Part II Substantive Issues, Ch.15 Corruption

Subject(s):

Investment ‘in accordance with host state law’ — Corruption claim — Corruption — Investment — UNCITRAL Arbitration Rules

This chapter examines the legal effects of corruption on international investment contracts. It proposes solutions for contracts and dispute resolution and aims at a balance between anti-corruption values and the economic rationality of contracts, in particular the mutual responsibilities of the parties and the specifics of complex long-term projects. The introduction to the chapter gives an overview of the definitions of key terms, the legal scope of the chapter, and the legal instruments regulating corruption in foreign investment. Section 2 provides some general characteristics of corruption cases and some systematic remarks on the types of problems and cases. Problems related to the main contract, which is the contractual relationship between the investor and the host state or other investors, are examined. Problems of dispute settlement relating to the main contract are then considered. The chapter then deals with problems of agency agreements, which are contracts between investors and intermediaries, mostly consultancy firms, and the dispute settlement problems related to these agency agreements.