Illegality And Corruption In International Arbitration: The Role Of Arbitrators And Counsel

We all know the majority of arbitration rules impose confidentiality obligations on arbitrators and counsel. But, they typically do not address possible exemptions on that requirement which may be utilized if arbitrators feel compelled to address issues of illegality by breaking that obligation of confidence.

Obviously an arbitrator or arbitral panel are not in the same position as a judge who can investigate issues of illegality. The panel has an obligation to maintain the confidentiality of the proceedings.

It used to be that even if there was no legal requirement of an arbitrator to disclose corrupt activities, there was some overriding duty that will compel an arbitrator to make such a report under the guise of public interest justice or international public order. However, there are now compelling statutory obligations that apply to counsel and arbitrators alike.

For example there are anti-money laundering regulations and anti-corruption legislation in many countries together with international treaties which may impose on arbitrators an obligation to report reasonable suspicions of a party's corrupt activities.

Arbitrators must then consider:

Any specific exemption arising from the confidentiality obligations imposed on them by the appointing authority and the appropriate arbitration rules. Whether they are specifically exempted from the confidentiality obligations if a competent authority requested disclosure of information in line with national legislation or international conventions. The more difficult question is whether there is an obligation on the arbitrators to act on their own volition to report findings of illegality to the appropriate authority.1 All of this requires careful consideration of the evidence before the tribunal and the obligations placed on the tribunal not only by the governing law, but ultimately on laws from their home jurisdiction and international convention.

While this is all very good where one of the parties tenders the appropriate evidence to satisfy the burden of proof that there are allegations of illegality, the real question is what do you do as arbitrator when you are merely suspicious or there is limited evidence to suggest there is illegality behind the contractual issues.

Arbitral bodies of course, have limited means to discover facts or press for documents or evidential points which obviously will impact the consideration of the burden of proof of illegality.

Arbitrators should still be...