In the last panel of the annual meeting we found that there had been a positive finding, by whatever means,1of corruption in a pending or concluded arbitration, or at least an allegation to this effect. Our task was to examine the consequences and effects of the finding or allegation to the legal relationship that is the subject matter of the arbitration under examination.

As our panel topic indicated the issues that arose were numerous. Some of them were disposed of in a rather summary fashion, either since they were infrequent or since the solution is rather given under many laws. Others, again, required much thought and analysis, depending on the legal regime(s) to be applied or whether the corruption had been found or alleged in or in connection with commercial or investment treaty arbitration.

While many national laws accept the principle that an unlawful act cannot serve as the basis for an action in law and that no one can be allowed to take advantage of his own wrong, and other alike good faith principles of Roman law,2transforming such principles into contractual or other relief where a contract or an investment is tainted by corruption can, however, raise questions of some complexity. How do we 'fully compensate' 'persons who have suffered damage as a result of corruption' as provided in the Civil Law Convention on Corruption,3or compute in each case the damages that such compensation according to the Convention may cover, namely 'material damage, loss of profits and non-pecuniary loss',4also considering the effect of 'contributory negligence'?5

When it comes to commercial arbitration a corruption finding will as a rule affect the merits thereof. Three main situations required our attention on the panel. The first was where we were dealing with a contract for corruption, e.g. where the contractual object was the payment of a bribe. This question is quite well regulated by most European national laws with the result that such contract is void or at least cannot serve as the basis for an action in law. When we, as our second category, were faced with a contract with a legitimate purpose that has been procured by corruption, the prevalent view under most laws that we examined on the panel was that such contract is voidable, at least at the request of the innocent, non-corrupt, party. The remedies available to the contracting parties as a result of the contract having been voided or where the innocent party insists on its performance, raised a number of challenging issues under different applicable laws and were the focal point for our panel in relation to commercial arbitration. The third situation we examined in commercial arbitration was procedural, namely whether the corruption in the procurement strikes the agreement to arbitrate in the underlying contract, i.e. whether the separability doctrine can be upheld and a dispute thereunder arbitrated. The default position faced with this question is probably that the agreement to arbitrate will not be void or voidable unless the corruption has directed itself to this very contractual clause, which probably remains quite a rare occurrence and did not need to be the focus of much attention on our panel.

We therefore, as regards commercial arbitration, analysed the civil law effects of corruption on a contract that had been procured by corruption and the remedies available to an innocent party both from a civil law and a common law perspective. As already stated, various forms of monetary compensation can come into play, both where the innocent party requests performance of the contract and where there is a request for voidance thereof. Damages can also under some laws constitute so-called 'negative interest,' i.e. the negotiating costs of the innocent party.

Our first panel had already debated the extent to which allegations of corruption may affect the jurisdiction of the Arbitral Tribunal or (substantive) admissibility of Claimant's case. In investment treaty arbitration an allegation that the investment has been procured, effected or maintained by corruption will normally become a gateway issue for the Arbitral Tribunal's authority to rule on the dispute before it. This since the legality of the investment can be deemed to constitute a prerequisite for jurisdiction based on an investment treaty, which only protects non-corrupt investments.

It is difficult to see how an allegation of corruption that remains unproven in the arbitration could affect the award on the merits therein. However, the situation may be different as regards determinations on jurisdiction, admissibility and enforcement/setting aside proceedings.

The expansion of criminalized bribery to businesses and their officers6beyond the traditional governmental institutions and public officials (directly or indirectly), does not to date seem to have triggered much discussion as regards any particular considerations that may attach to private sector bribery in respect of the civil law effects of corruption. The panel discussion also did not analyse whether a finding or allegation of bribery in the private sector in a purely B2B context could or should have different civil law implications than the more 'traditional' forms of bribery when assessed by the arbitrators.

On a personal note I find that the question of the commercial consequences, under applicable substantive laws, on the underlying contract or investment of a finding of corruption is worthy of further analysis internationally. Much of the debate today also in the world of arbitration has, equal to the discussions on Company Boards and the risk-management programs implemented by their compliance officers, been on the necessity, obvious as it is, to identify and combat corruption and to a lesser degree on the civil law consequences of any such finding to the merits of a case. When arguing in favour of an expansion of arbitrator powers to the criminal domain, we may need to become better versed in the checks and balances, including protection against self-incrimination, that need to regulate inquiries into criminalized offences. The legal effects of any finding of corruption in or to a dispute being or having been arbitrated is, on the other hand, an area where the core competencies of international arbitral practitioners could be more extensively deployed. Another related area is the attribution to a corporation of bribery under applicable company law and corporate governance regulation, including the existence of corporate intent or negligence.

A summary conclusion can, in all events, be drawn already at this point, as also concluded by Richard Kreindler: 'Corruption and bribery, irrespective of the agreed or determined law(s), will invariably deprive the contracting party or investor of the benefits of the contract and/or of treaty protection'.7Apart from the many gateway issues and those under international law that will continue to be analyzed, remains to be established also if there can be convergence in civil law as to how national laws will approach the allocation of the commercial risk where corruption is found to have influenced a commercial contract or an investment.

1
Such as the Arbitral Tribunal's own finding, result of criminal investigation or national court judgment etc. that has been introduced into the arbitration or into enforcement/setting aside proceedings.

2
Ex delicto non oritur actio; nullus commodum capere potest de injuria sua propria.

3
ETS No. 174, 1999, Article 3.1.

4
id. Article 3.2.

5
id. Article 6.

6
ETS No. 173, 1999 and Council Framework Decision 2003/568/JHA.

7
Compétence-Compétence in the Face of Illegality in Contracts and Arbitration Agreements, Pocketbooks of the Hague Academy of International Law, 2013, p. 353. This book has also in many other respects served as inspiration and guidance for this moderator.