Is corruption an issue that is regularly raised in your jurisdiction? What standard do local courts apply for proving of corruption?

International Arbitration (4th edition)

Argentina Small Flag Argentina

The issue of corruption is not often raised in domestic arbitration proceedings. Local courts apply a high standard of proof. Evidence of corruption should be clear and convincing. Circumstantial evidence (red flags, connecting the dots, etc.) is not sufficient.

Austria Small Flag Austria

There is no reliable data on how often the issue of corruption is raised in arbitration proceedings in Austria. The standard of proof required to establish corruption is not different than the otherwise applicable standard of proof.

Bulgaria Small Flag Bulgaria

No. In case of doubts about the impartiality of the arbitrators, the party may challenge them. Corruption is a crime as per our penal code and there is high threshold to prove it.

United States Small Flag United States

No. Corruption is not an issue that is regularly raised in the U.S.-seated arbitrations or courts. The U.S. ranked 22 out of 180 countries on Transparency International’s 2018 Corruption Perceptions Index with a score of 71/100. This is a slight drop from its rank of 16 out of 180 in 2017.

Under Chapter 1 of the FAA, awards may be vacated where “there was evident partiality or corruption in the arbitrators, or either of them[.]” 9 U.S.C. § 10. Courts have interpreted this provision to require that the moving party show that the corruption was (1) not discoverable upon the exercise of due diligence prior to the arbitration, (2) materially related to an issue in the arbitration, and (3) established by clear and convincing evidence. See, e.g., Weirton Med. Ctr., Inc. v. QHR Intensive Res., LLC, 682 F. App’x 227, 228 (4th Cir. 2017); Inversiones y Procesadora Tropical INPROTSA, S.A. v. Del Monte Int’l GmbH, 921 F.3d 1291, 1306 (11th Cir. 2019), cert. denied sub nom. Inversiones Y Procesadora v. Del Monte Int’l GMBH, No. 19-117, 2019 WL 4922743 (U.S. Oct. 7, 2019); Certain Underwriting Members of Lloyds of London v. Fla., Dep’t of Fin. Servs., 892 F.3d 501, 505 (2d Cir. 2018).

UAE Small Flag UAE

Corruption is not frequently alleged and even less frequently proven in the UAE.

Article 257 of Federal Law No. 3 of 1987 (i.e. the UAE Penal as initially amended in September 2016, used to provide for the potential imprisonment of experts and arbitrators in the event a breach of duty of fairness and impartiality. However, this provision has now been repealed with regard to its application to arbitrators.

United Kingdom Small Flag United Kingdom

There are no statistics available to assess the frequency with which corruption or bribery allegations are made in an arbitration context. It is worth noting, however, that in Premium Nafta v Fili Shipping [2007] UKHL 40, the House of Lords held that unless the arbitration agreement specifically (as opposed to the main contract) can be shown to be induced by bribery, the arbitration agreement will remain valid.

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France Small Flag France

Since at least 2004, French courts have had to deal with corruption issues in arbitrations. Corruption would be included in the grounds for setting aside an international award. FCCP Article 1520 provides that the recognition or enforcement of the award may be denied if this recognition is contrary to international public policy. Regarding the violation of international public policy, recent French court decisions have expressly mentioned corruption.

The standard for refusing enforcement of an arbitral award on the grounds of public policy is a “flagrant, effective and concrete” violation of public policy. In the Belokon Case (Kirghizstan v. Belokon, Paris Court of Appeal, 21 February 2017, No. 15/01650) and in the MK Group Case (MK Group v. Onix, Paris Court of Appeal, 16 January 2018, No. 15/21703), the reviewing Court reviewed the full case record to decide whether the recognition and enforcement of the award would violate international public policy in a concrete and effective manner.

In the first judgment of the Alstom Case (Alstom Transport SA & Alstom Network UK Ltd v. Alexander Brothers Ltd, Paris Court of Appeal, 10 April 2018, No. 16/11182), the Paris Court of Appeal considered that an agreement to traffic influence or procure a bribe is contrary to international public policy and would allow the Court to investigate all factual and legal elements to reach a decision. The Court reopened the proceedings and ordered the parties to provide various documents it considered relevant. The Court wished to ensure that the enforcement of the award would not have the effect of giving force to a contract procured by corruption. On 28 May 2019, the Paris Court of Appeal held that parties must respect international public policy (Alstom transport SA & Alstom Network UK Ltd v. Alexander Brothers Ltd, Paris Court of Appeal, 28 May 2019, No. 16/11182). To identify a violation of public policy, the Court focused on the evidence and on the facts and set aside the award holding that there were sufficiently serious, precise and consistent indicia of corruption (without finding, however, precisely identified acts of corruption).

Germany Small Flag Germany

Corruption is not an issue/topic that is raised regularly. If raised by one of the parties, the standard of prove is no different than any other facts that are relevant to the subject matter of the alleged claim or defence.

India Small Flag India

With regard to Arbitration, there is no special enactment. However, there are various legislations, which delas with the same.

Indonesia Small Flag Indonesia

While corruption is an issue, it has never been raised in respect of enforcing an arbitral award.

Liechtenstein Small Flag Liechtenstein

No. Corruption charges may, however, be grounds for foreign courts/authorities to request legal assistance by Liechtenstein courts.

Malaysia Small Flag Malaysia

In general, in Malaysia, like in many other jurisdictions, any act of corruption is prohibited and if proven, can be a criminal offence. In this regard and in general, the standard of proof in criminal proceedings is ‘beyond reasonable doubt’.

Egypt Small Flag Egypt

Corruption is not an issue that is raised regularly in arbitration proceedings in domestic cases, but, since 2011, it has been increasingly invoked and pleaded in cases involving the State and state entities whether in international or local proceedings. That said, it is worth noting that Egypt has ratified the United Nations Convention against Corruption in 2005, which aims at eliminating corruption as a major impediment to development in poor countries and regions, and obliges member states to implement a wide and detailed range of anti-corruption measures affecting their laws, institutions and practices. Before national courts, the standards for proving corruption is quite high and it must be proven beyond reasonable doubt.

Also, it is worth noting that sometimes arbitral proceedings may be seriously abused to conceal sham dealings. For example, in a recent sham arbitration case, in January and May 2019 the Egyptian courts passed and confirmed imprisonment sentences against certain individuals and members of a purported local arbitration institution who were engaged in sham arbitral proceedings. Criminal charges of misappropriation by fraudulent means and forgery were made against the sentenced individuals. (Al-Nozha Misdemeanor Court in Cairo, case no. 12648 of JY 2018; Cairo Court of Appeal, appeal no. 695 of JY 2019 (East Cairo Appeals)). This was an exceptional case that involved a criminal scheme that resulted in the issuance of a US$18 billion award against Chevron and enforcement petitions were also declined by US courts in California and Houston in relation to the award resulting from the said proceedings in Cairo.

Ecuador Small Flag Ecuador

No. Fortunately corruption does not reach arbitration in Ecuador.

Czech Republic Small Flag Czech Republic

Corruption in arbitration panels or the judiciary is not a significant issue in the Czech Republic.

The common criminal law standard is required to prove a criminal conviction for corruption.

Chile Small Flag Chile

No.

Canada Small Flag Canada

No, corruption is not an issue that is regularly raised in Canada.

Cyprus Small Flag Cyprus

(a) No, it is not.

(b) The standard would be that of the balance of probabilities for civil cases and for criminal cases the one that dictates that an offence should be proven beyond any reasonable doubt.

Mexico Small Flag Mexico

Like in many other countries, corruption is an issue that has been addressed several times by the various administrations that have been in power throughout Mexico´s history, discussions that concluded in the creation of the National Anticorruption System in 2016 as well as the General Law for the National Anticorruption System in order to:

  • Establish the minimum bases for the prevention of acts of corruption and administrative penalties.
  • Create coordinating mechanisms throughout the various organisms dedicated to combating corruption both at a Federal and Local capacity.

Nigeria Small Flag Nigeria

Allegation of corruption is not a common issue in arbitration in Nigeria. If and when such an allegation is raised, the courts demand proof beyond reasonable doubts.

Norway Small Flag Norway

Corruption is very rarely an issue. Norway ranks among the top ten nations with the least corruption in Transparency Internationals Corruption Index.

Philippines Small Flag Philippines

There is no case decided by the Philippine Supreme Court where corruption was raised in relation to arbitration proceedings.

Saudi Arabia Small Flag Saudi Arabia

From our experience with the Saudi legal system, judges are generally fair-minded and impartial. Proving corruption in Saudi courts would require clear evidence and there are laws, such as the anti-bribery law, which impose stiff civil and criminal penalties on violators.

Taiwan Small Flag Taiwan

Per Transparency International’s Corruption Perception Index, Taiwan is ranked 31 globally. So the corruption of courts or arbitration institutions is not in actual practice a regularly raised complaint.

For legal standards, there is an Anti-Corruption Act in Taiwan, which imposes a set of rules regarding corruption by public officials. Under Article 4, public officials will be found to be guilty of corruption and face criminal liabilities for: (i) unlawful possession or misappropriation of public facilities or assets, (ii) acquisition of property through the use of undue influence, extortion, or forced seizure or collection of property (iii) false reporting of quantities or prices, taking kickbacks or other bribes while handling public projects or procurement, (iv) the use of public transportation to carry contraband or goods for tax evasion, (v) request, expect or taking bribes or unjust benefits for acts that are in breach of his/her official duties.

Switzerland Small Flag Switzerland

Switzerland has a strong and effective legal framework to combat corruption. On a scale from 0 (highly corrupt) to 100 (very clean), Transparency International's Corruption Perceptions Index 2017, a recognized source for comparing worldwide corruption, ranks Switzerland 3rd with a score of 85 (the average score in Western Europe is 66). In particular, the provisions of the Swiss Criminal Code are pivotal elements of the fight against corruption. Arts. 322ter to 322novies of the Swiss Criminal Code prohibit active and passive bribery of public officials, including arbitrators, as well as active and passive bribery of private individuals which are prosecuted ex officio. In a recent order issued by the Office of the Attorney General of Switzerland, a company was ordered to pay a sum of CHF 94 Mio. for not having timely implemented sufficient organizational measures (such as sufficient training, internal rules, internal audits, etc.) to avoid that certain employees and consultants paid bribes to foreign state officials.

As regards the standard of proof, the determination of the facts of the case must be based on all available and admissible evidence and must be justifiable as well as objectively comprehensible. A defendant may only be convicted if the criminal court is convinced, beyond any reasonable doubt, that all conditions for criminal liability are met.

Turkey Small Flag Turkey

From a criminal law perspective, corruption includes crimes of embezzlement, extortion, influence peddling, bribery etc. Although not falling under a definition of a crime, certain actions may constitute corruption, as they may be against ethical principles.

Based on the above, we have not come across any decision touching upon the corruption issues in an arbitration, when we browse through publicly available decisions of the Court of Appeal.

Singapore Small Flag Singapore

No, this is not an issue that is regularly raised in Singapore. The standard that the Singapore Courts consider in cases involving a charge of corruption under the Prevention of Corruption Act (Cap. 241) is generally based on s 5 of the same, which provides as follows:

‘Any person who shall by himself or by or in conjunction with any other person —

(a) corruptly solicit or receive, or agree to receive for himself, or for any other person; or

(b) corruptly give, promise or offer to any person whether for the benefit of that person or of another person,

any gratification as an inducement to or reward for, or otherwise on account of —

(i) any person doing or forbearing to do anything in respect of any matter or transaction whatsoever, actual or proposed; or

(ii) any member, officer or servant of a public body doing or forbearing to do anything in respect of any matter or transaction whatsoever, actual or proposed, in which such public body is concerned,

shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $100,000 or to imprisonment for a term not exceeding 5 years or to both’.

With respect to the ‘corrupt element’ of the above, the Singapore Courts have held that:

‘Thus, there must first be a corrupt element in the transaction according to the ordinary and objective standard, followed by the accused’s guilty knowledge that what he was doing was, by that standard, corrupt. Both limbs must be fulfilled beyond a reasonable doubt. And, the question of “corrupt” would be determined on the facts of the individual case.’ Chan Wing Seng v Public Prosecutor, [1997] 1 SLR(R) 721 at [25].

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Corruption is an issue that is regularly raised in Korea. In 2016, the Improper Solicitation and Graft Act was introduced for the purpose of “ensur[ing] that public servants, etc. perform their duties in a fair manner and to secure public confidence in public institutions, by prohibiting any improper solicitation made to public servants, etc., and by prohibiting public servants, etc. from receiving money, goods, etc.” (Article 2 of the Improper Solicitation and Graft Act).

Updated: November 8, 2019