Introduction

Corruption is the cancer of international commerce.1

Multinational companies should be the most active players in the international trade arena to fight by all means against the so called "gift economy,"2whereby phenomena of corruption are more and more frequently realized not only via bribery and/or money laundering, but also through "favours" normally done by representatives of the private sector to members (and their relatives) of public institutions. A new Bermuda Triangle is in place, composed by corrupted politicians, ambitious judges and a suspicious public opinion, more and more inclined to consider guilty rather than innocent any person involved in corruption cases.3

For this purpose, Enel SpA, the Italian energy utility present in forty countries across four continents, implemented the Code of Ethics and the Zero Tolerance Plan, both applied in all companies belonging to Enel Group.4

The Code of Ethics expresses the ethical commitments and responsibilities in the performance of business activities and corporate operations by the employees of Enel SpA and its subsidiaries, consists of:

a) the general principles governing relations with stakeholders which determine, in an abstract manner, the reference values for judging Enel's activities;

b) the criteria of conduct in the relationship with each category of stakeholder, which generate the specific guidelines and standards that Enel employees are required to follow in order to comply with the general principles and to prevent unethical behavior;

c) the implementation procedures, which delineate the system of control to ensure the observance and continuous improvement of the Code of Ethics.

The Code of Ethics is applicable both in Italy and abroad, with due regard to the cultural, social and economic differences prevailing in the various countries in which Enel operates. Furthermore, Enel is committed to respecting its own Code of Ethics, and obligations assumed through signing of the Global Compactw.5Consequently, it requires its staff to demonstrate honesty, transparency and fairness in performing their work. The same commitments are required of all other stakeholders (i.e. individuals, groups or institutions) that contribute to the achievement of its mission or undertake activities related to this objective.

In compliance with the 10th principle of the Global Compact, which requires that "businesses should work against all forms of corruption, including extortion and bribery",6Enel intends to pursue its commitment to fight corruption as confirmed by its subscription to PACI,7which provides for the application of the criteria of transparency recommended by Transparency International. Enel confirms its adhesion to the 10 principles of the Global Compact through the annual COP8of the United Nations and its Sustainability Report accounts for their application in operational activities. This commitment, which includes 'Organizational Model 231',9translates into the following general principles:

(i) Enel rejects corruption in all its forms, both direct and indirect.

(ii) Enel establishes the "Zero Tolerance Of Corruption" (ZTC) plan for fighting corruption.

1. Arbitrators ' Right or Duty to Investigate Corruption

A crucial question: Is the arbitrator, entrusted with a sacred mission of rendering an award, bound to report a case if he has only a suspicion that something is wrong?"10

The best reply to this question is given by professor Antonio Crivellaro, who considers that the arbitrators' approach may vary from case to case, following one of the following patterns:11

a) refuse to arbitrate the dispute; or

b) accept jurisdiction on the theory of severability of the arbitration agreement, but uphold ex officio international standards of public policy (…); or

c) either on request of the party (the respondent) or ex officio they find in the agency agreement itself certain 'indicia' that the agency conceals a bribery case; or

d) if an allegation of bribery is raised by the respondent they require 'low standard' of proof or resort to a 'presumption' in order to declare the agency agreement invalid; or

e) if an allegation of bribery is raised they require high standard of proof of corruption and failing such proof declare the agreement valid and uphold the agents' claim to payment; or

f) if bribery can't be established by the evidence, dismiss the agents' claim for payment and refuse to enforce the agency agreement on the ground that the agreement is illicit under mandatory provisions of the procurement law of the importing country, prohibiting recourse to intermediaries when contracting with a state or state entities; or

g) apply the public policy rules of the national law, which by the parties' choice governs the agreement, disregarding the equivalent public policy rules of the law of the importing country; or

h) inquire whether the arbitration agreement contained in the main contract awarded to the principle has been as such induced by corruption and fraud.

With regard to the arbitral jurisprudence on the matter, the first award was rendered by Judge Gunnar Lagergren,12who stated that "(…) it cannot be contested that there exists a general principle of law recognized by civilized nations that contracts which seriously violate bonos mores or international public policy are invalid or at least unenforceable and that they cannot be sanctioned by courts or arbitrators." He continues affirming that "parties who ally themselves in an enterprise of the present nature must realize that they have forfeited any right to ask for assistance of the machinery of justice (national courts or arbitral tribunals) in settling their disputes."

Subsequently, a different approach has been taken by the arbitral tribunals, and now the prevailing view is that arbitrators have jurisdiction and should decide the merits of the case and take any illegality resulting from the criminal activity into consideration when they decide the case.13

This is based, firstly, on the principle of separability of the arbitration clause from the other provisions of the contract giving rise to the dispute, meaning that while the contract may be invalid, the arbitration clause remains valid.14Said principle is set forth, inter alia, under article 23 (1) of the UNCITRAL Arbitration Rules which reads: "The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause that forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause."

The separability doctrine was addressed in the arbitral jurisprudence, with particular reference to the case Westinghouse International Projects Company et al. v National Power Corporation.15

Secondly, it has to be taken into account the principle of Kompetenz- Kompetenz,16which grants an arbitral tribunal the power to make a decision on whether (i) it has jurisdiction over an issue that needs to be settled and (ii) an arbitration agreement is valid. Said entitlement is also recognized under the most relevant arbitral regulations. In particular:

i) article 6.5 of ICC Rules,17which set forth that "in all matters decided by the Court under Article 6(4), any decision as to the jurisdiction of the arbitral tribunal, expect as to parties or claims with respect to which the Court decides that the arbitration cannot proceed, shall then be taken by the arbitral tribunal itself";

ii) according to article 41 of ICSID Convention,18the tribunal shall be the judge of his own competence. The paragraph two of said article states that "any objection by a party to the dispute that the dispute is not within the jurisdiction of the Centre, or for other reasons is not within the competence of the tribunal, shall be considered by the tribunal which shall determine whether to deal with it as a preliminary question or to join it to merits of the dispute";

iii) pursuant to article 23.1 of UNCITRAL Arbitration Rules,19 "the arbitral tribunal shall have the power to rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause that forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null shall not entail automatically the invalidity of the arbitration clause." This is an example of an express regulation of the principle of separability of the arbitration clause, mentioned above, with respect to the contract under dispute;

iv) article 23.1 of LCIA Rules,20styled "Jurisdiction of the Arbitral Tribunal" reads

The Arbitral Tribunal shall have the power to rule on its own jurisdiction, including any objection to the initial or continuing existence, validity, effectiveness or scope of the Arbitration Agreement." Article 23.2 continues: "For that purpose, an arbitration clause which forms or was intended to form part of another agreement shall be treated as an arbitration agreement independent of that other agreement. A decision by the Arbitral Tribunal that such other agreement is non-existent, invalid or ineffective shall not entail ipso jure the non-existence, invalidity or ineffectiveness of the arbitration clause.

The major scholarship points out that "insofar as arbitrators are requested to make a binding arbitral award through an adjudicative process, either awarding monetary sums or declaratory relief, it is a vital precondition to the fulfillment of this mandate that they consider and decide claims that contractual agreements are not invalid, unlawful, or otherwise contrary to public policy."21

It remains however understood that too general rules should not be made, "but rather have to look at specific situations to see how these issues arise in the individual case",22in line with Prof. Crivellaro's conclusion mentioned above as regards the different arbitrators' approach on a case by case basis, as well as, with the conclusion achieved in the session of GAR Live where Jeremy Carver, an advisor at anti-corruption watchdog Transparency International, raised "the importance of distinguishing between cases where the contract (or the arbitration itself) is part of a corrupt compact, and those where the contract is allegedly tainted by collateral corruption. He warned that arbitrators in the second type of case should think carefully if asked to void a contract worth billions of dollars on the basis of "implications of corruption that are impossible to prove To do so based on a mere 'sniff' of corruption would be 'grossly irresponsible'," he said.23

Raising Issues of Corruption Upon Arbitrators' Own Initiative

There are several reasons why an arbitral tribunal should compensate for parties' reluctance to make corruption allegations and investigate issues of corruption sua sponte,24bearing however in mind that arbitrators are not prosecutors and therefore have not statutory obligation to carry out investigation and handle criminal matters.

First, arbitrators have a duty not only to resolve a dispute, but to issue an award that is valid and enforceable, at least at the place of arbitration, in line with the principle of enforceability. This is confirmed, for example, by the provision of article 41of ICC Rules which reads: "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." A similar provision is set forth under article 32 (2) of 1998 LCIA Rules, according to which "in all matters not expressly provided for in these rules the LCIA Court, the Arbitral Tribunal and the parties shall act in the spirit of these rules and shall make every reasonable effort to assure that the award is legally enforceable." An award that overlooks corruption is certainly contrary to both national and international public policy, a state court will be obliged to set aside or refuse to enforce the award.25

Secondly, according to art. 25 of ICC Rules,26it is the duty of arbitrators to establish the facts of the case by all appropriate means. Furthermore, article 22 (1) provides: "The Arbitral Tribunal and the parties shall make every effort to conduct the arbitration in an expeditious and cost-effective manner, having regard to the complexity and value of the dispute." These provisions reflect both rights and duties of the arbitral tribunal, which has the discretion and option to pursue 'all appropriate means', but at the same time it must do so in an expeditious and cost-effective manner." It is also worth noting that pursuant to article 39 of ICC Rules, "a party which proceeds with the arbitration without raising its objection to a failure to comply with any provision of the Rules, or of any other rules applicable to the proceedings (…) shall be deemed to have waived its right to object.

However, in case issues related to money laundering, bribery and corruption are not pleaded, there may be a risk of the arbitral tribunal going outside the claims raised by the parties (ultra petita).27Said risk is mitigated, bearing in mind the due process principle to the extent arbitrators inform the parties of the basis for their suspicions on corruption, and provide them with an opportunity to make submissions on the matter in full compliance with the principle of the parties' autonomy. Indeed, arbitrators are entitled (if not obliged) to inquire into corruption and compel the production of evidence or the submission of arguments if the parties refuse to be forthcoming, and make the relevant ruling on the basis of such inquiry".28

Third, an arbitrator's function has not only a private aspect (that of resolving a dispute), but also a public aspect (that of rendering a decision that has the same force as a judgment issued by state court). In this respect, the most eminent scholarship recently defined international arbitration as a public function, considering that the community of operators in international commerce elected arbitration as the preferred method of disputes resolution; thus a system of transnational rules on procedural aspects related to arbitration is now in force, creating a jurisdiction where arbitrators are considered to perform a public function in the interest of collective needs of the international trade community.29

The Applicable Law

Article 21.1 of the ICC Rules reads, "The parties shall be free to agree upon the rules of law to be applied by the arbitral tribunal to the merits of the dispute. In the absence of any such agreement, the arbitral tribunal shall apply the rules of law which it determines to be appropriate."

Where a particular law is chosen by the parties, under the contract that gave rise to the dispute, can the arbitrators apply corruption or money laundering law of another country?30

The most famous case on this issue is the Hilmarton Case, where the arbitrator concluded that the agreement was "in violation of Swiss public policy and hence invalid, since the agent was appointed in patent violation of Algerian law, forbidding intermediaries in administrative contracts."31

The last jurisprudential trend to apply the law chosen by the parties (rather than the mandatory provisions of a different law disciplining corruption) in taking a decision on the merits of the case under dispute, contradicts with article 3, paragraph 3, of the Convention on the Law Applicable to Contractual Obligations of June 19, 1980 (the "Rome Convention"),32which reads: "The fact that the parties have chosen a foreign law, whether or not accompanied by the choice of a foreign tribunal, shall not, where all the other elements relevant to the situation at the time of the choice are connected with one country only, prejudice the application of rules of the law at the country which cannot be derogated from by contract, hereinafter called 'mandatory rules'"; it also contravenes article 7 of said Rome Convention, which provides under paragraph 1 that in certain cases effect may be given to rules of law of another country than the country whose law is otherwise applicable.33That is so if under the law of that other country its rules of law must be applied in all cases, i.e. if those rules are internationally mandatory and thus are part of the international public policy of the country. This principle may, where necessary, i.e. where the arbitrator must otherwise apply a law by which certain activities are lawful, such as, e.g. bribery, be utilized if the arbitrators find that such activities should be stopped or not given recognition in a particular case.

The "Legal Analysis" contained in the Partial Award of ICC case n. 10518/2001 with reference to the applicable law, reads:

However, (Respondent)'s affirmative defense goes farther. It asks the Tribunal to find that (Claimant) committed 'commercial bribery' within the meaning of N.Y. Penal Law, Section 180 (Mckinney 1999). The Tribunal agrees that New York substantive law, "excluding rules of private international law that form a part of the law of New York and that lead to the application of the law of any other jurisdiction" governs (the contract)… The result is that the conduct at issue here is to be judged by New York substantive law and that the law of (the South East Asian country) is excluded. Indeed, this was recognized by the Parties in the Terms of Reference which state: "the Law to be applied to the merits of the dispute is the law of the State of New York, USA (…). In view of the absence of any definitive New York case deciding these and other important issues, the Tribunal has determined not to decide the question of whether the bribery here was Section 180 bribery. To decide that question is unnecessary because the Tribunal has concluded, in view of the instant facts, that the remedy should be the same irrespective of whether the bribery here is a generic bribery or a Section 180 bribery."

With respect to the application of a law to the merits of the case under dispute, it is worth mentioning the principle of iura novit curia,34which applied to international arbitration means that the arbitral tribunal alone is responsible for determining which law applies to the case, and how, for solving the legal matters under dispute, without being limited in any way whatsoever by the allegations and the proofs produced by the parties in taking its decision (iuxta alligata et probata).

Said principle is also confirmed under the provisions of the Resolution n. 6/2008, released in the 73rd Conference of the International Law Association held in Rio de Janeiro, Brazil, on 21 August 2008, which recognize "the need for guidance and the development of best practices for parties, counsel and arbitrators in relation to ascertaining the contents of the applicable law in international commercial arbitration," and consequently requires under Recommendation 2 that "in ascertaining the contents of applicable law and rules, arbitrators should respect due process and public policy, proceed in a manner that is fair to the parties deliver an award within the submission to arbitration and avoid bias or appearance of bias."

Thus, iura novit curia application in international arbitration requires the arbitral tribunal however to comply with the main principles of due process, with a full involvement of the parties in the definition of the major legal issues.

2. Arbitrators' Right or Duty to Report Corruption Admissions , Findings or Suspicions; Report to Whom?

The most eminent scholarship dealt with the issue whether an international arbitrator has any obligation to denounce and report corruption to the arbitral institution and the competent authorities and, if so, the consequent possible violation of its confidentiality obligations.

In line of principle, arbitrators should have no duty of 'denunciation,' even if they determine that they must resign.35

Arbitrators should be obliged to disclose only if so requested under the national legislation to which the tribunal members are subject to the extent that the suspected or manifest act is of the same kind and nature as any act that would require any other third party to denounce. In this case "failure to report a suspicion, admission or finding of a crime itself to the Authorities may be seen as a crime by the arbitrator under national law (…)."36

Said duty would override any express or implied obligation of confidentiality by the arbitral tribunal,37provided that an exception to it should be made as a matter of public policy. It remains however understood that the tribunal, omitting to denounce any illegality found in the case under dispute, would be acting as an accomplice to an illegal enterprise or contributing to violation of local or transnational public policy. The arbitrator should inform the arbitral institution of circumstances that may cause the institution unwittingly to engage in such derogation from mandatory public policy.

Indeed, even if arbitrators have no legal obligation to disclose corrupt activities, disclosure sua sponte to the relevant authorities may fall under the public interest or interests of justice exceptions to the duty of confidentiality.38

This also arises from several provision under the most relevant arbitral regulations, e.g. article 30 (1) of LCIA Rules, as applied to the arbitrator: "save and to the extent that disclosure may be required of a party by legal duty, to protect or pursue a legal right or to enforce or challenge an award in bona fide legal proceedings before a state court or other judicial authority."

While this wording admittedly speaks of "a party" and not of the arbitrator, it is submitted that it equally allows for an exception to confidentiality on the part of the arbitrator. The right or even duty on the part of the arbitrator is not less compelling in the case of the vast majority of arbitration rules, legislation and jurisprudence, which do not contain an express confidentiality obligation.

The desire and duty to inform the authorities of the suspicion or existence of illegal acts, and their perpetrators, may be great, but does not necessarily flow from the mission of an arbitrator. In the absence of a corresponding treaty, the state courts of one country are not obliged to enforce the penal laws of another country. Why then should an arbitral tribunal do so?39

Eventually, Prof. Antonio Crivellaro recently noted that to his knowledge, there is no precedent in which the arbitral tribunal notified a criminal complaint of the illicit facts discovered during the arbitration proceedings to the state authorities, due to the fact that arbitrators are not state 'organs' bound by a duty of criminal complaint, in most cases sitting far away from the State potentially concerned.40

3. What are the Relevant Differences Between Commercial and Investment Treaty Arbitration ?

Comparing international commercial arbitration and the arbitration for the protection of investments, the major differences of particular relevance when referred to corruption cases are:41

1) the nature of the arbitration agreement, which in both cases requires the parties' "consent in writing" to be intended in two different ways: (i) in international commercial arbitration consists of a mutual and contemporaneous exchange of promises between the parties, whereas (ii) in an arbitration "without privity",42i.e. where there is not a negotiated arbitration agreement, the state parties in a bilateral investment treaty make an open offer of arbitration to foreign investors, whose acceptance arises only at the moment the investor commences arbitration;43in investment arbitration, therefore, corruption is likely to deprive the investor of the power to complete the arbitration agreement, thereby depriving the tribunal of jurisdiction over the dispute as the principle of separability of the arbitration agreement may not apply to an open offer accepted with a request of arbitration;

2) in resolving treaty claims, an arbitral tribunal mainly applies the relevant investment treaty together with public international law, whereas contract claims are in most cases decided by applying the national law governing the contract under dispute;

3) public international law plays a very important role in investment arbitrations, especially with respect to the interpretation of the relevant provisions of the BIT and the determination of the state responsibility;

4) the lack of provisions pertaining to bribery or corruption - and more generally relating to investor responsibility - in the more than 2500 existing BITs, in addition to the absence of any means of reviewing arbitral awards on grounds of public policy, as there is in international commercial arbitration, make the investigation of corruption accusations an intricate task for any arbitral tribunal.44

5) article 34(6) of the ICC Rules provides that "Every award shall be binding on the parties. By submitting the dispute to arbitration under the Rules, the parties undertake to carry out any award without delay and shall be deemed to have waived their right to any form of recourse insofar as such waiver can validly be made," whereas article 54 of ICSID reads: "Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in the State." Therefore an ICSID award although rendered by an international institution has de facto the same value of a final decision of the local courts of the any state adhering to the Washington Convention; furthermore said award issued under the aegis of the Word Bank may guarantee a more favorable outcome for contractors, taking the host state to spontaneously execute it;45

6) with respect to the ICC proceedings, immunity does not apply to the extent the host state acts as a private party, whereas article 55 of ICSID sets forth that the provisions of the Convention do not derogate the right of the contracting parties regarding the immunity from the execution by the host state or another state; and

7) pursuant to article 52 of ICSID, an award may be annulled by the ICSID committees upon either party's request; an award under ICC proceedings can be set aside by the national courts of the state where the venue of arbitration is located.

In the last 20 years the number of corruption complaints raised in arbitration proceedings for the protection of investments has considerably increased, but no principles unanimously accepted by the scholarship and the arbitral jurisprudence may be found, as already seen with respect to international commercial arbitration.

Without repeating the detailed analysis of some relevant ICSID cases, already carried out by the most eminent scholars,46I will try to outline some basic principles, bearing in mind the distinction made by Mohamed Abdel Raouf47between a first group of investment arbitration cases where the arbitrator appeared to be passive or reticent to address allegations of corruption (the "Eyes Shut" approach),48and a second group of cases which illustrates a more proactive role played by the investment arbitrators with respect to corruption issues (the "Zero Tolerance" approach), with arbitral tribunals firmly denying the foreign investor's claims on jurisdictional or substantive grounds, based on the host state's defense of bribery or fraud in inducement of the investment opportunity.49

Firstly, bilateral and multilateral treaties set forth certain minimum standard of protection of the foreign investments to grant the investors with a series of guarantees, including but not limited to: i. non-discriminatory treatment relative to similarly situated contractors from the host state (i.e. national treatment) and any third state (i.e. most-favoured nation treatment); ii. fair and equitable treatment, including protection of the investor's legitimate expectations at the time of the contract execution; iii. compensation in case property is nationalized or expropriated, either directly or indirectly, by measures that deprive the investor of the economic benefit of the property; iv. full protection and security, typically from physical attack or destruction by third parties of assets under construction; v free transfer of proceeds and asset related to the performance of the contract; vi. protection against the host state's breaches of its investment obligations and undertakings, including any contractual undertakings (i.e. the above mentioned "umbrella clause"); vii. a right to a stable and predictable legal and regulatory framework for the performance of the construction contract, as well as, for the resolution of disputes arising therefrom (i.e. the "grandfather clause"). Without any doubt, acts of corruption constitute a violation of the above listed standards, as stated in the award of EDF v Romania case:50

The Tribunal shares the claimant's opinion that a solicitation of bribes by a state agency is a violation of the obligations of the state under agreement that justice and equality shall be given to all citizen and it is also a violation of international public policy and the transparency of the government.

Thus, corruption violates "international public policy" as it is contrary to morality and legality, which is also confirmed in the award of the World Duty Free v Kenya case, which refers to the term "international public policy" as an international consensus with respect to the universal standards and the acceptable norms of conduct that should be applied in all charters.51

More recently the final award of ICC case n. 14920/2009 also refers to "orden public internacional," on the basis of which

Todo árbitro tiene, por lo tanto, la obligacion de oponerse enérgicamente a la corrupciòn. Por ello, si en el seno de un procedimiento arbitral surgen acusaciones de que la operación jurídica subyacente está afectada por prácticas corruptas, el árbitro no puede desconocer estos hechos, sino que debe investigar, recabar alegaciones y pruebas, para poder corroborar o desechar las acusaciones y evaluar las implicaciones sobre las pretensiones de las partes.

The arbitral tribunal concludes that

Los hechos de corrupción admitidos por (las Demandadas) son deleznables y la persecuciòn de la corrupción constituye un principio de orden pùblico internacional. El arbitraje debe ser medio para la erradicación de unas prácticas antijurídicas, que constituyen importantes rémoras para el desarrollo armònico del comercio internacional.

Investments must be made and operated in compliance with the international principle of good faith, in most cases also taken into account by arbitral tribunals in taking their decisions, as per the award in the Phoenix Action Ltd v Czech Republic case:

The purpose of the international mechanism of protection of investment through ICSID arbitration cannot be to protect investments made in violation of the laws of the host state or investments not made in good faith (…).52

It is essential, therefore, all players involved in international arbitration nowadays must take into account the concept of ethics, which coincide with their professional conscience, being furthermore in their own interest to act accordingly given their primary interest in safeguarding their reputation in the small world of arbitration.53Ethics for arbitrators is an additional requirement with respect to the independence and impartiality requested by all arbitral regulations.

Eventually, it would be opportune to have uniform procedural rules to make investment arbitration more transparent and therefore more capable of exposing corruptive practices in transnational investments.54

Conclusions

Bearing in mind the different role in fighting corruption by the various players, including multinational companies and public institutions, states should guarantee to operators of international trade law a stable legal framework, with systems of laws, rules and regulations, as well as reliable judicial institutions, also in order to overcome the most recent criticisms by most eminent scholarships as regards the waiver of sovereignty by the same states, which causes an unfruitful competition among local jurisdictions, not being capable to grant a stable system of laws to a more and more global market.55Governments, indeed, should recover the fundamental value of competition among the various belonging states, by providing stable and safe jurisdictions were international investors may better execute their transactions.56

Firstly, nowadays there is a remarkable difference between corruption made by infringing the rules and corruption in making the rules, i.e. laws themselves being corrupted ab origine; thus compliance with corrupted rules does not constitute any form of crime nor allows the application of any sanction by a powerless system of justice,57i.e. arbitral and ordinary jurisdiction.

This phenomenon further complicates the variety of anti-corruption laws, rules and regulations under the various jurisdictions where a multinational company daily operates (e.g. 40 countries for Enel Group), having the same conduct considered as a crime in certain parts of the world and commercial praxis in others (e.g. lobbying). Therefore, the harmonization (and in some cases standardization) of rules carried out by international institution (e.g. United Nations, OCSE, International Chamber of Commerce and World Bank) are particularly useful for having at least some guidelines in defining what corruption is.58

In addition, the most recent doctrine highlighted how the total lack of states' sovereignty in front of a global market completely and autonomously self-disciplined rendered even the system of justice a kind of contract:59in major cases where multinational companies were investigated for alleged violations of U.S. legislation on anticorruption and economical crimes, they achieved an agreement ("deal") either with the Department of Justice or the Securities and Exchange Commission (SEC), in order to avoid expensive and time-consuming proceedings.60This phenomenon, recently defined as "privatization of justice,"61gave therefore raise to a system of law without justice, where the international trade laws are made and managed by the executive power rather than the legislative competent bodies, and international commercial operators carry out self-investigations to declare their own violations, against the fundamental principle of the U.S. Bill of Rights which prohibits the self-incrimination.

The following question derives from the above described status of the justice: is it more reliable this system of self-investigation and selfsanctioning by multinational companies or the arbitral jurisdiction deciding on money laundering, bribery and corruption cases?

I shall reply based on my experience as of Italian lawyer. Firstly, article 819 ter of the Italian Code of Civil Procedure62governs the relationship between proceedings before ordinary courts and arbitral proceedings, defining a potential "conflict of the competence" between the two mechanisms of disputes resolution that takes the arbitration to be considered as a "different method" of jurisdiction. Secondly, article 824 bis of the Italian Code of Civil Procedure63equalizes the effects of an award, from the date of its last signature, to the effects of a judicial decision become res judicata. In this respect, article 829, 8) of the Italian Code of Civil Procedure64confirms that an award always contains in its decision a res cognita, once again comparing the res judicata to a "non-appealable" award.

The above provisions constituted one of the bases of a recent decision of the Italian Court of Cassation65which stated the jurisdictional (rather than contractual) nature of the arbitration, defining it as an alternative method of disputes resolution with respect to ordinary courts. The Italian Constitutional Court recently confirmed that the arbitral jurisdiction might substitute the public justice considering that the arbitration derives from ordinary jurisdiction some mechanism to achieve the same result of a dictum by a state judge.66Furthermore, it is worth reiterating the public function carried out by international arbitrators.67

Therefore, arbitration can be used to combat bribery and corruption as it may be considered equivalent to ordinary jurisdiction, with the advantage of being at the same time a method of "binding resolution of disputes accepted with serenity by those who bear its consequence because of their special trust in chosen decision-makers."68

The position today is that the international arbitrator has a clear duty to address issues of bribery, money laundering or serious fraud whenever they arise in the arbitration and whatever the wishes of the parties and to record its legal and factual conclusions in its award. This is the only course available for arbitrators to act in compliance with ethical values, the fundamental pillar of the institution of international commercial arbitration, also in view of guaranteeing the enforceability of the award as well as the integrity of the proceedings.

However, certain doubts are raised due to the fact that the evidentiary problems that arise in cases involving allegations of corruption as well as the relative lack of transparency in the field of international arbitration inhibit the ability of arbitral tribunals to contribute to anti-corruption efforts. By design, international arbitral proceedings allow for less public access than domestic legal systems, which are able to play a more robust role in fostering awareness of allegations of corruption. Thus, both the lack of transparency in this field and the evidentiary challenges posed by allegations of corruption has circumscribed the role of international arbitral tribunals in the fight against corruption.69

The global market, to conclude, is a system totally based on risk, where criminal law regulates, rather than the acts to be punished by law, any action which expose a citizen to be condemned and sanctioned, becoming a law which takes into account the capacity to evaluate the risks instead of the morality of individuals: from homo oeconomicus to homo legalis, to homo penalis and homo criminalis is the path described by Michel Foucault in his Naissance de la Biopolitique.70From economical crisis to crisis of democracy to legal crisis, where the democracy may play a fundamental role to possibly find a solution.

It is at the same time essential the role of multinational companies. In this respect, it is worth mentioning the initial paragraphs of the letter dated 2 September 2013, from Presidents and CEOs of companies in the B20 Task Force on Transparency and Anti-Corruption to the G20 Heads of State:71"For us in business, fighting corruption is not just a question of ethics or social responsibility. We know - in some cases from our own experience - that the corrupt actions of just one rogue employee can destroy a company's corporate reputation and cause untold financial damage. For our management and our shareholders, corruption and its consequences are a massive drain on our resources. Finally corruption, especially in some of our key markets, constrains our appetite for investment. In short, corruption has a detrimental impact on growth - for business and for society. (…)

This year, within our Task Force, we set ourselves to goal to move "from declaration to action."

1
Carlevaris Andrea, Secretary General of International Court of Arbitration, in the Foreword of the ICC Bulletin of 2013 on Tackling corruption in arbitration. In the present paper, this document shall be mentioned as the "Bulletin 2013". On the meaning of illegality, see Kreindler Richard, Competence-Competence in the Face of Illegality in Contracts and Arbitration Agreements, Hague Academy of International Law, 2013, pages 61 ff.

2
Lessig Lawrence, Republic lost: how money corrupts congress - and a plan to stop it, New York, Twelve Press, 2011.

3
Romano Sergio, I politici, i giudici e noi - il Triangolo delle Bermuda, La Lettura Corriere della Sera # 138, 13 July 2014, pages 2-3, with a description of Wulff case and Sarkozy case.

4
These documents may be found at www.enel.coms

5
Plan of action promoted by the United Nations in July 2000 on the direct initiative of the Secretary General with the aim of involving the business world in a new form of partnership with the United Nations through adhesion to 10 universal principles in the areas of human rights, labour protection and environmental protection (www.unglobalcompact.org).

6
www.globalcompactitalia.org

7
This refers to the adhesion of around 60 international companies operating in the energy, construction and mining industries to the Partnering Against Corruption Initiative sponsored by the World Economic Forum. Enel is a member (www.weforum.org).

8
The Communication on Progress Towards the UN Global Compact is submitted each year by the Corporate Social Responsibility and Relations with Associations unit; it reiterates Enel's commitment to the 10 principles of the Global Compact and is accompanied by the group's Sustainability Report.

9
In July 2002, Enel became the first company to launch "Organizational Model 231" designed to prevent offences committed in a company's interest under Legislative Decree 231/2001, which adapted Italian legislation to a number of International conventions, introducing an administrative but de facto criminal responsibility for companies guilty of offences under the decree.

10
Lazareff, Serge in the Foreword of Dossiers of ICC Institute of World Business Law, Arbitration Money Laundering,Corruption and Fraud, Edited by Karsten Kristine and Berkeley Andrew, ICC 2003. In the present paper, this document shall be mentioned as the "Dossiers 2003".

11
Crivellaro Antonio, Arbitration case law on bribery: Issues of arbitrability, contract validity, merits and evidence, in Dossiers 2003, p. 114, whereby he considers a case related to an agency agreement. A recent update the jurisprudence on the matter is contained in Crivellaro Antonio, The Courses of action available to international arbitrators to address issues of bribery and corruption, in Bonelli Franco-Mantovani Massimo (a cura di), Corruzione Nazionale e Internazionale, Contratti & Commercio Internazionale, Milan, 2014, pages 225- 252.

12
ICC case 1110/1963, with a comment to the case by G. Wetter, Issues of Corruption Before International Arbitral Tribunal: the Authentic Text and True Meaning of Judge Gunnar Lagergren's 1963 Award in ICC Case N. 1110, published in (1994) 10 Arbitration International, pages 277-294. The case is also described in Crivellaro Antonio, cit.

13
Philip Allan, Arbitration - Money laundering, corruption and fraud: The role of the tribunals, in Dossier 2003, pag. 147-148.

14
Kreindler Richard, Competence-Competence in the Face of Illegality in Contracts and Arbitration Agreements, cit., pages 244 ff. A different perspective of the principle of separability shall be considered with respect to clauses for investment arbitration, see paragraph 3 below, p. 9.

15
ICC Case n. 6401/1991.

16
Kreindler Richard, Competence-Competence in the Face of Illegality in Contracts and Arbitration Agreements, cit. pag. 237.

17
See https://www.iccwbo.org

18
See https://icsid.worldbank.org

19
See https://www.uncitral.org

20
See http://www.lcia.org

21
Bom Gary, International Commercial Arbitration (Wolters Kluwer Law & Business, 2009 ) at p. 2183.

22
Philip Allan, Arbitration - Money laundering, corruption and fraud: The role of the tribunals, cit., pag.148.

23
GAR The International Journal of commercial and treaty arbitration, Volume 9, Issue 3, 2014, dealing with Watchdogs or bloodhounds. Is it an arbitrator's role to sniff out corruption?

24
Khvalei Vladimir, Using red Flags to Prevent Arbitration from Becoming a Safe Harbour for Contracts that Disguise Corruption, in Bulletin 2013. Reasons why an arbitral tribunal must investigate bribery, money laundering or corruption irrespective of the intention of the parties are also examined by R. Kreindler, Competence-Competence in the Face of Illegality in Contracts and Arbitration Agreements, cit., pages 339 ff., and Cremades and Cairns, Transnational public policy in international arbitral decision-making: The cases of bribery, money laundering and fraud, in Dossier 2003,pag. 80.

25
This is confirmed by the famous "Frigates-to-Taiwan case" (ICC case n. 7664 of 1996): in 1992 Frontier AG and Brunner Sociedad Civil de administracao Limitada brought a US$37 million claim against Thales, seeking commission due on the sale of warships to Taiwan. The award declared the agency contract valid as no evidence of bribery was found, even though an agent was paid to possibly influence the Chinese authorities not to raise any objection to the sale of war ships to Taiwan. The Swiss court thereupon confirmed the award on January 28th, 1997.

26
See, in particular, Article 25.1 of ICC Rules, which reads: "The arbitral tribunal shall proceed within as short a time as possible to establish the facts of the case by all appropriate means."

27
Pursuant to art. V 1 (c) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that the award deals with a difference not contemplated or not falling within the terms of the submission to arbitration, or it contains decisions or matters beyond the scope of the submission to arbitration, provided that if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced.

28
Hwang Michael and Lim Kevin, Corruption in arbitration - Law and Reality, at www.arbitration-icca.org, page 12.

29
Draetta Ugo, L'arbitrato internazionale come funzione pubblica, in Diritto del Commercio Internazionale n. 3/2013, page 800.

30
Philip Allan, Arbitration - Money laundering, corruption and fraud: The role of the tribunals, cit., p.154. On the question of the applicable law, see also Kreindler Richard, Competence-Competence in the Face of Illegality in Contract sand Arbitration Agreements, cit., pages 167 ff.

31
ICC Case n. 5622, with the first award rendered in 1982 annulled and second award issued in April 1992.

32
The Rome Convention may be found at http://eur-lex.europa.eu.

33
See the Conclusions in Crivellaro Antonio , Arbitration case law on bribery: Issues of arbitrability, contract validity, merits and evidence, in Dossiers 2003, cit.

34
Corapi Diego, Iura novit curia nell'arbitrato internazionale, in Scritti in onore di Ugo Draetta, Napoli, 2011.

35
Kreindler Richard, Competence-Competence in the Face of Illegality in Contracts and Arbitration Agreements, cit., page330, and The arbitrator as accomplice - Sham proceedings and the trap of the consent award, in Appendix 2 of Moran Ted, Combating corrupt payments in foreign investment concessions: closing the loopholes, extending the tools, Centre for Global development, January 2008, page 29.

36
Kreindler Richard Competence-Competence in the Face of Illegality in Contracts and Arbitration Agreements, cit. page331.

37
Cremades Bernardo and Cairns David, Transnational public policy in international arbitral decision-making, cit., p. 85, mentioned also by Hwang Michael and Lim Kevin, Corruption in arbitration - Law and reality, page 48, with a detailed analysis of Singaporean anti-money laundering legislation.

38
Hwang Michael and Lim Kevin, Corruption in arbitration - Law and reality, page 49.

39
Kreindler Richard, The arbitrator as accomplice - Sham proceedings and the trap of the consent award, cit.

40
Crivellaro Antonio, The Courses of action available to international arbitrators to address issues of bribery and corruption, cit., pag. 249

41
Kreindler Richard, Competence-Competence in the Face of Illegality in Contracts and Arbitration Agreements, cit. page222; Bernardini Piero, ICSID versus non - ICSID, Liber Amicorum Bernardo Cremades, Wolters Kluwer Espana, la Ley2010; Marcenaro Edoardo, New trends in disputes related to international construction contracts: commercial or investment arbitration?, in Diritto Commercio Internazionale, 3/2013, page 844.

42
Kreindler Richard, Competence-Competence in the Face of Illegality in Contracts and Arbitration Agreements, cit. pages 35 and 106.

43
Cremades Bernardo, Corruption and Investment Arbitration, in Liber Amicorum in Honour of Robert Briner, 2005.

44
Raouf Mohamed Abdel, How should international arbitrators tackle corruption issues?, in Fernández Miguel - Ballestreros and Arias David (eds), in Liber Amicorum Bernardo Cremades, Wolters Kluwer Espana, la Ley 2010, pages 1 - 16.

45
Carrara Cecilia, Bond argentini, piu tutela con l'arbitrato in Il Sole 24 ore of 15 September 2013, with interesting remarks on the ICSID case Abaclat and others v the Argentine Republic.

46
De Luca Anna, La nozione di investimento illegal nella prassi arbitrale: il caso dlla corruzione, in Rivista dell'Arbitrato, Anno XXIII, Fasc. 1 - 2013, pag. 249, Cremades Bernardo, Corruption and Investment Arbitration, in Liber Amicorum in Honour of Robert Briner, 2005, Raouf Mohamed Abdel, How should international arbitrators tackle corruption issues?, in Fernández Miguel-Ballestreros and Arias David (eds), in Liber Amicorum Bernardo Cremades, Wolters Kluwer Espana, la Ley 2010, pages 1-16, Goday, The treatment of corruption complaints within the framework of foreign investment arbitration, in BA Arbtration Review, Edition n° II, June 2013, Webb Yackee Jason, Investment treaties & investor corruption: an emerging defense for host states, in Virginia Journal of International Law, Vol. 52, n° 3, pag. 723.

47
Raouf Mohamed Abdel, How should international arbitrators tackle corruption issues?, cit. and Kreindler Richard, Competence-Competence in the Face of Illegality in Contracts and Arbitration Agreements, cit. page 317.

48
Southern Pacific Properties (Middle East) Ltd. v Arab Republic of Egypt, ICSID Case N° ARB/84/3, Award (May 20, 1992); Azurix Corp. v The Argentine Republic, ICSID Case N° ARB/01/12, Award (July 14, 2006); Siemens A.G. v Argentine Republic, ICSID Case N° ARB/02/8, Award (Feb.6, 2007); African Holdings Co. of America,Inc. and Societe Africaine de Construction au Congo S.A.R.L. v The Democratic Republic of Congo, ICSID Case N° ARB/05/21, Award /July 29, 2008) and Edf (Service) Ltd v Romania ICSID Case N° ARB/05/13, Award (Oct. 8, 2009).

49
World Duty Free v Kenya, ICSID Case Nà ARB/00/7, Award (Oct.4, 2006); Plama Consortium Ltd v Republic of Bulgaria, ICSID Case N° ARB/03/24, Award (Aug.27, 2008) and Azpetrol Int'l Holdings B.V, Azpetrol Group B.V. and Azpetrol Oil Services Group v The Republic of Azerbaijan, ICSID Case N° ARB/06/15, Award (Sept. 8, 2009).

50
Paragraph 221 of the award EDF v Romania.

51
Paragraph 139 of World Duty Free v Kenya.

52
Paragraph 100 of Phoenix Action Ltd v Czech Republic.

53
U. Draetta, What does "ethics in arbitration" really mean?, in European International Arbitration Review (EIAR), Vol. 1/No. 1, 57-72, 2, www.arbitrationlaw. Com

54
N. Bernasconi-Osterwalder, Combating corruption through transparent disputes settlement processes, in the Center for International Environmental Law 13th International Anti-Corruption Conference held in Athens on 30 October-2 November, 2008.

55
Rossi Guido, La crisi piu grande? Quella del diritto, Il Sole 24 Ore, 2 September 2012

56
Vietor Dick, How Countries Compete - Strategy, structure and government in the global economy, Harvard Business School Press 2007.

57
Barbieri Giorgio-Gavazzi Francesco, Corruzione a norma di legge, Milano, 2014, page 41

58
Severino Paola, Lotta alla corruzione internazionale ed omogeneita delle regole di prevenzione, in Bonelli Franco- Mantovani Massimo (a cura di), Corruzione Nazionale e Internazionale, Contratti & Commercio Internazionale, Milan, 2014, pag. 1.

59
Rossi Guido, La scommessa vincente della democrazia contro la crisi, in Sole 24 Ore, 29 December 2013.

60
See Garapon Antoine et Servan-Schreiber Pierre , Deals de Justice - le marche americain de l'obeissance mondialisee, 2013

61
Rossi Guido, La democrazia paga il conto di un mondo senza regole, Il Sole 24ore, 15 June 2014.

62
Article 819 ter, styled "Relations between arbitrators and judicial authority" under the first paragraph reads: "The arbitrators jurisdiction shall not be excluded by the pendency of the same dispute before the judge or by the connection between the dispute referred to them and a dispute pending before the judge."

63
Article 824 bis, styled "Efficacy of the award", sets forth that "(…) as from the date of its last signature the award shall have the same effects as a judgment rendered by the judicial authority."

64
Article 829, styled "Grounds for Nullity", states that "Notwithstanding any prior waiver, a recourse for nullity may be filled (…) if the award is contrary to a previous award which is no longer subject to recourse or to a previous judgment having the force of res judicata between the parties, provided such award or such judgment has been submitted in the proceedings" (see, in particular, art. 829, n.8).

65
Corte di Cassazione n. 24153/2013.

66
Corte Costituzionale n. 223/2013.

67
See paragraph 1 above, page 6.

68
See the opening remark by Paulsson Jan, in The idea of arbitration, Oxford University Press, 2013, page 1.

69
Rose Cecily, Questioning the Role of International Arbitration in the Fight against Corruption, Journal of International Arbitration, (Kluwer Law International, 2014 Volume 31 Issue 2) pp. 183-264

70
Foucault Michel, Naissance de la biopolitique, Cours au collège de France 1978-1979.

71
The letter was signed by Interros, The Boston Consulting Group, Deloitte, Dragoman Pty Ltd, Eni SpA, Fluor Corporation, GE, Hiliti Corporation, KPMG, SABIC, Mahindra and Mahindra, Siemens AG, Sistema JSFC, Thales and OOO Ural Locomotives. A full text of the letter, with recommendations on how to fight corruption, may be found at https://www.thalesgroup.com/sites/default/ files/asset/document/letter_to_g20_leaders_final.pdf. For a recent comment, see Mantovani Massimo and Alderman, A promising step toward better regulatory enforcement worldwide, in Bonelli Franco-Mantovani Massimo (a cura di), Corruzione Nazionale e Internazionale, Contratti & Commercio Internazionale, Milan, 2014 pag. 139.