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How Do Tribunals in Investment Arbitrations Treat Parallel Domestic Investigations and Proceedings?

Recent years have seen an uptick in the expansion and enforcement of anti-corruption laws worldwide. In 2017, China amended its Anti-Unfair Competition Law, broadening the scope of bribe recipients covered by the law, and increasing penalties. In 2019, Italy widened its anti-bribery law, No. 3/2019, increasing penalties for both individuals and companies found guilty of bribery. Also, the past few years have been some of the most active for U.S. Foreign Corrupt Practices Act (“FCPA”) litigation. In 2019, the Department of Justice (“DOJ”) and Securities and Exchange Commission (“SEC”) reported more than fifty actions under the Foreign Corrupt Practices Act (“FCPA”), and collected more than US$2.5 billion in total penalties, fines, and disgorgement in FCPA settlements. In the UK, the powers and funding of the Serious Fraud Office (“SFO”) have been gradually increasing, and the appointment of a new Director in 2018 has given new impetus to the SFO’s investigation of bribery and corruption offenses.

Given these global developments, it is unsurprising that corruption defenses have become more common in international investment arbitration, and often these corruption investigations occur in parallel with related arbitration proceedings. Yet, while much has been written about the burden of proof for parties invoking corruption defenses within the context of an arbitration, little has been written about how tribunals treat domestic or international criminal investigations or court rulings regarding the same allegations of a corrupt act at issue in an arbitration. Specifically: How do tribunals adjudicating a corruption defense consider parallel criminal investigations into that alleged act of corruption, a conviction, or even the absence of an investigation entirely? This post addresses these issues in the limited context of international investment arbitration. Read the entire article here.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.