This Dossier XIII of the ICC Institute of World Business Law addresses one of the more difficult issues that international arbitrators have to face: corruption. It was previously discussed in 2002, at the 22nd Annual Meeting of the ICC Institute, along with related matters such as money laundering and fraud.1. Why to revisit the topic 12 years later? There are several reasons, one of which is that although arbitrators have been confronting corruption for many years, as illustrated by the well-known Judge Lagergren's Award of 1963 in the ICC case n°1110, and have progressively learned to react properly against it, the environment of international arbitration has changed since 2002, for better and for worse.

For better, the legal environment has considerably improved: most national laws are now favourable to arbitration and more than 150 countries are parties to the 1958 New York Convention on the Recognition and Enforcement of Foreign Awards. The arbitrability of matters involving public policy is less and less disputed and as a result the arbitrators are expected to deal with it. For worse, the media and the public are now aware of the importance of the arbitration phenomenon, in particular in investment treaties, and, under the misguidance of groups and individuals with a political agenda, are developing towards it some distrust. The vote of the European Parliament on 8 July 2015, relating to the Transatlantic Trade and Investment Partnership recommending that investor-State disputes be dealt with "by publicly appointed, independent professional judges in public hearings and which includes an appellate mechanism, where consistency of judicial decisions is ensured, the jurisdiction of courts of the EU and of the Member States is respected, and where private interests cannot undermine public policy objectives" is very telling.

The fear that arbitration might be a procedure used to enforce agreements tainted with corruption contributes to this unfair distrust. Even in a jurisdiction such as France where the courts have traditionally shown the greatest trust to arbitrators in the enforcement of public policy, limiting their control to extreme cases where the breach of public policy was "clear, effective and concrete, .2" the arbitrators' decision on corruption issues has become subject to full review by the courts. According to the Court of Appeal of Paris, "Where it is claimed that an award gives effect to a contract obtained by corruption, it is for the judge in set aside proceedings, seized of an application based upon article 1520-5° of the Code of Civil Procedure, to identify in law and in fact all elements permitting it to pronounce upon the alleged illegality of the agreement and to appreciate whether the recognition or enforcement of the award violates international public policy in an effective or concrete manner.3" So the findings of the arbitrators are provisional.

In this climate, the fight against corruption is a test for all arbitration practitioners to show that arbitration is a procedure through which public policy rules may be enforced. This Dossier of the Institute provides them with analyses of the legal and factual hurdles to overcome and the tools to win that fight.

The main hurdle is probably the reluctance of the parties to raise the issue in front of arbitrators, especially when both of them have been involved directly or even indirectly in the corruption process. For instance, there are many cases when the arbitrator has to decide whether an intermediary is entitled to a commission for helping a company to conclude a contract with a State. Under its own agency contract, the intermediary is required to study the local market, sell the company, organize meetings with decision makers, etc. The company refuses to pay, alleging that the intermediary did not perform, and that the contract with the State was concluded without its help. Can the arbitrator, instead of assessing the work of the intermediary, ask the parties whether the actual purpose of the agency contract was not to pay bribes to certain civil servants and, if so, what are the legal consequences of this new characterization? The arbitrator has not only the power to do so but he must. Contrary to some hasty views, this is not in breach of due process as the parties are invited to comment and in case the arbitrator eventually dismisses the claim as incompatible with public policy, the decision is not ultra petita, since the request to dismiss the claim was presented by the company. However, what can the arbitrator do if both parties deny that their agency contract was contemplating inter alia the payment of bribes? It depends very much upon the circumstances but in no case the arbitrator should be consciously instrumental in an illegal transaction. If nothing else can be done, the arbitrator must resign.

However, corruption is not easy to prove and the arbitrator, as any judge, may not act on the basis of a general impression only. As recently pointed out by the Paris Court of Appeals, it could not be accepted, without ruining the binding force of contracts, that a State could free itself of contractual obligations by alleging "a general climate of corruption" within its administration, without specifying the individuals involved and without the alleged beneficiaries being prosecuted.4.

The reader will find that these issues and many others are addressed in this Dossier in a systematic way, balancing theoretical and practical considerations and clearly distinguishing between commercial and investment arbitration.

The Dossier gathers the papers discussed at the 34th Annual Meeting of the Institute on 24 November 2014. Its preparation reflects the greater involvement of the Institute members in the Institute's activities. The tradition was that two experienced members of the Institute's Council were in charge of devising a programme for the Annual Meeting on the basis of the theme elected by the Council. It was decided this time to ask one of the 200 members of the Institute, Domitille Baizeau to work with an active council member, Richard Kreindler. The dynamic was perfect and the result is impressive.

Yves Derains

1
See Dossier I of the ICC Institute World Business Law, 2003.

2
Paris, 18 November 2004, SA Thales Air Defense v GIE Euromissile, Rev. arb. 2005.751

3
Paris, 4 March 2014, Ste Gulf Leaders for Management and Services Holding Company v SA Credit Foncier de France, Rev. arb. 2014,502.

4
Paris, 14 October 2014, République du Congo v S.A. Commissions Import Export (Commisimpex), Rev. arb. 2014, 1030.