CHINA Trends and Developments Contributed by: Jun Gao and Fan Xu, Zhong Lun Law Firm
ings were conducted in secret and with unusual haste. The arbitral tribunal ultimately ruled that Nigeria was liable for compensation, and as of 2023, Nigeria’s total debt had risen to approximately USD11 billion. It was not until 2019 that Nigeria first raised allega - tions of bribery and sought to have the award set aside. The High Court of England and Wales found that P&ID had committed serious irregularities, includ - ing bribing officials, submitting false evidence, and stealing the opposing party’s internal legal documents to manipulate the arbitration. Ultimately, the court set aside the award on the grounds that it was contrary to public policy. In his ruling, Judge Knowles noted that without over - sight, the arbitration process would become less reli - able and more susceptible to fraud. This inevitably raises the question – does the arbitral tribunal have sufficient tools at its disposal to ensure the fairness of its awards? Highlights of the report This landmark case underscores the necessity of the ICC’s long-standing efforts to standardise and sys - tematise anti-corruption practices in international arbitration. As early as 2019, the ICC Committee on Arbitration and ADR established the “Task Force Addressing Issues of Corruption in International Arbi - tration”, which spent nearly seven years compiling this Report. The final guidelines establish a logically coherent three-stage framework for investigating corruption: • the first stage involves a preliminary review of the issues, focusing on issues such as whether the arbitral tribunal should initiate an investigation sua sponte, and the impact of parallel proceedings; • the second stage focuses on evidentiary issues, systematically addressing the burden of proof and the assessment of such evidence; • the third stage clarifies the tribunal-specific aspects of the corruption inquiry, including the legal consequences of a corruption finding and arbitrators’ obligations; and
• the Report provides international arbitration prac - titioners with a comprehensive operational frame - work for combating corruption. Factors to consider before conducting a sua sponte investigation When deciding whether to initiate a corruption investi - gation of its own motion, the arbitral tribunal may take into account multiple key factors: • the severity and credibility of corruption risk indica - tors present in the case; • the potential impact of the alleged corrupt conduct on the validity of the arbitration agreement; • the relevance of the conduct to the core dispute in the case; • the applicable legal framework and fundamental principles of procedural fairness; and • the impact of the investigation on the cross-border enforceability of the final award. This balanced approach addresses the expectations that the arbitration system will combat corruption while preventing unnecessary delays and increased costs resulting from procedural abuse. For enterpris - es, suspicious conduct in transactions will be subject to more rigorous scrutiny. Therefore, it is essential for companies to maintain higher compliance standards throughout the entire transaction process. Integrating experience and evidence: red flag methodology Corrupt conduct is inherently covert, and direct evi - dence is often difficult to obtain. This has long been the greatest challenge in proving corruption in arbi - tration. To address this critical issue, the ICC Report develops the “red flag methodology”, integrating scattered practical experience into a systematic set of tools for evidence evaluation. ICC ’ s three - step assessment framework : Identify – Validate – Assess This methodology provides the arbitral tribunal with a clear three-step operational framework, for a more standardised and transparent review of corruption allegations:
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