Arbitration and the Fight Against Corruption in Contracts

In cases where the underlying contract to an arbitral dispute has proven to be tainted by corruption, there are not at present enough legal tools for arbitrators to avoid enforcing corruption-obtained rights, nor for national courts to reject the enforcement of the arbitral award which upheld, in one way to another, such rights. A preliminary review of domestic court decisions shows that the most frequently applied ground for rejecting enforcement of an award containing corruption-obtained rights is the violation of public policy as provided in the UNCITRAL Model Law and the New York Convention. Still, violation of public policy may entail a myriad of meanings and consequences from one jurisdiction to another. Its ambiguity is less than satisfactory when it comes to tackling such a problematic issue as corruption in contracts.

This article, therefore, argues that a more explicit ground for annulment of awards should be incorporated to the UNCITRAL Model Law: when in the conclusion or performance of the contract or legal relationship whose rights were enforced in the arbitral proceedings, there has been corruption of any of the parties, in accordance with the transnational understanding of corruption. By doing so, we, the arbitral community, would contribute to discourage those engaged in corrupt dealings from using arbitration as a means to have their rights upheld and enforced.

See complete article at: ITA in Review, Institute of Transnational Arbitration. Volume 4, Issue 2.