TRANSNATIONAL PUBLIC POLICY ISSUES AND INTERNATIONAL ARBITRATION
There were times when illicit activities such as corruption, whether approved of or not, were seen as necessary or inevitable ‘evils’ in the context of international business transactions. The diversity of cultures, business practices and regulations across the planet was clearly a fact, if not a pretext, that led to such a tolerance.
But times are changing.
Moral or ethical values are increasingly important in international business transactions. An abundance of national laws and regulations have been enacted around the world to fight corruption, bribery, tax fraud or evasion, money laundering and so on. A wide range of international conventions have also been concluded to combat or curb these illicit actions, and international organisations and non-governmental organisations (NGOs) alike have joined the fight.
International arbitration specialists are aware that public policy issues raised by illicit activity have been under discussion for decades, in connection with international arbitration proceedings involving both commercial disputes and investments disputes.
In a 1963 ICC award, a seasoned international arbitrator, having found that the contract he was asked to examine was fraudulent, ruled based on such finding that the contract was null and void, and consequently that he, as arbitrator, had no jurisdiction over the dispute. That award, which is a reflection of the arbitrator’s dignity, was vigorously criticised. It is by and large an isolated decision, perhaps owing to the fact it is not consistent with the concept of autonomy or ‘separability’ of the arbitration clause, which is now widely recognised, whereby an arbitration clause is considered valid even where the underlying business agreement in which it is inserted is held invalid.
Oct-Dec 2018 issue
FLV & Associés