Corruption Allegations in Arbitration: Burden and Standard of Proof, Red Flags, and a Proposal for Systematization

Abstract

Arbitration is widely regarded as one of the most efficient mechanisms to solve complex commercial disputes. However, it has not yet been able to present sufficiently cohesive solutions for cases involving contracts obtained through corruption and, oftentimes, the current arbitrator’s toolkit might not be enough to deal with such disputes without compromising the decision, risking its enforceability, and eventually unsettling the status quo of arbitration as an adequate mechanism for dealing with commercial disputes. To harmonize the current treatment of corruption allegations in arbitration and the broader societal fight against corruption, this article analyses the issues arising out of corruption allegations in arbitration and demonstrates how burden and standard of proof can be used as the missing link to seek such cohesiveness. Moreover, it analyses how the use of red flags – which can be obtained primarily from anti-corruption compliance practice – in arbitration is desirable. As a result, this article proposes a systemized framework for addressing allegations of corruption, in which a red flag of great gravity or the accumulation of red flags, in the absence of counterevidence or sufficient evidence to rule out the plausibility of the risk, authorizes arbitrators to apply negative inferences vis-à-vis the suspicion of corruption. corruption, bribery, standard of proof, burden of proof, red flags, adverse inferences, public policy, soft law, compliance, United Nations Convention Against Corruption, Civil Law Convention on Corruption