaty would only have been applicable if a Peruvian court would not have validly settled the dispute before the ratification of the BIT. The respondent alleged corruption in the proceedings before the Peruvian court and so contested the settlement of the conflict before the national judiciary.

� Ice No. 6497, Final Award of 1994, 24a Y. B. Comm. Arb. 71, Facts and para. 17 (1999) (hereinafter Ice No. 6497). � Federation of Pakistan through WAPDA (Secretary Water & Power) in the HUBCO case, Supreme Court of Pakistan, 20 June 2000, Arb. Int'I 439, 439 (2000) (hereinafter HUBCO v. WnYnA); PLN in the Himpurna case, Final Award of 4 May 1999, 25 Y. B. Comm. Arb. 11, para. 113 (2000) (hereinafter Himpuma v. Pt N); Arab Republic of Egypt in the ICSm Award of 28 January 2002, IntADR (www.kluwerarbitration.com).

38 The Islamic Republic of Iran in American Bell International v. Iran, Award in Case No. 48 (255-48-3) of 19 September 1986, 12 Y. B. Comm. Arb. 292, 292 (1987) (hereinafter American Bell v. Iran); The Islamic Republic of Iran in Oil Fields of Texas v. Iran (National Iranian Oil Company), Award in Case 43 (258-43-1) of 8 October 1986, 12 Y. B. Comm. Arb. 287, 298 (1987) (hereinafter Oil Fields of Texas v. Iran). 39 Himpuma v. PLN, para. 113; World Duty Free v. Republic of Kenya, ICSID Case No. ARB/00/7, p. 49-62. 40 HUBCO v. WAPDA, 439. 41 American Bell v. Iran, 292. 42 World Duty Free v. Republic of Kenya, ICSID Case No. ARB/00/7, p. 49-62. ^s BGE 129 (2003) III, 320, 323-325, 4^ American Bell v. Iran, 292. 45 Hilmar Raeschke-Kessler, Some Aspects of International Public Policy in International Commercial Arbitration, Presentation in Berlin on August 20, 2004, Lalive et al, Transnational (or truly international) Public Policy and International Arbitration 258 (1986). This was still different in the late 1980s, cf. Bruno Oppetit, Le paradoxe de la corruption a 1'6preuve du droit du commerce international, 114 Jm 5, 16 (1987).

ab Art. 8 (2) of the Council of Europe Civil Law Convention on Corruption: "Each Party shall provide in its internal law for the possibility af all parties to a contract whose consent has been undermined by an act qfcorruptioti to be able to apply to the court for the contract to be declared void, noUVithstanding their riqht to daim for damages." a' Art. 50 of the Vienna Convention on the Law of Treaties: "If the expression of a State's consent to be bound by a treaty has been procured through the corruption of its representative directly or indirectly by another negotiating State, the State may invoke such corruption as invalidating its cansent to be bound by the treaty." �s UN provisions on State responsibility, http://www.un.org/inc/text/state_responsibility/responsibility fra.htm. a� Paul E. Comeaux, N. Stephan Kinsella, Protecting Foreign Investment Under International Law 32 (1996).

so Art. 4-11 Draft Articles on State Responsibility, ILc 2001; cf Kaj Hober, State Responsibility and Investment Arbitration. 51 For the question if a state is liable under contracts entered into by its state-controlled entities cf Marc Blessing, State Arbitrations: Predictably Unpredictable Solutions?, presentation at 8th IBA International Arbitration Day Geneva, 18 March 2005. 5= World Duty Free v. Republic of Kenya p. 59. 53 Hilmar Raeschke-Kessler, Corrupt Practices in the Foreign Investment Context: Contractual and Procedural Aspects, in Norbert Hom (ed.), Arbitrating Foreign Investment Disputes 488 (2004).

54 Himpurna v. PLN, para. 118; Oil Fields of Texas v. Iran para. 25; American Bell v. Iran, para. 17. ss 2nd ICS[D Award of 28 January 2002, IntAna or www.kluwerarbitration.com, under the headline: "Did the Tribunal not deal with questions submitted for its decision?" S6 "When a country's reputation as a contractual partner sutlers, the terms on which it is able to attract foreign investment and financing are impaired.... an over-readiness by international arbitrators to accept illegality defences may harm an international mechanism which benefits numerous countries that rely on access to international funding, technology, and trade.", Himpurna v. PLN para. 114. 57 World Duty Free v. Republic of Kenya p. 48, p. 53. Ss Cf. Norbert Horn, The concepts of adaptation and renegotiation in the law of transnational commercial contracts, in Norbert Horn (ed.). Adaptation and Renegotiation of Contracts in International Trade and Finance 7 (1985). 59 "Adaptation of a contract means the adjustment of its terms in a new situation", Norbert Horn, The Concepts of Adaptation and Renegotiation in the Law of Transnational Commercial Contracts, in Norbert Horn (ed.), Adaptation in International Trade and Finance 7 (1985).

60 Richard Buxbaum, Modification and Adaptation of Contracts: American Legal Developments; Horacio A. Grigeira Naon, Adaptation of Contracts: An Argentine Substantive and Private International Law Outlook; Enrique P. Syquia, The Revision and Adaptation of Contracts in Philippine Law. With a Comparative Outlook at the Law of Other ASEAN Countries; Fath EI Rahman Abdalla El Sheikh, Legal Criteria for the Revision and Adaptation of International Commercial Contracts: The African and Arab Perspective, in Norbert Horn (ed.), Adaptation in International Trade and Finance 15 (1985). 11 Hilmar Raeschke-Kessler, Corrupt Practices in the Foreign Investment Context: Contractual and Procedural Aspects, in Norbert Horn (ed.), Arbitrating Foreign Investment Disputes 488, 489-491 (2004). 62 Norbert Horn, Procedures of Contract Adaptation and Renegotiation in International Commerce, in Norbert Horn (ed.), Adaptation and Renegotiation of Contracts in International Trade and Finance 179 (1985). 63 Norbert Horn, Procedures of Contract Adaptation and Renegotiation in International Commerce, in Norbert Horn (ed.), Adaptation and Renegotiation of Contracts in International Trade and Finance 182 (1985).

64 § 48 n 3 No. 1 BVwVfG. 65 Staudinger-Lorcnz § 817 No. 11-23; Mirko Moller, Leistungskondiktion trotz beiderseitiger Sittenwidrigkeit? - Die Einschrankung des § 817 S. 2 BGB durch den BGH, Njw 268 (2006).

ss cf Cameroon Airlines v. Transnet Limited, 29 July 2004 - High Court of Justice, IntADR or www.kluwerarbitration.com. s� The only known compensation case in the corruption context did not concern the damage for corruption, but is rather an expropriation case. Wena v. Egypt deals with the compensations that Wena claimed for expropriation after the seizure of various hotels by the Egypt government. Corruption played a role as the defendant tried to contest the validity of the investment contract by allegations of corruption. However, the arbitrators did not find that there was a connection between the validity of the contracts and the compensation for expropriation and did not decide about the corruption issue, Wena Hotels v. Egypt Award of 8 December 2000 at A, Award of 28 January 2002, "Did the Tribunal not deal with questions submitted for its decision?", both IntADR or www.kluwerarbitration.com.

68 HUBCO v. WAPDA para. 15 and 19. If the main contract is invalid, problems of the severability or separability of the arbitration agreement may also arise, which will be examined below in the context of agency agreements. HUBCO v. WAPDA para. 31: "It may be noted that since WAPDA accepts the validity of the arbitration agreement ..., no issue of "separability" actually arises in this case." 69 Id. para. 47 e). 70 SGS v. Pakistan, Supreme Court of Pakistan 3 July 2002, 28 Y. B. Comm. Arb. 1312 (2003) (hereinafter SGS v. Pakistan); in the arbitration proceedings before the ICSID tribunal, corruption was not decided upon, cf Decision of the Tribunal on Objections to Jurisdiction, http://www.worldbank.org/icsid/cases/SGSvPhil-final.pdf. 71 SGS v. Pakistan para. 83. �2 Id.; cf. also Robert N. Homick, The Mihaly Arbitration, 20 Journal of International Arbitration 189 (2003). �3 Id. para. 39-40; Homayoon Arfazadeh, Considerations pragmatiques sur la competence respective de 1'arbitre et du juge en matiere de corruption, 19 ASA Bulletin 672 (2001). 74 Since Ice No. 3913, Award of 1981, quoted in Y. D., Observations, Coll. Ice Arbitral Awards 497 (1974- 1985) (hereinafter Icc No. 3913). Cf. also Karl-Heinz B6ckstiegel, Public Policy and Arbitrability, 3 ICCA Congress series 177, 200-201 (1986). �5 Ice No. 6474 Partial award on Jurisdiction and Admissibility, 25 Y. B. Comm. Arb. 11, para. 120 (1999) (hereinafter lee No. 6474). �6 Ice No. 6474 para. 127-129.

� HUBCO v. WAPDA para. 47. �a Nudrat B. Majeed, Commentary on the Hubco Judgment, 16 Arb. Int'l 431 (2000). 79 Alexis Mourre, Arbitration and Criminal Law: Reflections on the Duties of the Arbitrator, Arbitration International 95, 99 (2006) (hereinafter Mourre); Matti S. Kurkela, Criminal law in international arbitration - notes to arbitrators; Ice Task Force on Criminal Law and Arbitration, March 2006. 80 Abdulhay Sayed, Corruption in International Trade and Commercial Arbitration (hereinafter Sayed) 93 (2004). 81 Cf. Also Jose Rosell, Harvey Prager, Illicit Commissions and International Arbitration: The Question of Proof, 15 Arb. Int'l 329 (1999). 12 Sayed 104. e3 The Claude Reynold Award, ASA Bulletin 742, 747 (1995). Both cases relate to type two, cf. below "the agency agreement." 84 Himpurna v. PLN para. 116. Cf. also Matthias Scherer, Beweisfragen bei Korruptionsfallen vor internationalen Schiedsgerichten, 19 ASA Bulletin 684, para. (2001). as Sayed 104. 86 Sayed 103.

a� Himpurna v. PLN para. 116 6 88 Ice No. 8891, 127 JDI 1076, 1079 (2000) (hereinafter Ice No. 8891); ten effet, 1'objet illicite est generalement dissimule dernere des dispositions contractuelles d'apparence anodine. C'est pourquoi les arbitres n'ont souvent autre choix que de se fonder sur des indices. Ceux-ci doivent etre serieux. » 89 Oil Fields of Texas v. Iran, para. 25. 9� Icc No. 6497 para. 3-15, 11 Cf. also Jose Rosell, Harvey Prager, Illicit Commissions and International Arbitration: The question of Proof, 15 Arbitration International 329 (1999); Christopher Koch, The Sixteenth ICCA Congress - May 12-15, 2002, London, 19 Journal of International Arbitration 609, 612 (2002). 9z Mourre 103. 93 In Ice Case 4145, the tribunal stressed to follow "general principles of interpretation", according to which a fact can also be proven by circumstantial evidence, if it leads to "very high probability" - which implies that direct evidence needs only to present normal probability, Ice Case No. 4145, Interim Awards and Final Award of 1983, 12 Y. B. Comm. Arb. 97, para. 28 (1987) (hereinafter Ice No. 4145). In Icc Case No. 7047, the tribunal seeks to be "convinced" of the alleged fact, a "mere suspicion" being not sufficient, lee No. 7047 Final Award of 1994 in 21 Y. B. Comm. Arb. 79 para. 54 (1996) (hereinafter Ice No. 7047). In No. 9333, the tribunal requires "conviction", 19 ASA Bulletin 757, para. 8 (2001) (hereinafter Ice No. 9333).

9a Art. 5 § 2 of the New York Convention reads: "Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that ... b) The recognition or enforcement of the award would be contrary to the public policy of that country." 9S Emmanuel Gaillard, John Savage (ed), Fouchard, Gaillard, Goldman on International Commercial Arbitration No. 1710-1711 (1999). 9� Audley Sheppard, Interim IW Report on Public Policy as a Bar to Enforcement of International Arbitral Awards, 19 Arbitration International 217, 222 (2003). " O'rv v. Hilmarton, High Court ofJustice, 24 May 1999, 24a Y. B. Comm. Arb. 777 (1999). 98 Soleimany v. Soleimany Court of Appeal, 30 January 1998, 24a Y. B. Comm. Arb. 329, para. 32 (1999) (hereinafter Soleimany v Soleimany). 99 OTV v. Hilmarton, High Court of Justice, Queen's Bench Division (Commercial Court), 24 May 1999, 24a Y. B. Comm. Arb. 777, para. 14 (1999). too Westacre v. Jugoimport, High Court, Queen's Bench Division (Commercial Court), 19 December 1997, 23 Y. B. Comm. Arb. 836 para. 77-79 (1998): "...only by going behind the award and admitting further evidence of Kuwait public policy would an English or any other enforcement court become aware that the underlying contract was contrary to Kuwait public policy. Given the weight to be attached to the public policy of sustaining the finality of international arbitration awards..., it is difficult to see how enforcement of such an award could be said to represent a lack of respect for the law of or administration of justice in Kuwait... Moreover, as a I have already held, it does not follow that, merely because an underyling contract is void at common law because direct enforcement would be contrary to public policy enforcement of an international arbitration award which treated that contract as enforceable would itself automatically be contrary to public policy." Cf. also HUBCO para. 34, 35. To a different view cf. Corvetina v. Clough, Supreme Court of New South Wales, IntADR or www.kluwer arbitration.com para. 14, 15 (only relating to the problem of separate hearings). In Mexico v, Metalclad, the British Columbia Supreme Court in a decision of 2 May 2001 re-examined the same evidence as the tribunal again, coming to the conclusion that corruption was not sufficiently proven.

101 Algeria, Libya, Saudia Arabia (armament contracts), Syria, cf. Sayed 192-193. 102 Egypt, Kuwait, Syria (exception of total ban for registered firms), cf. Sayed 194. 103 Bahrain, United Arab Emirates, Kuwait, Saudi Arabia (general commercial contracts), Qatar, cf. Sayed 192. 104 For definitions Sayed 169-171. �°5 Art. 3 § 1 of the Rome Convention on the Applicable Law to contractual relations reads: "A contract shall be governed by the law chosen by the parties. The choice must be expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case. By their choice the parties can select the law applicable to the whole or a part only of the contract." m Sayed 166. �°� Ice 8113, Partial award on the Applicable Law of 1995, 25 Y. B. Comm. Arb 11 (2000) (hereinafter Ice No. 8113), cf Sayed 173-175.

108 Ice No. 4145, 99. Cf. to this problem also Sayed 168-178 and Ice No. 8113. for a critical commentary on this award cf. Sayed 181-187. ��° Art. 19 § 1 Spila reads; "If, pursuant to Swiss legal concepts, the legitimate and manifestly preponderant interests of a party so require, a mandatory provision of law other than that designated by this Code may be taken into account if the circumstances of the case are closely connected with that law." It is, however, already doubtful if Art. 19 Swiss PILA is applicable if there is a valid party choice, taking into account Art. 187 PmA; cf. State Agency A v. Respondent X, Tribunal Federal, 30 December 1994, 21 Y. B. Comm. Arb. 172, para. 20 (1996) (hereinafter State Agency A v. Respondent X). Art. 187 PILA reads: "The arbitral tribunal shall rule according to the law chosen by the parties or, in absence of such choice, according to the law with which the action is most closely connected." Sayed 258-265. ��= Beta SA v. Alpha International Corporation, Ad hoc Award of 1989, ASA Bulletin 239, 252 (1991) (hereinafter Beta v. Alpha) � The Jürgen Dohm Award, ASA Bulletin 216, 233 (1993); Geneva Chamber of Commerce and Industry Award dated 23 February 1988, ASA Bulletin 136, 141 (1988); Beta v. Alpha 352.

114 Icc No. 1110 Award of 1963 10 Arb. Int'l para. 16 (1994) (hereinafter Ice No. 1110); Ice 2730 Award of 1982 Coll. Ice Arbitral Awards 490, 494 (1974-1985); Ice 3913, 498; Ice No. 3916 Award of 1982, 111 J�t 930, 933 (1984) (hereinafter Ice No. 3916); Ice 4145 para. 24, Ice No. 6286 19 Y. B. Comm. Arb. 141 para. 22 (1999) (hereinafter Ice No. 6286), Ice No. 6497 para. 2; Ice No. 7047 para. 53; Ice No. 8891, 1079; State Agency A v. Respondent X para. 23. "5 Art. 8 (1) of the Civil Law Convention on Corruption reads as follows: "Each party shall provide in its internal law for any contract or clause of a contract providing for corruption to be null and void." 116 Ice No. 4145 para. 36; Ice No. 7047 para. 41; EGT v. Westman, Paris Court of Appeal, 30 September 1993, Revue de 1'arbitrage 359 (1994). 117 Icc No. 6248 para. 7 (morality). 118 BGH Nyw 1985, 2406. 119 Ice No. 5622, Final Award of 1988, 19 Y. B. Comm. Arb. 105 para. 34 (1994) (hereinafter Icc No. 5622). Note the different characteristics of the Algerian law No. 78-02 and the prohibitions of intermediaries quoted above: While the latter prohibit any activities of agents, the Algerian law in the Hilmarton case aims at combating the activities above defined as trading in influence. However, this position was not accepted and the award set aside by Swiss courts, Cour de Justice Geneva, 17 November 1989, 19 Y. B. Comm. Arb. 214 (1994), Tribunal federal Suisse, 17 April 1990, Revue de 1'arbitrage 342 (1993); cf. also Vincent Heuze, La morale, farbitre et le juge, Revue de 1'arbitrage 179 (1993). 120 Pierre Mayer, Audley Sheppard, Final ILA Report on Public Policy as a Bar to Enforcement of Intemational Arbitral Awards, 19 Arbitration International 249, 261 (2003); Audley Sheppard, Interim ILA Report on Public Policy as a Bar to Enforcement of International Arbitral Awards, 19 Arbitration International 217, 222 (2003). 121 Ice No. 1110, para. 20.

122 Ice No. 1110 para. 21. Cf. also Icc No. 5622 para. 56. Without examination of the parties' intentions Ice No. 5943, 123 JDI 1014, 1017 (1996); Ice No. 6497 para. 2 ("the result... is not necessarily equitable ... But this is legally irrelevant"); Mourre 101. �z3 Enunanuel Gaillard, John Savage (ed), Fouchard, Gaillard, Goldman on International Commercial Arbitration para. 389-451 (1999). �z4 16 (1) Uncitral Model Law reads: "The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause." Art. 6 5 4 Icc rules reads: "Unless otherwise agreed, the Arbitral Tribunal shall not cease to have jurisdiction by reason of any claim that the contract is null and void or allegation that it is non-existent, provided that the Arbitral Tribunal upholds the validity of the arbitration agreement. The Arbitral Tribunal shall continue to have jurisdiction to determine the respective rights of the parties and to adjudicate their claims and pleas even though the contract itself may be non- existent or null and void."

125 Ice No. 1110; cf. also J. Gillis Wetter, Issues of Corruption before International Arbitral Tribunals: The Authentic Text and True Meaning ofJudge Gunnar Lagergren's 1963 Award in Ice Case No. 1110, 10 Arb. Int'l 277 (1994). 126 Ice No. 1110, para. 3. 127 Ice No. 3916, 931; Ice 4145, para. 8; Ice 5662, Final Award of 1988, para. 50; cf. also Andrew Rogers, Rachel Launders: Separability - the Indestructible Arbitration Clause, 10 Arb. Ins'1 77 (1994); Pierre Mayer, The Limits of Severability of the Arbitration Clause, 9 ICCA Congress Series 261 (1999). 'zri Y. D., Observations, Coll. Ice Arbitral Awards 497, 498-499 (1974-1985): n II y a cependant une evolution sensible entre I'attitude refl6t6e par la sentence rendue en 1963 dans I'affaire no 1110 qui constatait a considerer la matiere non arbitrable ... et cefle qui consiste a constater la nullite du contrat que revelent les sentences plus recentes. ... les arbitres sont de plus en plus convaincus qu'il leur appartient de sanctionner eux-memes les violations de l'ordre public, et en particulier de 1'ordre public international dont ils sont des gardiens naturels. » in Westacre v. Jugoimport, the High Court, Queen's Bench (Commercial Court), in its decision of 19 December 1997, argued from the perspective of the enforcement court with a strong support to the severability doctrine for reasons of confidence into arbitration: "If the issue of illegality by reason of corruption is referred to high calibre ICC Arbitrators and duly denied by them, it is entirely inappropriate in the context of the New York Convention that the enforcement Court should be invited to retry that very issue in the context of a public policy submission." (23 Y. B. Comm. Arb. 836, para. 71 (1998)); Mourre 98. 129 For a slightly different solution in the case that the claimant filed subsidiary claims: Homayoon Arfazadeh, Considerations pragmatiques sur la competence respective de 1'arbitre et du juge en matiere de corruption, 19 ASA Bulletin 672 (2001).

'3o Although they exist in some cases, cf. Icc 3913, 497; ICC: 4145 para. 29. '3' Matthias Scherer, Beweisfragen bei Korruptionsfallen vor intemationalen Schiedsgerichten, 19 ASA Bulletin 684, para. n (2001). '32 Ice 1110 para. 20. Not accepted in Ice No. 5622 para. 23; Ice No. 6286 para. 22; Ice No. 7047, para. 55. 133 Ice No. 6497 para. 5; Ice No. 7047, para. 42. 134 Ice No. 8891,1080. �j5 Ice No. 4145, para. 33. 136 Ice No. 3916, 932; Icc No. 8891, 1081; Jose Rosell, Harvey Prager, Illicit Commissions and International Arbitration: The Question of Proof, 15 Arbitration International 329 (1999). 137 Ice No. 3916, 932: "1'6tonnante rapidite avec laqueflc le demandeur avait pu obtenir des marchés pour la societe grecque n; Ice No. 4145 para. 30. �3a Refused in Icc No. 4145 para. 30. 139 The defendant was successful with this indication in Ice No. 8891, 1081; it was discussed in Ice No. 6497 para. 17 (33,33 % for "extraordinary services") and in Ice No. 7047, para. 43-44; refused in Ice 9333 para. 9 ("il se peut que fintermediaire soit simplement avide").

�^° Ice No. 3916, 932 ("la composition de «son groupe�>"). Refused in Ice No. 6497 para. 8. A friendship between the agent and one of the decision-makers of the purchasing public entity is not an indication of corruption, Lunik v. Soliman, ASA Bulletin 210 para. 44 (1998). 141 International Law Association, New Delhi Conference (2002), Final Report on Public Policy as a Bar to Enforcement of International Arbitral Awards, para. 52, quoted in Hilmar Raeschke-Kessler, Some Aspects of International Public Policy in International Commercial Arbitration, Presentation in Berlin on August 20, 2004. An example for these problems under the Arbitration act of South Africa is Coetzee v. Paltex, Provincial Division of the High Court of South Africa 8 May 2002, Digest by Lise Bosman, IntAi>it or www.kluwerarbitration.com.

Information

Content Metrics

Content Metrics

All Time Past Year Past 30 Days
Abstract Views 7 7 5
Full Text Views 4 4 4
PDF Downloads 0 0 0
EPUB Downloads 0 0 0