Lanzamiento de la Revista Themis Revista de Derecho

1. ¿Manos límpias?
La corrupción en los arbitrajes con el Estado
Conversatorio con motivo de la presentación de
THĒMIS-Revista de Derecho
“Estándar de la prueba”
ELINA MEREMINSKAYA
LL.M., Ph.D.
Socia de Wagemann Abogados & Ingenieros
8 de agosto de 2020

3. EDF (Services) Limited v. Romania, ICSID Case No. ARB/05/13
221. The Tribunal shares the Claimant’s view that a request for a bribe by
a State agency is a violation of the fair and equitable treatment
obligation owed to the Claimant pursuant to the BIT, as well as a
violation of international public policy, and that “exercising a State’s
discretion on the basis of corruption is a […] fundamental breach of
transparency and legitimate expectations.” …

4. EDF (Services) Limited v. Romania, ICSID Case No. ARB/05/13
221. … In any case, however, corruption must be proven and is notoriously
difficult to prove since, typically, there is little or no physical evidence. The
seriousness of the accusation of corruption in the present case, considering that
it involves officials at the highest level of the Romanian Government at the time,
demands clear and convincing evidence. There is general consensus among
international tribunals and commentators regarding the need for a high
standard of proof of corruption. The evidence before the Tribunal in the instant
case concerning the alleged solicitation of a bribe is far from being clear and
convincing.

5. World Duty Free Company v. Republic of Kenya, ICSID Case No. Arb/00/7:
157. In light of domestic laws and international conventions relating to
corruption, and in light of the decisions taken in this matter by courts and
arbitral tribunals, this Tribunal is convinced that bribery is contrary to the
international public policy of most, if not all, States or, to use another
formula, to transnational public policy. Thus, claims based on contracts of
corruption or on contracts obtained by corruption cannot be upheld by this
Arbitral Tribunal.

6. World Duty Free Company v. Republic of Kenya, ICSID Case No. Arb/00/7:
179. In conclusion, as regards public policy both under English law and
Kenyan law (being materially identical) and on the specific facts of this case,
the Tribunal concludes that the Claimant is not legally entitled to maintain
any of its pleaded claims in these proceedings on the ground of ex turpi
causa non oritur actio.

7. Metal-Tech Ltd. v. Republic of Uzbekistan, ICSID Case No. ARB/10/3:
243. As in World Duty Free, the present factual matrix does not require the
Tribunal to resort to presumptions or rules of burden of proof where the
evidence of the payments came from the Claimant and the Tribunal itself
sought further evidence of the nature and purpose of such payments.
Instead, the Tribunal will determine on the basis of the evidence before it
whether corruption has been established with reasonable certainty. In this
context, it notes that corruption is by essence difficult to establish and
that it is thus generally admitted that it can be shown through
circumstantial evidence.

8. Metal-Tech Ltd. v. Republic of Uzbekistan, ICSID Case No. ARB/10/3:
372. On the basis of the foregoing analysis, the Tribunal comes to the
conclusion that corruption is established to an extent sufficient to violate
Uzbekistan law in connection with the establishment of the Claimant’s
investment in Uzbekistan. As a consequence, the investment has not been
“implemented in accordance with the laws and regulations of the Contracting
Party in whose territory the investment is made” as required by Article 1(1) of
the BIT.

9. Metal-Tech Ltd. v. Republic of Uzbekistan, ICSID Case No. ARB/10/3:
373. Uzbekistan’s consent to ICSID arbitration, as expressed in Article 8(1) of
the BIT, is restricted to disputes “concerning an investment.” Article 1(1) of the
BIT defines investments to mean only investments implemented in
compliance with local law. Accordingly, the present dispute does not come
within the reach of Article 8(1) and is not covered by Uzbekistan’s consent.
This means that this dispute does not meet the consent requirement set in
Article 25(1) of the ICSID Convention. Accordingly, failing consent by the host
state under the BIT and the ICSID Convention, this Tribunal lacks jurisdiction
over this dispute.

10. Niko Resources (Bangladesh) Ltd v Bapex and Petrobangla, ICSID Case No.
ARB/10/11 and ICSID Case No. ARB/10/18:
805. In this complex situation of facts and allegations, the Tribunals do not find
much assistance in terms such as “preponderance of evidence” and
“heightened standard of proof”.
806. In the end the question is whether the Tribunals are persuaded that the
JVA and GPSA were procured by corruption or not. The Tribunals share the
conclusion reached by Aloysius Llamzon in his comprehensive monograph
devoted to the legal doctrine and cases concerning corruption in international
investment arbitration, to which the Parties have frequently referred:

11. Niko Resources (Bangladesh) Ltd v Bapex and Petrobangla, ICSID Case No.
ARB/10/11 and ICSID Case No. ARB/10/18:
… the less formalistic sensibility of Rompetrol and Metal-Tech towards the evidentiary
rules to be applied to corruption issues is helpful. Because corruption is a serious charge
with serious consequences attached, the degree of confidence a tribunal should have in
the evidence of that corruption must be high. However, this does not mean that the
standard of proof itself should necessarily be higher, or that circumstantial evidence,
inferences, or presumptions and indicators of possible corruption (such as ‘red flags’)
cannot come to the aid of the fact-finder. Tribunals are given the freedom and burden
of choice, which they should not abdicate by rote reference to an abstract ‘heightened’
standard of proof.

12. Glencore International A.G. and C.I. Prodeco S.A. v Republic of Columbia,
ICSID ARB/16/6, Award, 27 August 2019:
669. As for the standard to be applied to assess the evidence, the Tribunal
perceives no reason to depart from the traditional standard of preponderance
of the evidence, since neither the Treaty nor the ICSID Arbitration Rules impose
a different standard.

13. Glencore International A.G. and C.I. Prodeco S.A. v Republic of Columbia,
ICSID ARB/16/6, Award, 27 August 2019:
670. In fact, what Respondent labels as “connecting the dots” is nothing else
than the time-honoured methodology followed by tribunals in all jurisdictions
to establish truth based on indicia or circumstantial evidence: if a party
marshals evidence that proves the existence of certain indicia, and it is possible
to infer from these indicia (using experience and reason) that a certain fact
has occurred, the tribunal may take such fact as established. The Tribunal has
followed this methodology.
….. The dots simply do not connect.

14. Corruption and Money Laundering in International Arbitration: A Toolkit for
Arbitrators by BASEL INSTITUTE ON GOVERNANCE
If the investment was procured by corruption: consider whether the unclean
hands principle or other relevant doctrines apply.
If an investment has been procured by corruption, the tribunal should consider
whether this renders the claim inadmissible, whether on jurisdictional grounds
(where the treaty requires the legality of the investment) or other grounds (such
as by application of the “unclean hands” doctrine).

15. Corruption and Money Laundering in International Arbitration: A Toolkit for
Arbitrators:
In a case where a foreign investor has procured its investment by offering,
promising or paying bribes to public officials in the host state, the tribunal
therefore may not have jurisdiction to hear its claims or claims may be
inadmissible. Whilst this may be a harsh consequence for the investor,
condoning investor’s corruption undermines domestic and international
efforts to overcome transnational corruption. Investors who knowingly
engage in illegal activity may forfeit any legitimate claim for protection under
international dispute settlement mechanisms.

16. Corruption and Money Laundering in International Arbitration: A Toolkit for
Arbitrators
On the other hand, the circumstances in which corruption occurs may warrant
the tribunal to consider whether the investor may rely upon arguments such as
attribution, acquiescence and estoppel to prevent a host state from escaping
all accountability for substantive violations of investor protections, especially
where the state has condoned or was complicit in the corruption of its
officials. In such cases, the tribunal might consider ways to find the right
balance, while being mindful of any potential impact on the state’s innocent
population, particularly when the host state has failed to take action to
investigate and prosecute the government officials involved.

17. ¿Manos límpias?
La corrupción en los arbitrajes con el Estado
Conversatorio con motivo de la presentación de
THĒMIS-Revista de Derecho
ELINA MEREMINSKAYA
LL.M., Ph.D.
Socia de Wagemann Abogados & Ingenieros
8 de agosto de 2020