Corruption and Fraud in Investment Arbitration: Procedural and Substantive Challenges

Description

This book offers an exciting overview of how the investor-state dispute settlement mechanism currently deals with allegations and/or evidence of fraud and corruption. It provides a detailed analysis of the legal framework under which arbitral tribunals usually operate in investment disputes involving allegations of illegality. Readers will find step-by-step examinations of the corruption and fraud arguments employed by arbitral tribunals in ten landmark ISDS cases, followed by a chapter summarizing the status quo on the topic. The final part of the book discusses the identified challenges of addressing illegality issues in investment arbitration and potential solutions, including the creation of a multilateral investment court. Preface Contents Abbreviations Chapter 1: Introduction References Part I: Legal Framework Chapter 2: Fraud and Corruption 2.1 Fraud 2.2 Corruption References Chapter 3: Legality Requirement as a Safeguard to Abuse 3.1 Legality Requirement Assessment 3.1.1 Severity 3.1.2 The Timing of the Alleged Illegal Act 3.2 Implied Application: Good Faith and Clean Hands 3.3 Procedural Setting of Legality Examination 3.3.1 Jurisdictional Stage Approach 3.3.2 Merits Stage Approach 3.4 Concluding Remarks References Chapter 4: Applicable Law for the Examination of Illicit Conduct 4.1 Choice of Law in Investment Treaties 4.2 Tribunal´s Determination of the Applicable Law 4.3 Concluding Remarks References Chapter 5: Evidence and Proof 5.1 Evidence in International Arbitration 5.2 Burden of Proof 5.3 Standard of Proof 5.4 Concluding Remarks References Part II: Current Arbitral Practice in the Context of Corruption and Fraud Chapter 6: Arbitral Tribunals Upholding Corruption and Fraud Arguments 6.1 World Duty Free v. Kenya 6.1.1 Factual and Procedural Background 6.1.2 Findings and Analysis of the Tribunal 6.1.2.1 Local Tradition or Bribery? 6.1.2.2 Consequence of Bribery 6.1.3 Analysis of the Award 6.1.3.1 Corruption v. Contract 6.1.3.2 Corruption v. Public Policy 6.2 Metal-Tech v. Uzbekistan 6.2.1 Factual and Procedural Background 6.2.2 Findings and Analysis of the Tribunal 6.2.2.1 Burden of Proof 6.2.2.2 Standard of Proof 6.2.2.3 Red Flags 6.2.2.4 Finding on Corruption 6.2.2.5 Violations of Uzbek Law 6.2.2.6 Impact of Corruption Findings on Costs Allocation 6.2.3 Analysis of the Award 6.2.3.1 Legality Requirement Application 6.2.3.2 Surrounding Circumstances 6.2.3.3 Ex-officio Examination of Corruption 6.2.3.4 Burden and Standard of Proof 6.2.3.5 Red Flags 6.2.3.6 Effects of Corruption on Quantum 6.3 Churchill and Planet v. Indonesia 6.3.1 Factual and Procedural Background 6.3.2 Findings and Analysis of the Tribunal 6.3.2.1 Applicable Law 6.3.2.2 Burden and Standard of Proof 6.3.2.3 Findings on Fraud 6.3.3 Analysis of the Award 6.3.3.1 Applicable Law 6.3.3.2 Burden of Proof 6.3.3.3 Standard of Proof 6.3.3.4 Consequences of Fraud 6.4 Spentex v. Uzbekistan 6.4.1 Factual and Procedural Background 6.4.2 Findings and Analysis of the Tribunal 6.4.2.1 Effects of Corruption on Arbitration 6.4.2.2 Burden and Standard of Proof 6.4.2.3 Red Flags 6.4.2.4 ``It Takes Two to Tango´´ 6.4.3 Tribunal´s Criticism and Cost Assessment 6.4.3.1 Lack of Cooperation from the Respondent 6.4.3.2 Creative Cost Assessment 6.4.3.3 Proposals for Subsequent Treaty Drafting 6.4.4 Analysis of the Award 6.4.4.1 Application of the Legality Requirement 6.4.4.2 Standard of Proof 6.4.4.3 Red Flags as Evidence 6.4.4.4 Burden of Proof 6.4.4.5 State´s Liability/Responsibility 6.4.4.6 International Investment Law Reform 6.5 Sanum v. Laos 6.5.1 Factual and Procedural Background 6.5.2 Findings and Analysis of the Arbitral Tribunal 6.5.2.1 Jurisdiction v. Merits 6.5.2.2 Burden and Standard of Proof 6.5.2.3 Timing of Illicit Conduct 6.5.2.4 Application of the UN Convention Against Corruption 6.5.2.5 Findings of Illegality 6.5.2.6 Finding of Bad Faith 6.5.2.7 Lack of Internal Investigation by the Respondent 6.5.3 Analysis of the Award 6.5.3.1 Standpoint of Examination 6.5.3.2 Standard of Proof 6.5.3.3 Illegality and Bad Faith During the Investment Operation and Arbitration 6.5.3.4 Respondent´s Failure to Investigate and Prosecute References Chapter 7: Arbitral Tribunals Not Upholding Corruption and Fraud Arguments 7.1 Sistem v. Kyrgyzstan 7.1.1 Factual and Procedural Background 7.1.2 Findings and Analysis of the Tribunal 7.1.3 Analysis of the Award 7.2 EDF v. Romania 7.2.1 Factual and Procedural Background 7.2.2 Findings and Analysis of the Tribunal 7.2.2.1 Standard of Proof 7.2.2.2 Burden of Proof 7.2.3 Analysis of the Award 7.3 Siag and Vecchi v. Egypt 7.3.1 Factual and Procedural Background 7.3.2 Findings and Analysis of the Tribunal 7.3.2.1 Burden of Proof 7.3.2.2 Standard of Proof and Evidence 7.3.3 Analysis of the Award 7.3.4 Analysis of the Dissenting Opinion of Professor Francisco Orrego Vicuña 7.4 Kim and Others v. Uzbekistan 7.4.1 Factual and Procedural Background 7.4.2 Findings and Analysis of the Tribunal 7.4.2.1 Legality Requirement 7.4.2.2 Findings on Fraud 7.4.2.3 Red Flags and Proof 7.4.2.4 Findings on Corruption 7.4.3 Analysis of the Award 7.5 Karkey v. Pakistan 7.5.1 Factual and Procedural Background 7.5.2 Findings and Analysis of the Tribunal 7.5.2.1 Burden of Proof 7.5.2.2 Standard of Proof 7.5.2.3 Findings on Fraud 7.5.2.4 Findings on Corruption 7.5.3 Analysis of the Award References Chapter 8: Learned Lessons 8.1 Ability of Investment Tribunals to Address the Issues of Corruption and Fraud 8.2 Use of Fraud and Corruption Arguments as a ``Shield´´ 8.3 Evidence and Red Flags 8.4 Burden and Standards of Proof: Different Approaches 8.5 Addressing States´ Responsibility for Illicit Acts References Part III: Challenges & Solutions Chapter 9: Difficulty of Proving Corruption and Fraud 9.1 Red Flags as Means of Proof 9.2 Shifting the Burden of Proof 9.3 Flexible Standard of Proof References Chapter 10: Consequences of Corruption for States References Chapter 11: Multilateral Investment Court? References Chapter 12: Conclusions References Documents Cases