24th Annual IBA Arbitration Day, 2023 - Session 4 and closing remarks: Corruption

María Angélica Burgos 
Bogota, Colombia

The final panel of the 24th IBA Arbitration Day addressed dealing with corruption in international arbitration. The panel was moderated by Professor Mohamed S Abdel Wahab (Zulficar & Partners), who set the floor for the discussion, and was followed by presentations by Olivier Caprasse (Caprasse Arbitration), José Feris (Squire Patton Boggs), Itweva Nogueira (Dentons) and Anke C Sessler (Skadden).

Mohamed Abdel Wahab recalled that issues arising from corruption in international arbitration have not yet been resolved and identified several complexities that arise when dealing with corruption in international arbitration: (i) the existence of multiple regulations and instruments (including the ICC Commission’s 2019 Report); (ii) increasing allegations of corruption; (iii) lack of alignment of arbitral tribunals when considering issues of corruption, as well as by domestic courts; (iv) divergent approaches arising from cultural complexities and diverse backgrounds of arbitrators; and (v) the characterisation of issues as questions of jurisdiction or merits.

Abdel Wahab concluded by stating that this is one of the areas of international arbitration where efforts should be put in place to give predictability and to avoid divergent approaches and results. 

Itweva Nogueira followed with comments on the burden of proof when dealing with allegations of corruption, considering frequently corrupt practices are concealed and very difficult to prove. The main concern tends to be how to prove the facts alleged and how to obtain support from the other party. Some commonly used tools are (i) resorting to red flags which can guide the Tribunal on circumstances in which there is a high probability that the facts are true; and (ii) shifting the burden of the proof, which has generally not been accepted. Nogueira finalised her remarks commenting on the standard of proof and how there are differing approaches depending on the perspectives of common and civil law, as well on the highest standard of proof generally resorted to in criminal proceedings.

Olivier Caprasse discussed what arbitral tribunals should do in the face of corruption allegations. First, tribunals must determine their role and whether they will assess corruption allegations based on the applicable law. Second, tribunals must consider whether they are under a duty to notify allegations of corruption to domestic authorities. Third, the tribunal should review whether it can raise corruption issues sua sponte, bearing in mind the potential effects this might have on the enforceability of the award. Lastly, Caprasse explained the different positions that a tribunal could take faced with parallel proceedings, noting that in domestic arbitrations there is a larger tendency to suspend proceedings.

Turning to how national courts have been deciding issues of corruption in relation to international arbitrations, Anke C Sessler briefly surveyed experiences in Switzerland, France, Germany, the United Kingdom and the United States. Sessler noted the paradox of dealing with court intervention, considering that resort to arbitration generally embeds the expectation of not having court-interference. However, she stressed that arbitral tribunals have a role not to lend their hands to enforce awards that protect a contract based on corruption, and if this happens, the courts should be expected to consider the matter.

To wrap up the discussion, José Feris reviewed the question of criminal proceedings in parallel to arbitration. Feris noted that this topic witnessed developments since the 2019 ICC Commission Report, yet arbitral tribunals tend to reject a suspension of the arbitration in the face of parallel proceedings. Feris explained two possible methodologies to analyse this question. The first based on the fact that criminal proceedings are different in nature using the Triple Test for lis pendens, that tribunals are committed to efficiency and that they have in any case tools to request further information and should not be concerned with the potential annulment of the award – a matter that should be left for the annulment court. The second methodology is grounded in the need to preserve the legitimacy of arbitration by preventing the tribunal from lending its hand to corrupt practices and the duty of the tribunal to render an enforceable award.

After the panel, Xavier Favre-Bulle, Conference Co-Chair, closed the Arbitration Day, highlighting the discussions and thought-provoking questions that remained from the four panels and the keynote speech, and thanked all participants for joining the session. Favre-Bulle concluded by announcing that the following edition of the IBA Arbitration Day would be returning to Asia and take place in Singapore in February 2024.