Empowering the Victims of Corruption: The Potential of Sleeping Third-Party Beneficiary Clauses

This paper proposes that third-party beneficiary clauses, rights ius quaesitum tertio, can be used to create platforms for private actor intervention in the fight against corruption that can help to shape an environment that discourages corruption in a self-regulatory manner. By linking those who bear the brunt of the negative consequences of corruption to public contracts tainted by corruption, third-party beneficiary clauses would give victims of corruption a seat at the table, a right to sue and a right to be engaged in the sanctioning processes with regard to such corrupt transactions. This approach can also act as a check on the actions of government officials and corporations by increasing the risk they incur through corrupt activity. However, there are good reasons for rules of standing; the machinery of justice may break down under the weight of a multiplicity of claims or, worse, an onslaught of frivolous claims. This paper therefore proposes that it is possible to provide third party redress, while also providing mechanisms to avoid encouraging excessive litigation, through establishing a sleeping third-party beneficiary clause in procurement contracts. Such clauses remain dormant unless the third party can demonstrate evidence of corrupt activity relating to the award of a specific contract. A threshold of evidence of corruption or fraud can be defined that will trigger the clause into operation, upon which it automatically comes into effect, making the identified third-party beneficiaries parties to the contract and giving them standing to sue on the contract. Ultimately, such a clause would be most successful if the specter of direct intervention discourages corruption so effectively that the clause is in fact never triggered into operation.