Corruption in international investment arbitration

Abstract

Corruption appears to be destructive to investment arbitration and the international development as a whole. In some states to engage in corruption is a typical method of conducting business in investment or trade. There are two forms of bribery regarding international investment. One of them is that when an investor corrupts public official to get a suitable investment agreement, another is where the investor is blackmailed to pay money by a person who has authority. The paper aims to evaluate whether international investment arbitration as a source of dispute settlement might be used to combat bribery in foreign investment. Also, the paper focuses on a controversial issue when host states may use corruption as a defence in investment tribunals. As an example, a case the World Duty Company Ltd v Republic of Kenya has been given to explain the defence by the host state. One may expect that this case is able to change approach taken by previous arbitrators.