International Investment Law Symposium LLM Perspectives Online Publications

International Arbitral Tribunals and Corruption: Not so Duty Free

“Big money, big names, and a mega scandal. The story of the World Duty Free complex must rank as one of the most extraordinary investment disputes in Kenya’s history. It involves claims of bribes on a scale that dwarfs anything mentioned in the Goldenberg commission,01Moi Ordered Goldenberg Payment (Feb. 17, 2004), http://news.bbc.co.uk/2/hi/africa/3495689.stm. The Goldenberg Commission was established to investigate the Goldenberg scandal, a political scandal in the 1990s involving Daniel arap Moi’s government subsidies of gold exports, which far exceeded the standard arrangements at the time. Subsidies paid to Goldenberg International amounted to 35% more than their foreign currency earnings. The scheme is estimated to have cost Kenya over 10% of its annual GDP, and it remains disputed whether any amount of gold was actually exported. a plot involves a raft of senior government officials and a heady mix of intrigue and betrayal.”03Muriithi Mutiga, Kenya: Genesis of an Extraordinary Case, E. Afr. Stand., Apr. 3, 2005.

Introduction

Fifty-three years ago, Judge Gunnar Lagergren served as sole arbitrator in a landmark ICC arbitration involving a contract containing an agreement to pay bribes.02Case No. 1110 of 1963, 10 Arb. Int’l, 282, 291 (ICC Int’l Ct. Arb.), available at http://www.trans-lex.org/201110/. In the reasons given for his pioneering award, he held that “a case such as this, involving such gross violation of good morals and international public policy, can have no countenance in any court […] nor in any arbitral tribunal.”04Id. at 291 ¶ 23. It is a well-settled principle in both civil and common law that no cause of action may arise from an illegal contract; in Roman law, the principle was summarized by the Latin maxim “ex turpi causa non oritur actio.05Giacomo Rojas Elgueta, The Legal Consequences of Corruption in International Arbitration: Toward a More Flexible Approach?, Kluwer Arb. Blog, Jan. 20, 2016, available at http://kluwerarbitrationblog.com/2016/01/20/the-legal-consequences-of-corruption-in-international-arbitration-towards-a-more-flexible-approach/. In international arbitration, the same principle is generally accepted as a transnational rule of public policy.06See, e.g., Pierre Lalive, Transnational (or Truly International) Public Policy and International Arbitration, in Comparative Arbitration Practice and Public Policy in Arbitration, 257, 257 (Sanders ed., 1986). In commercial arbitration, contracts are generally declared void or unenforceable when corruption is established.07Id. at 258. Arbitral tribunals take a similar position in investment treaty arbitration, either declining jurisdiction08See, e.g., Inceysa Vallisoletana S.l. v. Republic of El Salvador, ICSID Case No. ARB/03/26, Award, ¶ 339 (Aug. 2, 2006). or deeming the claim inadmissible.09See, e.g., Phoenix Action Ltd. v. Czech Republic, ICSID Case No. ARB/06/5, Award, ¶ 145 (Apr. 15, 2009).

This paper considers the appropriateness of a strict and systematic application of the “corruption defense” as a total defense against liability arising out of tainted contracts where both parties are involved in corrupt practices. Using the recent and remarkable case of World Duty Free v. The Republic of Kenya (“WDF”),10World Duty Free Company Limited v. Republic of Kenya, ICSID Case No. ARB/00/7, Award, ¶ 157 (Oct. 4, 2006) (“World Duty Free”), available at http://www.italaw.com/documents/WDFv.KenyaAward.pdf. it discusses the implications of exonerating state parties from liability where a claim – contractual or treaty-based – concerns an investment obtained through corruption.

It begins with a general discussion of corruption in international business and its treatment by arbitration tribunals. It then examines the facts of the WDF award and considers the merits of the Tribunal’s decision to dismiss all claims brought against the Kenyan government, which allowed it to effectively expropriate an investor’s property with impunity. It then broadens the discussion to assess the implications of strictly and automatically applying the corruption defense, and considers whether the defense should be available as a total defense against all liability in connection with an illicitly-obtained contract. Its final section argues that a more nuanced approach that accounts for both parties’ role in the corruption scheme would more effectively advance the ultimate goal of combatting global corruption.

1. Corruption in Arbitration: Overview, Definitions, Current Status

Corruption in international business is endemic and, in many regions, a growing concern.11Transparency International, Corruption Perceptions Index 2015, (last visited Mar. 1, 2017) http://www.transparency.org/cpi2015 (revealing an increase in perceived global corruption levels over the past three years. The report shows, for example, increases in perceived corruption among many South American countries – with Brazil’s score dipping from 43 to 38 and Guatemala’s dipping from 32 to 28.). In developing and transition countries alone, total annual bribes received by corrupt government officials and politicians are estimated at USD $20 to 40 billion – or the equivalent of 20 top 40% of all official development aid.12Transparency International, Global Corruption Report 2009: Corruption and the Private Sector, at xxv (2009), available at http://files.transparency.org/content/download/107/431/file/2009_GCR_EN.pdf. According to Transparency International’s Corruption Perceptions Index (CPI), on a scale from zero (highly corrupt) to one hundred (very clean), over 100 countries assessed scored less than 50, and only a dozen scored more than 80.13Id. at 11. The economic, social, political, environmental, and rule of law costs of widespread corruption are dramatic and impact citizenries in myriad insidious ways.14Id. at 12.

Before exploring the treatment of corruption in international arbitration, a distinction must be drawn between “corruption” and “bribery.” Corruption – the broader term – comes from the Latin word corruptus, “to break.” It encompasses all instances in which public authorities “break” the trust that citizens have placed in them. According to the Oxford English Dictionary, it is the “perversion or destruction of integrity in the discharge of public duties by bribery or favour; the use or existence of corrupt practices, esp. in a state, public corporation etc.”15Colin Nicholls, Tim Daniel, Alan Bacarese & John Hatchard, Corruption and Misuse of Public Office 101 (2d ed. 2011). In contrast, “bribery” refers to the act of corruptly influencing the actions of a person by a remuneration, reward, or consideration. Most modern countries and bodies of law identify and punish corrupt actions by all persons in positions of authority, independently of whether they are acting in the public or private sector.16Elgueta, supra note 5.

The international business and legal community is united in its determination to combat corruption. Yet while national legislation, regional initiatives, and international agreements form a robust body of overlapping anti-corruption law,17Developed countries have been united in their efforts to punish their citizens for acts of corruption abroad via national acts of legislation and international agreements against corrupt practices. See, e.g., Foreign Corrupt Practices Act of 1977 15 U.S.C. § 78dd-1 (1977); OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Dec. 17, 1997, 37 I.L.M. 1 (1999); Inter-American Convention Against Corruption, Mar. 29, 1996, 35 I.L.M. 724 (1997); Council of Europe Criminal Law Convention on Corruption, Jan. 27, 1999, E.T.S. No. 173; Council of Europe Civil Law Convention on Corruption, Nov. 4, 1999, E.T.S. No. 174; United Nations Convention Against Corruption, G.A. Res. 58/4, U.N. GAOR, 58th Sess., U.N. Doc. A/58/4 (Dec. 9, 2003); International Chamber of Commerce, Combating Extortion and Bribery: ICC Rules of Conduct and Recommendations (2005), available at https://cdn.iccwbo.org/content/uploads/sites/3/2005/10/Combating-Extortion-and-Bribery-ICC-Rules-of-Conduct-and-Recommendations.pdf; Bribery Act, 2010, c.23 (2010) (U.K.). cross-border corruption remains particularly difficult to address. Transnational legal instruments contend with stubborn jurisdictional limits to their effectiveness: For example, the 1999 OECD Anti-Bribery Convention, one of the most significant international instruments to combat corruption, applies only to transnational corruption and not to domestic corruption. The Convention is further limited, as it only addresses the “supply” side of corruption, the bribe payers, without punishing the “demand” side, the officials accepting illicit payments or other advantages.18Bruce W. Klaw, State Responsibility for Bribe Solicitation and Extortion: Obligations, Obstacles, and Opportunities, 33 Berkeley J. Int‘l L., 59, 63 (2015). Moreover, increasingly-sophisticated bribery schemes succeed in frustrating the application of anti-corruption legislation: Of the 427 enforcement actions brought under the OECD Convention, 75% concerned payments made via intermediaries used to conceal their origin in order to insulate the payer from criminal liability.19Victoria Shannon, 12th Annual ITA-ASIL Conference: Corruption in International Arbitration: Evidence and Remedies, Am. Soc’y of Int’l L. (Apr. 9, 2015, 3:18 PM), https://www.asil.org/blogs/12th-annual-ita-asil-conference-corruption-international-arbitration-evidence-and-remedies.

The inability of established authorities to effectively combat corruption at the international level presents international arbitrators with significant challenges. An arbitral tribunal can, of course, address corruption allegations when they are raised before it. However, in cases where both parties are involved in corrupt practices, neither has an interest in making any such allegations. Yet, as illustrated by Justice Lagergren’s award, arbitral tribunals arguably have a duty to ensure that the international arbitration system is not used as a refuge for parties involved in unlawful dealings seeking to avoid the scrutiny of national courts and the investigative and prosecutorial powers of national police authorities.

In spite of this alleged duty, the ability of arbitral tribunals to investigate, prove, or sanction corruption is constrained.20Michael Hwang & Kevin Lim, Corruption in Arbitration – Law and Reality, 8(1) Asian Int’l Arb. J. 1, 7–12 (2012). An arbitral tribunal’s jurisdiction and powers, founded as they are in the parties’ consent, are far more limited than that of national courts. An arbitral tribunal cannot compel unwilling parties to cooperate, and certainly has no powers of compulsion over third parties.21Ibironke Odumosu, International Investment Arbitration and Corruption Claims: An Analysis of World Duty Free v. Kenya, 4 L. & Dev. Rev. 88, 121 (2011). Moreover, by their very nature, tribunals lack the resources and infrastructure to undertake their own criminal investigations and ultimately can only apply laws and public policy considerations to the facts both parties are willing and able to prove before them.22Hwang & Lim, supra note 20, at 42–46 (outlining sanctions that tribunals can impose if corruption is established, including the power to decline jurisdiction, or the power to void a contract and exonerate the respondent from liability under the contract).

Nevertheless, tribunals can use the general powers they enjoy under most institutional arbitration rules and soft law instruments to inquire into their suspicions of corruption. For example, under the 2012 ICC Rules23See Int’l Chamber of Commerce, ICC Rules of Arbitration, art. 25(5), 41 (Jan. 1, 2012), available at http://community.icann.org/download/attachments/56985803/ICC Rules of Arbitration.pdf (stating that “at any time during the proceedings, the arbitral tribunal may summon any party to provide additional evidence” and “in all matters not expressly provided for in the Rules, the Court and the arbitral tribunal shall act in the spirit of the Rules and shall make every effort to make sure that the award is enforceable at law”). and the 2010 IBA Rules on the Taking of Evidence in International Arbitration,24See Int’l Bar Ass’n, IBA Rules on the Taking of Evidence in International Arbitration, art. 3.10 (2010), available at http://www.ibanet.org/Document/Default.aspx?DocumentUid=68336C49-4106-46BF-A1C6-A8F0880444DC (noting that the IBA Rules’ Article 3.10 allows the Tribunal to “request any Party to produce . . . any document”). tribunals can, sua sponte, call for the production of evidence. Thus, international arbitrators are not without means to investigate – even ex officio – their suspicions of illegality. Tribunals also have the powers, under the IBA Rules, to draw adverse inferences against a party that fails, without a satisfactory explanation, to produce requested evidence.25Id. arts. 9.4, 9.5. As a result of these two concededly-limited powers, there are instances in which tribunals have inquired sua sponte about corruption, drawn inferences based on the parties’ unwillingness to cooperate, and issued awards concluding that the parties’ conduct was tainted by corruption.26Constantine Partasides, Partner, Freshfields Bruckhaus Deringer, World Duty Free v. The Republic of Kenya: A Unique Precedent? 14 (March 18, 2007), available at http://star.worldbank.org/corruption-cases/sites/corruption-cases/files/documents/arw/Moi_World_Duty_Free_Chatham_House_Mar_28_2007.pdf.

A remarkable example of an arbitrator’s willingness to draw adverse inferences based on the absence of evidence produced by an allegedly corrupt party is ICC Case No. 3916, decided in 1982.27Case No. 3916, Coll. ICC Arb. Awards 1982, Award 507 (ICC Int’l Ct. Arb. 1982) (sustaining the voidness defense, as the underlying agreement was in serious opposition to good morals and public order). The dispute arose out of a contract under which the Claimant, an Iranian public servant, agreed to help the Respondent, a Greek company, secure Iranian public contracts by providing information, advice, and “personal actions.”28Id. at 509. The Claimant initiated ICC arbitration after helping the Respondent procure a number of public contracts but receiving less in commissions than had been promised. The Respondent argued that under Iranian and French law, the contract was null and void as it was contrary to good morals and public order.29Id. at 510. After the Claimant repeatedly refused to clarify the nature of the “personal actions” he undertook to secure these public contracts, the Sole Arbitrator concluded that it could be presumed that these actions had resulted in the unlawful influence of public officials and were illegal under both Iranian and French law. The award declared the contract void and that the Claimant had no legal basis on which to bring his claims.30See Case No. 6497, 24 YCA 71, Final Award (ICC Int’l Ct. Arb. 1999). (noting that “[t]he [party alleging corruption] has the burden of proof… [and] may bring some relevant evidence for its allegations, without these elements being really conclusive. In such case, the arbitral tribunal may exceptionally request the other party to bring some counter-evidence, if such task is possible and not too burdensome. If the other party does not bring such counter-evidence, the arbitral tribunal may conclude that the facts alleged are proven. [. . .] However, such change in the burden of proof is only to be made in special circumstances and for very good reasons.”) (Emphasis added).

How arbitral tribunals should balance the possible tension between their important but limited function – resolving the dispute brought to them by the parties – and the necessity to never serve as an instrument to sanction corrupt practices remains a difficult question. The WDF case serves as a useful framework to gain insight into this issue.

2. World Duty Free

This paper will describe the facts of WDF, and discuss the arguments brought forth by both parties. It will then summarise the Tribunal’s award and the rationale underlying its application of the “corruption defence.”

i. Facts

In June of 2000, World Duty Free Company Ltd., an Isle of Man corporation, initiated ICSID proceedings against the Republic of Kenya pursuant to an arbitration clause contained in a contract by which WDF had been granted exclusive concession rights for the operation of duty-free stores in Kenya’s international airports.31World Duty Free, supra note 10, ¶ 68. WDF claimed USD $500 million for revocation of contract and the unlawful transfer of the concession to a competitor, alleging that the Republic of Kenya had used its corrupt judiciary to appoint a receiver over WDF’s Kenyan operations – effectively expropriating Claimant’s assets.32World Duty Free, supra note 10, ¶ 66. The case was heard by a tribunal composed of three eminent figures of the international arbitration bar: President Gilbert Guillaume (a former President of the International Court of Justice), V.V. Veeder, QC (a leading English commercial silk), and Professor Andrew Rogers, QC (former Chief Justice of the Court of Appeals of New South Wales).33Elgueta, supra note 5.

In the Claimant’s only witness statement, WDF’s owner and CEO, Mr. Nassir Ibrahim Ali, admitted to having obtained the contract by making a “personal donation” of USD $2 million to then-Kenyan President Daniel arap Moi.34World Duty Free, supra note 10, ¶ 66. Mr. Nassir alleged that a friend had informed him that local custom required such a “personal donation” to the President in order to obtain public contracts.35World Duty Free, supra note 10, ¶ 67. At the time of the arbitration, Kenya had undergone an election, which had brought about a change in the Presidency. As a result, the Respondent chose not to contest the Claimant’s allegation of corruption, but rather to rely on the witness statement to argue that the contract was unenforceable as a matter of public policy. The Republic of Kenya then made an immediate application seeking the dismissal of all claims,36Partasides, supra note 26, at 3–4. arguing that the Claimant could not avail itself of the mechanism of international arbitration to enforce a contract that had been obtained illegally, and that, as a consequence, was both void and unenforceable.

The Claimant’s response was three-pronged. First, it argued that “personal donations” of the sort made by Mr. Nassir are “customary practice and culturally sanctioned in Kenya.”37Id. Accordingly, the payment was not illegal and did not therefore render the contract void.38Id. Second, it raised an estoppel argument, contending that this “gift” was made to, and accepted directly by, the Kenyan Head of State – the very personification of the State – and thus in effect by the Republic of Kenya itself. By accepting the payment and then partially performing the contract, the President, and by extension the Kenyan State, had affirmed the contract and lost its legal right to subsequently avoid their obligations under it on the basis of the impugned payment. The Claimant thus argued that even if there had been prior illegality, the Republic of Kenya was nevertheless bound by its obligations under the contract.39Id. Finally, the Claimant invited the arbitrators to “balance the venality” of giving and accepting a bribe.40World Duty Free, supra note 10, ¶ 178. It asked them to acknowledge the “messy realities of international business in the 1970s and 1980s in the developing world” and urged them not to punish the bribe payer to the benefit of the receiver.

ii. The Award

In October 2006, the Tribunal issued a dramatic award in which it dismissed WDF’s claims in their entirety. The Tribunal found that under the laws of England and Kenya, the Respondent was legally permitted to avoid the contract:41Partasides, supra note 26, at 12. There was some uncertainty surrounding the proper law of contract in the World Duty Free Case: while the arbitration clause referenced English law, the contract itself was to be governed by Kenyan law. Yet on matters of corruption, English and Kenyan laws were equivalent in all material respects. having been procured through the payment of a bribe, the contract was unenforceable. The award seems predicated on a zero-tolerance international policy toward corruption, stating:

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.42World Duty Free, supra note 10, ¶ 157.

As a “procedural issue of public policy,” the Tribunal found that any contract founded on corruption is unenforceable.43Id. ¶¶ 160–62. The award denounced corruption with the strongest possible moral language, holding that it “is more odious than theft,” “synonymous with the most heinous crimes,” and that contracts derived from it were “an affront to the public conscience.”44Id. ¶ 158.

The Tribunal’s reasons for dismissing each of the Claimant’s three arguments are worth canvassing. The Tribunal had no difficulty dismissing the contention that the USD $2 million payment was a culturally-sanctioned gift, stating that the existence of any such customary practice did not rebut the presumption that WDF’s payment was in effect a bribe intended to unduly influence a corrupt public official.45Id. ¶ 170. Regarding the estoppel argument, the Tribunal found that the President was acting beyond his legitimate functions, that he took the bribe to enrich himself and not the Kenyan State, and that therefore his actions could not be imputed to the State itself.46Id. ¶ 178 (distinguishing the government of Kenya, then-represented by President Moi, from the actual Republic of Kenya, and stating that “the Tribunal does not identify the Kenyan President with Kenya”). In other words, bribing the President – instead of, for example, some lower-ranking state official – could not sanitize the contract, even if it had been partially performed, from the consequences of prior illegality.47Id. ¶ 183. Thirdly, the Tribunal met the call to recognize the “messy realities” of international corruption with considerations of public policy, insisting that the law “protects not the litigating parties but the public; or in this case, the mass of tax-payers and other citizens making up one of the poorest countries in the world.”48Id. ¶ 181.

The Claimant could not “maintain any of its pleaded claims [. . .] on the ground of ex turpi non oritur actio,” since all its pleaded claims “sound[ed] or depend[ed] upon” the tainted contract.49Id. ¶ 188. The underlying principle, which found expression in English law, in Kenyan law, and in transnational public policy, was that no legally-enforceable rights or obligations can arise from a contract that was unlawfully obtained50Jason Yackee, Investment Treaties and Investor Corruption: An Emerging Defense for Host States?, Investment Treaty News, International Institute for Sustainable Development, (Oct. 19, 2012),
https://www.iisd.org/itn/2012/10/19/investment-treaties-and-investor-corruption-an-emerging-defense-for-host-states/.
– in effect, the corruption defence. Based on this principle, any respondent who proves that a contract was obtained by paying a bribe has a valid defense to escape liability for any obligation arising out of that contract.

iii. Aftermath

Since WDF, a number of tribunals have echoed its reasoning and strictly applied the corruption defense it articulated. For example, the 2010 award in GmbH & Co KG v. Republic of Ghana noted that “an investment will not be protected if it has been created in violation of national or international principles of good faith; by way of corruption, fraud or deceitful conduct; [or] if made in violation of the host State’s law.”51Gustav F W Hamester GmbH & Co KG v. Republic of Ghana, ICSID Case No. ARB/07/24, Award, ¶ 123 (June 18, 2010), available at http://www.italaw.com/sites/default/files/case-documents/ita0396.pdf. In Phoenix Action, Ltd. v. Czech Republic, the Tribunal similarly concluded that “States cannot be deemed to offer access to the ICSID dispute settlement mechanism to investments not made in good faith.” 52Phoenix Action, Ltd. v. Czech Republic, ICSID Case No. ARB/06/5, Award, ¶ 106 (Apr. 15, 2009), available at http://www.italaw.com/cases/850.

While still in its infancy, the corruption defense – if it were to become widely accepted as a defense against all liability – would profoundly affect the incentives of foreign investors and of corrupt governments.

3. Strictly Applying the “Corruption Defense”

Before WDF, the leading award on corruption in arbitration was the case mentioned in the introduction of this paper, ICC Case No. 1110, decided in 1963.53J. Gillis Wetter, Issues of Corruption before International Arbitral Tribunals: The Authentic Text and True Meaning of Judge Gunnar Lagergren’s 1963 Award in ICC Case No. 1110, 10 Arb. Int’l 277, 294 (1994) (serving as a reproduced copy of Lagergren Award in ICC Case No. 1110). In it, Judge Lagergren called corruption “an international evil […] contrary to good morals and to international public policy common to the community of nations.”54Id. ¶ 20. However, he warned that before invoking contravening good morals as a basis to prevent parties from accessing judicial or arbitral institutions to settle their disputes, tribunals must “see that one party is not thereby enabled to reap the fruits of his own dishonest conduct by enriching himself at the expense of the other.”55Id. ¶ 21.

In the wake of WDF, Judge Lagergren’s warning appears prescient, The outcome of WDF is that the Kenyan government did “reap the fruits” of its dishonest conduct. Relying on evidence of its own internal corruption, the State succeeded in avoiding any accountability for the arguably illegal expropriation of a foreign investor’s property. By allowing Kenya to invoke the “corruption defense” as total insulation from liability in connection with WDF’s contract, the award let Kenya profit from its previous government’s illegal conduct without in any way addressing ongoing corruption in other rungs of the Kenyan government.

The following section discusses whether the automatic and strict application of the “corruption defense” serves to help or to frustrate the broader objective of fighting global corruption. It argues that when dealing with disputes arising out of a state action harmful to a foreign investor, arbitral tribunals should proceed with caution before allowing state parties to rely upon the corruption of their own agents as the basis for an absolute defense against liability arising out of contracts their agents enter into corruptly or from investments procured through corruption. It discusses the ways in which such a policy misaligns the incentives of State parties. It concludes by arguing that a more balanced approach, which creates economic incentives for governments to tackle their own internal corruption, would be preferable to a one-sided policy that punishes only foreign investors in cases of corruption.

The traditional approach, which considers a contract void ab initio if tainted by illegality, may well be justified in a conventional, symmetrical, contractual setting. When parties enter into a contract – whether tainted by corruption or not – they do not generally know ex-ante whether they will find themselves in the position of claimant or respondent in the event of a dispute.56Elgueta. supra note 5. If a dispute does arise, whichever party happens to be the true respondent57It can never be ruled out that the truly injured party will find itself in the position of a respondent if the other party, for tactical reasons, commences the arbitration even though its claim pales in comparison to the “respondent’s” eventual counter-claim. Here the “true respondent” refers to the party that stands to gain from the contract — and any liability arising under that contract – being declared void due to corruption at its inception. will find itself in a systematically stronger position, since the respondent will be able to escape liability by raising the corruption defense. The justification for this imbalance was articulated by Lord Mansfield in Holman v. Johnson: In entering into the illicit contract, neither party knows ex-ante whether it stands to benefit or to be harmed by the eventual respondent’s ability to escape liability under the tainted contract.58Holmann v. Johnson, 98 Engl. Rep. 1120, 1121 (1. Cowp. 341) (1775), available at http://www.trans-lex.org/301700/.

In contrast, the system of investment arbitration is inherently asymmetrical. A State (and any agent) is aware ex-ante that it will always be the respondent if treaty claims are brought against it.59Partasides, supra note 26. In light of this, the question arises of whether the corruption defense creates perverse incentives for corrupt governments.60Richard Kreindler, Competence-Competence in the Face of Illegality in Contracts and Arbitration Agreements 433 (2013). If States are systematically exonerated from liability for harmful conduct towards a foreign investor because the initial investment was tainted by corrupt practices involving the state or its agents, what incentive is given to states to take action against corruption within their borders? In investment treaty arbitration, an inherently asymmetrical setting, the traditional approach of absolute contract nullity in cases of corruption leads to unsatisfactory results. It allows governments to use their own corruption as a grounds to escape liability for their illegal treatment of, and obligations toward, foreign investors – falling short in furthering the dual objectives of both combatting global corruption and protecting and encouraging foreign investment.

The asymmetry that exists in treaty claims brought by foreign investors also exists in contract claims brought in like scenarios, as exemplified in WDF. Since state agents who accept bribes do so ultra vires, tribunals do not impute their corrupt conduct to the state itself.61Aloysius Llamzon, State Responsibility for Corruption: The Attribution Asymmetry in International Investment Arbitration, 10 Transnat’l Disp. Mgmt 1–4 (2013) (emphasising that “there has simply never been a case in international investment arbitration where public official corruption has been attributed to the host state”). See also Klaw, supra note 18, at 91. Corrupt acts for personal enrichment bind only the officer or agent of a state, and not the State itself.62Llamzon, supra note. 61, at 83. For example, the WDF Tribunal found “no warrant at English or Kenyan law for attributing knowledge to the state (as the otherwise innocent principal) of a state officer engaged as its agent in bribery.”63World Duty Free, supra note. 10, ¶ 185. Because the bribe was covert and accepted by a President acting outside his official capacity, the Tribunal found that the corrupt action could not be imputed upon Kenya itself.64This conclusion was controversial. While a general policy exists whereby arbitration tribunals do not hold states accountable for their agents’ corrupt acts, this immunity flies in the face of principles of state responsibility underlying the Draft Articles of State Responsibility. For example, the Commentary to Article 4 of the Draft Articles states that it is “irrelevant for [purposes of attribution] that the person concerned may have had ulterior or improper motives or may be abusing public power.” It makes clear that “where such a person acts in an apparently official capacity, or under color of authority, the actions in question will be attributable to the State.” This is particularly applicable to bribery, as it is the agent’s position of public authority that allows him/her to solicit and accept illicit payments. Article 7 of the Draft Articles further notes that “[t]he conduct of an organ of a State or of a person or entity empowered to exercise elements of the governmental authority shall be considered an act of the State under international law if the organ, person or entity acts in that capacity, even if it exceeds its authority or contravenes instructions.” See, Int’l Law Comm’n, Draft Articles on Responsibility of States for Internationally Wrongful Acts, with Commentaries Rep. of the Int’l Law Comm’n, 53rd Sess., Apr. 23–Jun. 1 and Jul. 2–Aug. 10, U.N. GAOR, 56th Sess., Supp. No. 10, A/56/10 (emphasis added).

In contrast, the actions of corporate agents are imputed to the corporate entity – generally stripping the corporation of its rights under a contract and of protection under applicable investment treaties.65See generally Llamzon, supra note 61. In the WDF award, the Tribunal imputed the bribe paid by Mr. Nassir to the Claimant, the former being the latter’s agent.66World Duty Free, supra note 10, ¶ 167. Even in cases where middle-men acting for a corporation, but not expressly instructed to pay bribes, are found to have corrupted officials to procure a public contract, tribunals generally do not recognize the corporation’s rights under the tainted contract.67Partasides, supra n. 26, at 14 (recounting an address at the World Bank in which Partasides stated that “[o]ne of the purposes of proceedings such as World Duty Free is to disincentivise those who are participating in corrupt transactions. If the contract stands because the corruption was by middlemen, we will not be benefiting from that disincentivisation as much as we should be. English law is very clear in this regard. The Logicos case in particular draws no distinction between the middleman and the principal”). This asymmetrical attribution fails to hold states accountable for the actions of their agents.68Llamzon, supra note 61, at 67–70. And when state parties can suffer no legal consequences from their agents’ illegal conduct – and even stand to benefit from such conduct, as did Kenya –, there is no incentive for them to tackle systemic corruption within the government or its agencies. 69Andreas Kulick & Carsten Wendler, A Corrupt Way to Handle Corruption? Thoughts on the Recent ICSID Case Law on Corruption, 37 Legal Issues of Econ. Integration 61, 81 (2010).

A related concern is the potential that governments who acquire knowledge that an investment was procured or is otherwise tainted by fraud might act opportunistically and seek to obtain a benefit – say, by expropriating a concession without compensation –deliberately breaching their treaty or contract obligations. If the strict and systematic application of the corruption defense were to become universal in investment treaty arbitration, corrupt governments would know that arbitral tribunals would eventually refuse to enforce the contractual or treaty rights of investors guilty of corruption. Corrupt government officials might choose to expropriate the property of foreign investors whom they know obtained their investment through corruption.70Odumosu, supra note 21, at 14.

One might argue, au contraire, that the automatic and strict application of the corruption defense is so drastic that it creates a powerful incentive for investors to avoid corrupt practices entirely – perhaps powerful enough for all investors to stop paying bribes and herald the end to all corruption. However, there are good reasons to doubt the effectiveness of such a one-sided policy.

Fundamentally, the strict and systematic application of the corruption defense punishes the payer of bribes (corrupt entrepreneurs) to the benefit of the receiver (corrupt public officials or the government that employs them). When government corruption and the illegal treatment of foreign investors by state parties go unsanctioned, no incentive is created for their behaviours to change.71Hilmar Raeschke-Kessler & Dorothee Gottwald, Corruption in Foreign Investment: Contracts and Dispute Settlement between Investors, States, and Agents, 9 J. World Inv. & Trade vii, 16 (2008). Not only does such a policy fail to address the “demand” side of corruption, it also punishes only a portion of its corresponding “supply,” as government corruption is fuelled not just by foreign, but also by domestic bribe payers.72Id. at 18. Even if one concedes that the policy might dissuade foreign investors from bribing public officials, it has no effect on domestic contenders in bids for public contracts. In countries with ingrained cultures of corruption, domestic entrepreneurs will likely continue to bribe their officials. Finding it costlier to compete with domestic investors still willing to pay bribes, foreign investment as a whole will be dissuaded in countries with high rates of corruption.73Kulick & Wendler, supra note 69, at 81. Since many of these countries are emerging economies, the ultimate impact of the corruption defense’s strict and systematic application may be to hamper foreign investment in precisely the countries that need it most. This result seems at odds with the goals of investment arbitration, and not a consequence that should be idly tolerated.

In short, the asymmetrical nature of investment treaty arbitration means that the traditional rule of absolute contract nullity in cases of corruption involving a foreign investor results in inefficient outcomes. The strict and systematic application of the “corruption defense” creates no incentive for states to tackle corruption among their public officials, and may actually embolden the illegal treatment of investors by governments who need no longer worry about liability arising from their unlawful actions.

4. Toward a More Balanced Approach:

There is a need for a more flexible approach to dealing with corruption in international arbitration – one that will create strong incentives for governments to fight internal corruption.

First, the corruption defense should only be available to a State that demonstrates its commitment to transparency through robust and sustained domestic measures to combat corruption, including by the prosecution of corrupt public officials.74Aloysius Llamzon, The Control of Corruption through International Investment Arbitration: Potential and Limitations, 102 Proceedings of the Annual Meeting of the Am. Soc’y of Int’l L. 208, 210 (2008). In the WDF case, the bribe paid by the Claimant was “solicited by the Kenyan President” and “not wholly initiated by the Claimant.”75World Duty Free, supra note 10, ¶ 66. Yet no effort was made by the Kenyan authorities during or after arbitration proceedings to prosecute former President Moi or to force him to return the bribe he accepted from Mr. Nassir, despite his no longer enjoying constitutional immunity.76Daniel arap Moi, Encyc. Britannica Inc., http://www.britannica.com/biography/Daniel-arap-Moi (last visited Mar. 21, 2017). Unless the availability of the corruption defense is conditioned on a State having robust, actively enforced anti-corruption policies, it will continue to fail to create incentives for states to address their internal corruption problems.

Tribunals might also consider imposing some form of equitable relief – accounting for the State’s participation in corruption and determining its legal consequences accordingly.77Raeschke-Kessler & Gottwald, supra note 71, at 17–18. Some recognition of that concern, albeit very modest, can be found in the 2013 Metal-Tech Ltd. v. Uzbekistan award. Acknowledging the State’s role in creating the situation that led to the dismissal of the claims, the Tribunal concluded that “because of this participation, which is implicit in the very nature of corruption, it appears fair that the Parties share in the costs” of the arbitral proceedings.78Metal-Tech Ltd. v. Republic of Uzbekistan, ICSID Case No. ARB/10/3, Award, ¶ 422 (Oct. 4, 2013). Tribunals should also consider awarding alternative remedies in conjunction with their giving effect to the corruption defence, such as restitution – applying by analogy the principle informing Article 3.3.2 of the UNIDROIT Principles.79Elgueta, supra note 5 (observing that the imposition of a restitutionary remedy would be in line with the 2010 UNIDROIT Principles, as Comment 1 of Article 3.3.2 suggests they are permissible in certain circumstances: “Even where as a consequence of the infringement of a mandatory rule the parties are denied any remedies under the contract, it remains to be seen whether they may at least claim restitution of what they have rendered in performing the contract”). For example, this might include ordering restitution at least of the claimant’s initial investment, or the costs incurred in performing the contract. 80International Institute for the Unification of Private Law (UNIDROIT), UNIDROIT Principles of International Commercial Contracts 134 (2010).

Adopting the more nuanced approach advocated by this paper, including a wider spectrum of remedies, is especially appropriate where the corrupt host state is a developing country. Any failure to sanction a state that partakes in corrupt practices – and subsequently breaches its obligations toward a foreign investor – will negatively impact that state’s prospects as a destination for future foreign investment.81Kulick & Wendler, supra note 69, at 81. In WDF, the Tribunal sought to protect the interests of “the mass of tax-payers and other citizens making up one of the poorest countries in the world.”82World Duty Free, supra note 10, ¶ 181. The Tribunal was correct in noting that, ultimately, those who suffer most from corruption are not a country’s foreign investors, but its citizens. Yet those citizens suffer more from ingrained corruption remaining unaddressed than they would have from the financial burden of one arbitral award, had that award created an incentive for their government to undertake robust anti-corruption reforms. By failing to sanction the Kenyan government’s illegal treatment of a foreign investor, the WDF Tribunal ultimately harmed the country’s longer-term prospects. It created no incentive for the Kenyan State to tackle its endemic corruption, which in turn arguably hampered the country’s economic development by further limiting its ability to attract foreign investment.

Conclusion

The international arbitration system has the potential to make significant contributions to accountability in the global fight against corruption.83Odumosu, supra note 21, at 117. Already, it provides a robust international legal and institutional framework that serves foreign investment by allowing investors to bypass corrupt domestic judiciaries and by issuing awards that hold all states to their treaty obligations. Yet as we continue to reflect on how to optimize our international system of justice, it is incumbent upon us, and all levels of the justice system, to consider creative solutions to seemingly intractable problems. This paper has discussed one such problem – that of corruption in international arbitration – and has argued that giving effect to a strict corruption defence for states’ liabilities under tainted contracts gravely misaligns corrupt states’ incentives. It has advanced a number of proposals to reform the ways tribunals address corruption, arguing that a more nuanced approach would better advance the broader objectives of fighting global corruption while protecting and encouraging foreign investment.

References   [ + ]

01. Moi Ordered Goldenberg Payment (Feb. 17, 2004), http://news.bbc.co.uk/2/hi/africa/3495689.stm. The Goldenberg Commission was established to investigate the Goldenberg scandal, a political scandal in the 1990s involving Daniel arap Moi’s government subsidies of gold exports, which far exceeded the standard arrangements at the time. Subsidies paid to Goldenberg International amounted to 35% more than their foreign currency earnings. The scheme is estimated to have cost Kenya over 10% of its annual GDP, and it remains disputed whether any amount of gold was actually exported.
02. Case No. 1110 of 1963, 10 Arb. Int’l, 282, 291 (ICC Int’l Ct. Arb.), available at http://www.trans-lex.org/201110/.
03. Muriithi Mutiga, Kenya: Genesis of an Extraordinary Case, E. Afr. Stand., Apr. 3, 2005.
04. Id. at 291 ¶ 23.
05. Giacomo Rojas Elgueta, The Legal Consequences of Corruption in International Arbitration: Toward a More Flexible Approach?, Kluwer Arb. Blog, Jan. 20, 2016, available at http://kluwerarbitrationblog.com/2016/01/20/the-legal-consequences-of-corruption-in-international-arbitration-towards-a-more-flexible-approach/.
06. See, e.g., Pierre Lalive, Transnational (or Truly International) Public Policy and International Arbitration, in Comparative Arbitration Practice and Public Policy in Arbitration, 257, 257 (Sanders ed., 1986).
07. Id. at 258.
08. See, e.g., Inceysa Vallisoletana S.l. v. Republic of El Salvador, ICSID Case No. ARB/03/26, Award, ¶ 339 (Aug. 2, 2006).
09. See, e.g., Phoenix Action Ltd. v. Czech Republic, ICSID Case No. ARB/06/5, Award, ¶ 145 (Apr. 15, 2009).
10. World Duty Free Company Limited v. Republic of Kenya, ICSID Case No. ARB/00/7, Award, ¶ 157 (Oct. 4, 2006) (“World Duty Free”), available at http://www.italaw.com/documents/WDFv.KenyaAward.pdf.
11. Transparency International, Corruption Perceptions Index 2015, (last visited Mar. 1, 2017) http://www.transparency.org/cpi2015 (revealing an increase in perceived global corruption levels over the past three years. The report shows, for example, increases in perceived corruption among many South American countries – with Brazil’s score dipping from 43 to 38 and Guatemala’s dipping from 32 to 28.).
12. Transparency International, Global Corruption Report 2009: Corruption and the Private Sector, at xxv (2009), available at http://files.transparency.org/content/download/107/431/file/2009_GCR_EN.pdf.
13. Id. at 11.
14. Id. at 12.
15. Colin Nicholls, Tim Daniel, Alan Bacarese & John Hatchard, Corruption and Misuse of Public Office 101 (2d ed. 2011).
16. Elgueta, supra note 5.
17. Developed countries have been united in their efforts to punish their citizens for acts of corruption abroad via national acts of legislation and international agreements against corrupt practices. See, e.g., Foreign Corrupt Practices Act of 1977 15 U.S.C. § 78dd-1 (1977); OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Dec. 17, 1997, 37 I.L.M. 1 (1999); Inter-American Convention Against Corruption, Mar. 29, 1996, 35 I.L.M. 724 (1997); Council of Europe Criminal Law Convention on Corruption, Jan. 27, 1999, E.T.S. No. 173; Council of Europe Civil Law Convention on Corruption, Nov. 4, 1999, E.T.S. No. 174; United Nations Convention Against Corruption, G.A. Res. 58/4, U.N. GAOR, 58th Sess., U.N. Doc. A/58/4 (Dec. 9, 2003); International Chamber of Commerce, Combating Extortion and Bribery: ICC Rules of Conduct and Recommendations (2005), available at https://cdn.iccwbo.org/content/uploads/sites/3/2005/10/Combating-Extortion-and-Bribery-ICC-Rules-of-Conduct-and-Recommendations.pdf; Bribery Act, 2010, c.23 (2010) (U.K.).
18. Bruce W. Klaw, State Responsibility for Bribe Solicitation and Extortion: Obligations, Obstacles, and Opportunities, 33 Berkeley J. Int‘l L., 59, 63 (2015).
19. Victoria Shannon, 12th Annual ITA-ASIL Conference: Corruption in International Arbitration: Evidence and Remedies, Am. Soc’y of Int’l L. (Apr. 9, 2015, 3:18 PM), https://www.asil.org/blogs/12th-annual-ita-asil-conference-corruption-international-arbitration-evidence-and-remedies.
20. Michael Hwang & Kevin Lim, Corruption in Arbitration – Law and Reality, 8(1) Asian Int’l Arb. J. 1, 7–12 (2012).
21. Ibironke Odumosu, International Investment Arbitration and Corruption Claims: An Analysis of World Duty Free v. Kenya, 4 L. & Dev. Rev. 88, 121 (2011).
22. Hwang & Lim, supra note 20, at 42–46 (outlining sanctions that tribunals can impose if corruption is established, including the power to decline jurisdiction, or the power to void a contract and exonerate the respondent from liability under the contract).
23. See Int’l Chamber of Commerce, ICC Rules of Arbitration, art. 25(5), 41 (Jan. 1, 2012), available at http://community.icann.org/download/attachments/56985803/ICC Rules of Arbitration.pdf (stating that “at any time during the proceedings, the arbitral tribunal may summon any party to provide additional evidence” and “in all matters not expressly provided for in the Rules, the Court and the arbitral tribunal shall act in the spirit of the Rules and shall make every effort to make sure that the award is enforceable at law”).
24. See Int’l Bar Ass’n, IBA Rules on the Taking of Evidence in International Arbitration, art. 3.10 (2010), available at http://www.ibanet.org/Document/Default.aspx?DocumentUid=68336C49-4106-46BF-A1C6-A8F0880444DC (noting that the IBA Rules’ Article 3.10 allows the Tribunal to “request any Party to produce . . . any document”).
25. Id. arts. 9.4, 9.5.
26. Constantine Partasides, Partner, Freshfields Bruckhaus Deringer, World Duty Free v. The Republic of Kenya: A Unique Precedent? 14 (March 18, 2007), available at http://star.worldbank.org/corruption-cases/sites/corruption-cases/files/documents/arw/Moi_World_Duty_Free_Chatham_House_Mar_28_2007.pdf.
27. Case No. 3916, Coll. ICC Arb. Awards 1982, Award 507 (ICC Int’l Ct. Arb. 1982) (sustaining the voidness defense, as the underlying agreement was in serious opposition to good morals and public order).
28. Id. at 509.
29. Id. at 510.
30. See Case No. 6497, 24 YCA 71, Final Award (ICC Int’l Ct. Arb. 1999). (noting that “[t]he [party alleging corruption] has the burden of proof… [and] may bring some relevant evidence for its allegations, without these elements being really conclusive. In such case, the arbitral tribunal may exceptionally request the other party to bring some counter-evidence, if such task is possible and not too burdensome. If the other party does not bring such counter-evidence, the arbitral tribunal may conclude that the facts alleged are proven. [. . .] However, such change in the burden of proof is only to be made in special circumstances and for very good reasons.”) (Emphasis added).
31. World Duty Free, supra note 10, ¶ 68.
32. World Duty Free, supra note 10, ¶ 66.
33. Elgueta, supra note 5.
34. World Duty Free, supra note 10, ¶ 66.
35. World Duty Free, supra note 10, ¶ 67.
36. Partasides, supra note 26, at 3–4.
37. Id.
38. Id.
39. Id.
40. World Duty Free, supra note 10, ¶ 178.
41. Partasides, supra note 26, at 12. There was some uncertainty surrounding the proper law of contract in the World Duty Free Case: while the arbitration clause referenced English law, the contract itself was to be governed by Kenyan law. Yet on matters of corruption, English and Kenyan laws were equivalent in all material respects.
42. World Duty Free, supra note 10, ¶ 157.
43. Id. ¶¶ 160–62.
44. Id. ¶ 158.
45. Id. ¶ 170.
46. Id. ¶ 178 (distinguishing the government of Kenya, then-represented by President Moi, from the actual Republic of Kenya, and stating that “the Tribunal does not identify the Kenyan President with Kenya”).
47. Id. ¶ 183.
48. Id. ¶ 181.
49. Id. ¶ 188.
50. Jason Yackee, Investment Treaties and Investor Corruption: An Emerging Defense for Host States?, Investment Treaty News, International Institute for Sustainable Development, (Oct. 19, 2012),
https://www.iisd.org/itn/2012/10/19/investment-treaties-and-investor-corruption-an-emerging-defense-for-host-states/.
51. Gustav F W Hamester GmbH & Co KG v. Republic of Ghana, ICSID Case No. ARB/07/24, Award, ¶ 123 (June 18, 2010), available at http://www.italaw.com/sites/default/files/case-documents/ita0396.pdf.
52. Phoenix Action, Ltd. v. Czech Republic, ICSID Case No. ARB/06/5, Award, ¶ 106 (Apr. 15, 2009), available at http://www.italaw.com/cases/850.
53. J. Gillis Wetter, Issues of Corruption before International Arbitral Tribunals: The Authentic Text and True Meaning of Judge Gunnar Lagergren’s 1963 Award in ICC Case No. 1110, 10 Arb. Int’l 277, 294 (1994) (serving as a reproduced copy of Lagergren Award in ICC Case No. 1110).
54. Id. ¶ 20.
55. Id. ¶ 21.
56. Elgueta. supra note 5.
57. It can never be ruled out that the truly injured party will find itself in the position of a respondent if the other party, for tactical reasons, commences the arbitration even though its claim pales in comparison to the “respondent’s” eventual counter-claim. Here the “true respondent” refers to the party that stands to gain from the contract — and any liability arising under that contract – being declared void due to corruption at its inception.
58. Holmann v. Johnson, 98 Engl. Rep. 1120, 1121 (1. Cowp. 341) (1775), available at http://www.trans-lex.org/301700/.
59. Partasides, supra note 26.
60. Richard Kreindler, Competence-Competence in the Face of Illegality in Contracts and Arbitration Agreements 433 (2013).
61. Aloysius Llamzon, State Responsibility for Corruption: The Attribution Asymmetry in International Investment Arbitration, 10 Transnat’l Disp. Mgmt 1–4 (2013) (emphasising that “there has simply never been a case in international investment arbitration where public official corruption has been attributed to the host state”). See also Klaw, supra note 18, at 91.
62. Llamzon, supra note. 61, at 83.
63. World Duty Free, supra note. 10, ¶ 185.
64. This conclusion was controversial. While a general policy exists whereby arbitration tribunals do not hold states accountable for their agents’ corrupt acts, this immunity flies in the face of principles of state responsibility underlying the Draft Articles of State Responsibility. For example, the Commentary to Article 4 of the Draft Articles states that it is “irrelevant for [purposes of attribution] that the person concerned may have had ulterior or improper motives or may be abusing public power.” It makes clear that “where such a person acts in an apparently official capacity, or under color of authority, the actions in question will be attributable to the State.” This is particularly applicable to bribery, as it is the agent’s position of public authority that allows him/her to solicit and accept illicit payments. Article 7 of the Draft Articles further notes that “[t]he conduct of an organ of a State or of a person or entity empowered to exercise elements of the governmental authority shall be considered an act of the State under international law if the organ, person or entity acts in that capacity, even if it exceeds its authority or contravenes instructions.” See, Int’l Law Comm’n, Draft Articles on Responsibility of States for Internationally Wrongful Acts, with Commentaries Rep. of the Int’l Law Comm’n, 53rd Sess., Apr. 23–Jun. 1 and Jul. 2–Aug. 10, U.N. GAOR, 56th Sess., Supp. No. 10, A/56/10 (emphasis added).
65. See generally Llamzon, supra note 61.
66. World Duty Free, supra note 10, ¶ 167.
67. Partasides, supra n. 26, at 14 (recounting an address at the World Bank in which Partasides stated that “[o]ne of the purposes of proceedings such as World Duty Free is to disincentivise those who are participating in corrupt transactions. If the contract stands because the corruption was by middlemen, we will not be benefiting from that disincentivisation as much as we should be. English law is very clear in this regard. The Logicos case in particular draws no distinction between the middleman and the principal”).
68. Llamzon, supra note 61, at 67–70.
69. Andreas Kulick & Carsten Wendler, A Corrupt Way to Handle Corruption? Thoughts on the Recent ICSID Case Law on Corruption, 37 Legal Issues of Econ. Integration 61, 81 (2010).
70. Odumosu, supra note 21, at 14.
71. Hilmar Raeschke-Kessler & Dorothee Gottwald, Corruption in Foreign Investment: Contracts and Dispute Settlement between Investors, States, and Agents, 9 J. World Inv. & Trade vii, 16 (2008).
72. Id. at 18.
73. Kulick & Wendler, supra note 69, at 81.
74. Aloysius Llamzon, The Control of Corruption through International Investment Arbitration: Potential and Limitations, 102 Proceedings of the Annual Meeting of the Am. Soc’y of Int’l L. 208, 210 (2008).
75. World Duty Free, supra note 10, ¶ 66.
76. Daniel arap Moi, Encyc. Britannica Inc., http://www.britannica.com/biography/Daniel-arap-Moi (last visited Mar. 21, 2017).
77. Raeschke-Kessler & Gottwald, supra note 71, at 17–18.
78. Metal-Tech Ltd. v. Republic of Uzbekistan, ICSID Case No. ARB/10/3, Award, ¶ 422 (Oct. 4, 2013).
79. Elgueta, supra note 5 (observing that the imposition of a restitutionary remedy would be in line with the 2010 UNIDROIT Principles, as Comment 1 of Article 3.3.2 suggests they are permissible in certain circumstances: “Even where as a consequence of the infringement of a mandatory rule the parties are denied any remedies under the contract, it remains to be seen whether they may at least claim restitution of what they have rendered in performing the contract”).
80. International Institute for the Unification of Private Law (UNIDROIT), UNIDROIT Principles of International Commercial Contracts 134 (2010).
81. Kulick & Wendler, supra note 69, at 81.
82. World Duty Free, supra note 10, ¶ 181.
83. Odumosu, supra note 21, at 117.

You Might Also Like