Proving corruption allegations in international arbitration

Abstract

With the convergent of international anti-corruption conventions, corruption is increasingly condemned, prevented and adjudicated on both international and national levels. However, international arbitration is allegedly becoming a safe harbour which countenances and validates transnational contracts tainted by corruption. Despite the prevalence of corruption worldwide, corruption findings in international arbitral awards is questionably scarce. In addition, international arbitrators have adopted noticeably divergent approaches to the adjudication of corruption allegations. Subject to the particular evidentiary rules applied by each arbitral tribunal, same allegations supported by evidence of similar nature could lead to contradictory interpretation and conclusions in different arbitral awards. The rules of evidence with respect to corruption allegations therefore are considered as the most controversial topic in international arbitration.

Arbitrators who proactively fight against corruption permit the burden of proof to be reversed from an alleging party to an alleged party in order to increase the chance of corruption findings. On the other hand, arbitrators who are more conservative and cautious about the severity of corruption allegations and their consequences insist on a heightened standard of proof. Instead of applying the general standard of ‘balance of probabilities’, they specifically require corruption allegations must be substantiated ‘beyond reasonable doubt’ or at least with ‘clear and convincing’ evidence. Based on the reported cases, none of the aforesaid approaches is practicable and balanced enough to ensure a fair chance of substantiating corruption allegations in international arbitration.

Thus, this research paper aims to address the question of what are the appropriate rules of evidence with respect to corruption allegations in international arbitration. Considering that international arbitration, by nature, is subject to the party autonomy and the arbitral discretion, it is not the purpose of this paper to determine any rigid and universally accepted rules of evidence to handle corruption allegations. Alternatively, it is more crucial for international arbitrators to achieve a common understanding of and a consistent approach to the adjudication of corruption allegations in the context of international arbitration.

Ultimately, the applicable evidentiary rules should be able to maintain the appropriate equipoise between the pursuit of parties’ commercial interests and the integrity of truth seeking process. Regardless of whether international arbitrators consider themselves as the guarantor of the truth or the servant of the parties, they are always responsible for addressing and adjudicating corruption allegations appropriately. Therefore, the applicable evidentiary rules must enable international arbitrators and dispute parties to substantiate corruption allegations in a balanced, fair and practicable manner. It should be always kept in mind that corruption is intrinsically difficult to prove while international arbitration is devoid of power and resources to investigate, prosecute and pursue evidence. Thus, the persistence of the burden of proof on alleging parties, alongside the ‘balance of probabilities’ standard is an optimal solution to the existing dilemma in international arbitration. The aforesaid evidentiary rules are practicable but stringent enough to ensure that international arbitration is serving its commercial purposes in the compliance with international anti-corruption framework.