The State Responsibility for Corruption in Investment Arbitration

Abstract

In the investor-state dispute settlement context, there seems to be common for states to invoke corruption allegations as a defence against investors’ claims in front of arbitral tribunals. And if a tribunal determines that the corruption occurred during investment making, it will certainly dismiss all claims based on jurisdictional or inadmissibility grounds.However, corruption involves both sides. Therefore, this study examines the possibility of addressing the state’s role regarding corrupt acts in investor-state arbitration cases. In this paper, the author reviews five arbitration cases involving the tribunals’ findings directly relevant to the state’s acts in connection with corruption allegations. The results show that there is indeed an emerging principle for corruption control in investor-state dispute cases, which punishes both the investors and states for illicit acts. Even though this practice is not uniform in its application and scope, there is growing awareness that states could be held responsible for investments obtained through corruption under certain circumstances. The measures against states and their future implications are discussed.