TY - JOUR
AU - Devendra, Isuru, C
AB - Abstract International investment tribunals have increasingly been confronted with allegations of corruption. This includes investors alleging corrupt conduct by public officials as the basis for a claim, and host States alleging corruption between an investor and host State public officials as a defence. In these contexts, a question arises as to the responsibility of the host State for the corrupt conduct of its public officials. Tribunals have thus far shown a general reluctance to hold a host State internationally responsible in these circumstances. This article argues that such an approach is not consistent with principles of State responsibility. Instead, the article proposes an approach based on the ILC Articles on State Responsibility that considers, inter alia, the investor's conduct, the host State's conduct and the ostensible capacity in which the corrupt public official has acted. The article also considers the consequences of a host State's international responsibility for corruption, including the host State's ability to invoke that same corruption as a defence. 1. INTRODUCTION Corruption is universally condemned. It nonetheless remains widely practised and infects many aspects of life; foreign investment is no exception. It is, therefore, unsurprising that corruption is an increasingly prevalent issue in international investment arbitration (‘IIA’). Corruption has been invoked both as a sword for investors—where an investor brings a claim based on a host State public official’s solicitation of a bribe1—and a shield for host States—where the host State defends a claim on the basis that the investment at issue was obtained by corruption.2 A fundamental issue that has arisen in this context is whether a host State may be held internationally responsible for the corrupt acts of its public officials, and the consequences of such responsibility. While the few IIA tribunals that have directly confronted the issue have not been prepared to hold a host State internationally responsible for the corrupt conduct of its public officials, a principled approach to the issue has not emerged. Instead, the fragmented jurisprudence is more reflective of an uneasiness on the part of tribunals to hear claims concerning investments obtained by corruption—at times on the purported basis that dismissing such claims promotes the rule of law. This article argues that the approaches adopted by these IIA tribunals are inconsistent with the international law of State responsibility and do not assist the eradication of corruption. The article first considers the impact of corruption and the international community’s response. Section 3 then examines the leading IIA cases in which tribunals have directly addressed the issue of corruption. Section 4 considers whether, and in what circumstances, international law holds a host State internationally responsible for the corrupt conduct of its public officials. Finally, Section 5 considers how a host State’s international responsibility for corruption affects its ability to invoke that corruption as a shield to an investor’s claim and how the approach proposed in this article would better assist the eradication of corruption. 2. THE ‘INSIDIOUS PLAGUE’ OF CORRUPTION The international community has struggled to agree on a definition of corruption.3 International organizations have, however, been more successful. The World Bank defines corruption as ‘the abuse of public office for private gain’4 and Transparency International, the largest international non-governmental organization addressing corruption, defines corruption as the ‘abuse of entrusted power for private gain’.5 The late former Secretary-General of the United Nations, Kofi Annan, described the impact of corruption as: ‘… an insidious plague that has a wide range of corrosive effects on societies. It undermines democracy and the rule of law, leads to violations of human rights, distorts markets, erodes the quality of life and allows organized crime, terrorism and other threats to human security to flourish’.6 Despite the absence of a global definition, the international community has taken considerable steps in recent decades to address corruption. Its two major accomplishments are the United Nations Convention against Corruption (‘UNCAC’) and the OECD Convention on the Bribery of Foreign Public Officials in International Business Transactions (‘OECD Anti-Bribery Convention’). The UNCAC is the only legally binding universal anti-corruption instrument and requires its State parties to implement various anti-corruption measures within their domestic legal systems.7 The OECD Anti-Bribery Convention is aimed at reducing corruption in developing countries by establishing legally binding standards for OECD members to criminalize the bribery of foreign public officials in international business transactions.8 Notwithstanding these achievements, the World Bank reports that US$1.5 trillion in bribes are paid each year—equivalent to 2% of global gross domestic product.9 Transparency International also found that two in five of the 2700 businesspersons it surveyed in 26 countries reported that public service providers, such as customs and revenue authorities, the judiciary, police, and registry and permit offices, had solicited a bribe from them in the previous year.10 Similarly, a 2017 Report of the Secretary-General of the United Nations concerning progress towards the Sustainable Development Goals reveals that in 2015 over 18% of firms worldwide reported receiving at least one request for the payment of a bribe.11 In light of these figures, it is clear that more still needs to be done to address the problem of corruption. This need is particularly important from an economic perspective. As Arnone and Borlini observe, corruption distorts competitive markets and has a significant negative impact on foreign direct investment.12 Wei highlights the severity of this impact by comparing investing in low corruption risk Singapore with investing in high corruption risk Mexico.13 Wei finds that the increase in corruption-induced uncertainty between Singapore and Mexico for foreign direct investment is economically equivalent to increasing the tax rate on multinational firms by 32 percentage points.14 This negative impact of corruption is striking, and antithetical to the objectives of international investment instruments that seek to promote foreign investment.15 International investment law, therefore, has a strong interest in the eradication of corruption. 3. CONSIDERATION OF CORRUPTION IN INTERNATIONAL INVESTMENT ARBITRATION A. Cases The most notable IIA cases dealing with corruption are considered below. (i) World Duty Free v Kenya World Duty Free v Kenya (‘World Duty Free’) is regarded as the first case in which an International Centre for Settlement of Investment Disputes (‘ICSID’) tribunal made a dispositive finding of corruption.16 The case concerned a dispute under an agreement between World Duty Free Company Limited (‘WDF’) and the Government of Kenya for the construction, maintenance and operation of duty-free complexes at Nairobi and Mombasa international airports in Kenya. The agreement had originally been entered into between a company called House of Perfume and the Government of Kenya but was amended shortly thereafter to substitute WDF in place of House of Perfume. A dispute arose between WDF and Kenya, which WDF submitted to ICSID arbitration in accordance with the dispute resolution clause of the agreement between the parties. The agreement was governed by Kenyan law, except that (somewhat strangely) any tribunal constituted under the agreement was to apply English law.17 In the arbitration, WDF alleged that Kenya took certain measures in breach of the agreement between the parties, illegally expropriated WDF’s properties and destroyed WDF’s rights under the agreement.18 In addition to denying the substantive allegations, Kenya argued that the agreement was unenforceable as it had been procured through corruption.19 The factual basis for the corruption allegations was WDF’s own evidence that, in order to do business with the government, the manager of House of Perfume and WDF, Nasir Ibrahim Ali, was requested to make a US$2 million ‘personal donation’ to Kenya’s President, Daniel arap Moi.20 The US$2 million was solicited by Rashid Sajjad, a person whom Ali understood to be ‘politically and powerfully connected in the Kenyan Government’ and ‘very close’ to President Moi.21 In this regard, Ali testified that: ‘I was given to believe, that this was payment for doing business with the Government of Kenya. … Sajjad advised me that the appropriate donation, given the estimated value of the investment, was US$2 million. I was further advised by him that the donation should be in cash.’22 Sajjad arranged for Ali to meet with various Kenyan government officials, the first of whom was President Moi. Both Ali and Sajjad attended the meeting with President Moi at the President’s Kabarak Residence in Kenya. Sajjad had with him a brown briefcase containing the equivalent of US$500,000 in Kenyan Shillings. As Ali recalled: ‘[w]hen we entered the room where the President received us, [Sajjad] put the briefcase by the wall and left it there. After the meeting we collected the briefcase from where we had left it. On the departing journey I looked in the briefcase and saw that the money had been replaced with fresh corn. … I felt uncomfortable with the idea of handing over this “personal donation” which appeared to me to be a bribe. However, this was the President, and I was given to understand that it was lawful and that I didn’t have a choice if I wanted the investment contract. I paid the money on behalf of House of Perfume, treating it as part of the consideration for the agreement and documented it fully … ’.23 Kenya argued that the payment was a violation of Kenyan law, English law and the international ordre public, which made the agreement between the parties unenforceable.24 WDF, however, contended that Ali made the payment in the belief that it was lawful and in accordance with routine business practice in Kenya.25 The tribunal disagreed with WDF’s characterization of the payment and stated that it had ‘ … no doubt that the concealed payments made by Mr. Ali on behalf of the House of Perfume to President Moi and Mr. Sajjad could not be considered as a personal donation for public purposes’ and were instead a bribe.26 The tribunal then proceeded to examine the consequences of the bribery from the perspective of both domestic law and international public policy. First, the tribunal found the bribe to be contrary to the international public policy of most, if not all, States.27 As a result, the tribunal held that it could not uphold WDF’s claims based on a contract obtained by corruption.28 While this was dispositive of the case, the tribunal went on to examine the claims under domestic law. In doing so, the tribunal held that the fact that the agreement had been obtained by bribery made the agreement voidable at the election of Kenya, and that Kenya had elected to avoid the agreement by its counter-memorial in the arbitration.29 The tribunal also considered whether President Moi’s conduct was attributable to Kenya and whether the tribunal should balance the unlawfulness of the conduct of WDF and President Moi. On the first question, the tribunal considered that the covert nature of the payment meant that President Moi’s conduct could not be attributed to the State and commented that if the bribe were attributable to Kenya, the payment would not be a bribe.30 On the second question, while the tribunal recognized various criticisms of the asymmetry resulting from the principles ex turpi causa non oritur actio (from a dishonourable cause an action does not arise) and potior est conditio defendentis (in equal fault, better is the position of the defendant), the tribunal found that the principles were settled in English law.31 Accordingly, the tribunal did not consider it appropriate to weigh the culpability of the parties. Nonetheless, the tribunal observed that if such an exercise were undertaken, the balance would not favour WDF. In particular, the tribunal stated that WDF ‘was steeped in illegal conduct in paying the bribe to the Kenyan President’ and that the bribe: ‘was not procured by coercion or oppression or force by the Kenyan President nor by “undue influence”; and as regards any investment, there was at the material time no “hostage factor” because there was then no investment or other commitment in Kenya by Mr. Ali or his principal’.32 Despite this refusal to attribute President Moi’s conduct to Kenya, the tribunal commented that it found it ‘highly disturbing’ that President Moi had not been prosecuted by the Kenyan authorities, in circumstances where the evidence before the tribunal showed President Moi to have been the person who had solicited the bribe.33 (ii) Metal-Tech v Uzbekistan Metal-Tech v Uzbekistan (‘Metal-Tech’) involved a joint-venture agreement between Metal-Tech Ltd. (‘Metal-Tech’) and two companies owned by the Government of Uzbekistan, Uzbek Refractory and Resistant Metals Integrated Plant (‘UzKTJM’) and Almalik Mining Metallurgy Combinate (‘AGMK’), for building and operating a molybdenum production plant.34 The joint-venture was operated through Uzmetal Technology (‘Uzmetal’). A few years into the joint-venture, the Public Prosecutor’s Office for the Tashkent Region of Uzbekistan initiated criminal proceedings against certain officials of Uzmetal on the basis that they had abused their authority and caused harm to Uzbekistan.35 Shortly afterwards, Uzbekistan’s Cabinet of Ministers adopted a resolution that abrogated Uzmetal’s right to purchase raw materials and, according to Metal-Tech, cancelled Metal-Tech’s right to export Uzmetal’s refined molybdenum oxide. AGMK then embarked on a course of action by which it terminated the raw materials supply contract between Uzmetal and AGMK. Meanwhile, UzKTJM demanded payment of certain dividends from Uzmetal, which resulted in UzKTJM commencing bankruptcy proceedings against Uzmetal. Uzmetal was liquidated and, according to Metal-Tech, Uzmetal’s assets were acquired by AGMK and UzKTJM. Metal-Tech commenced ICSID arbitration claiming, inter alia, that Uzbekistan had breached its obligations under Uzbek law, violated the fair and equitable treatment (‘FET’) and full protection and security standards in the Agreement between the Government of the State of Israel and the Government of the Republic of Uzbekistan for the Promotion and Reciprocal Protection of Investments (‘Israel–Uzbekistan BIT’), unlawfully expropriated Metal-Tech’s investments in violation of the Israel–Uzbekistan BIT and breached the joint-venture agreement between Metal-Tech, UzKTJM and AGMK.36 Uzbekistan denied liability and objected to the tribunal’s jurisdiction on the basis that Metal-Tech’s investment in Uzbekistan was procured by corruption.37 In particular, Uzbekistan argued that Metal-Tech’s investment did not fall within the definition of an ‘investment’ in the Israel–Uzbekistan BIT as it violated Uzbek laws on bribery and transnational principles and international public policy prohibiting corruption.38 Uzbekistan’s corruption arguments were based on allegations that Metal-Tech had promised to pay several individuals to obtain or influence the Uzbekistan government’s approval of Metal-Tech’s project.39 The corruption was said to be evidenced in, inter alia, certain consultancy agreements entered into by Metal-Tech. In this regard, the tribunal considered that the consultancy agreements between Metal-Tech and Victor Mikhailov, Uygur Sultanov and Igor Chijenok, respectively, were sham contracts designed to conceal the true, corrupt, nature of the relationship between the parties, that involved, inter alia, using the relationship between Sultanov and his brother, the Prime Minister of Uzbekistan, to Metal-Tech’s advantage.40 In particular, the tribunal found that the consultancy agreements between Metal-Tech and Sultanov and Chijenok, respectively, breached Uzbek laws that criminalized bribery.41 On this basis, the tribunal held that Metal-Tech had not made its investments in Uzbekistan in accordance with host State law, as is required by the definition of ‘investment’ in the Israel–Uzbekistan BIT.42 Given this non-compliance, the tribunal held that it lacked jurisdiction ratione materiae.43 The tribunal, however, recognized the asymmetry resulting from this outcome: ‘ … the Tribunal is sensitive to the ongoing debate that findings on corruption often come down heavily on claimants, while possibly exonerating defendants that may have themselves been involved in the corrupt acts. It is true that the outcome in cases of corruption often appears unsatisfactory because, at first sight at least, it seems to give an unfair advantage to the defendant party’.44 However, the tribunal justified its approach on the basis that it is designed ‘ … not to punish one party at the cost of the other, but rather to ensure the promotion of the rule of law, which entails that a court or tribunal cannot grant assistance to a party that has engaged in a corrupt act’.45 The tribunal also considered its finding of corruption relevant to allocating the costs of the arbitration. In this regard, the tribunal observed that: ‘The Tribunal found that the rights of the investor against the host State, including the right of access to arbitration, could not be protected because the investment was tainted by illegal activities, specifically corruption. The law is clear – and rightly so – that in such a situation the investor is deprived of protection and, consequently, the host State avoids any potential liability. That does not mean, however, that the State has not participated in creating the situation that leads to the dismissal of the claims. Because of this participation, which is implicit in the very nature of corruption, it appears fair that the Parties share in the costs.’46 (emphasis added) Accordingly, unlike the asymmetry it highlighted when dismissing the investor’s claims, in its allocation of costs the tribunal appeared to hold Uzbekistan responsible for the participation of its public officials in the corruption, and to balance the culpability of the investor and the host State. (iii) Niko Resources v Bangladesh Corruption also featured prominently in Niko Resources (Bangladesh) Ltd. v Bangladesh Petroleum Exploration & Production Company Limited and Bangladesh Oil Gas and Mineral Corporation (‘Niko’).47 In that case, like in World Duty Free, the claimant admitted the corrupt conduct. The real question was whether the corruption barred the investor’s claims. The disputes in Niko arose under contracts entered into between Niko Resources (Bangladesh) Ltd. (‘Niko’) and two Bangladesh state-owned entities in connection with a gas project in Bangladesh. The first contract was a joint-venture agreement between Niko and Bangladesh Petroleum Exploration & Production Company Limited (‘BAPEX’) (the ‘Niko JVA’), for which BAPEX was acting under the direction of the Bangladesh Ministry of Power, Energy and Mineral Resources.48 The second contract was a gas purchase and sale agreement between Niko, BAPEX and Bangladesh Oil Gas and Mineral Corporation (‘Petrobangla’) (the ‘Niko GPSA’). The Bangladesh government approved both the Niko JVA and Niko GPSA.49 The first dispute concerned Petrobangla’s alleged non-payment of US$35.71 million under the GPSA for gas supplied and the second dispute concerned Tk746.5 crore in compensation sought by the Government of Bangladesh in local court proceedings against Niko for Niko’s alleged responsibility for a blowout during drilling at one of the gas fields. The disputes were submitted to ICSID arbitration pursuant to the respective dispute resolution clauses in the Niko JVA and Niko GPSA and heard together. In the arbitrations, BAPEX and Petrobangla (together, the ‘Respondents’) raised a number of objections to the jurisdiction of the tribunal and the admissibility of Niko’s claims. The Respondents contended, inter alia, that Niko had engaged in corruption and, therefore, could not benefit from the Niko JVA and Niko GPSA, including the dispute resolution clauses referring disputes to ICSID arbitration.50 The corruption allegations primarily concerned two instances of Niko’s Canadian parent company, Niko Resources Ltd. (‘Niko Canada’), providing benefits to the then Bangladesh State Minister for Energy and Mineral Resources. The provision of these benefits was the subject of criminal investigations in Canada and led to the conviction of Niko Canada based on an agreed statement of facts signed by officers of Niko Canada.51 The agreed statement detailed that the Minister had been provided with: (i) a Toyota LandCruiser, which was originally requested by BAPEX under the Niko JVA but then, upon BAPEX’s instructions, delivered to the Minister’s home in the presence of two Niko representatives;52 and (ii) travel and expenses, including CAN$5,000 of non-business related travel and expenses, to attend an oil and gas conference in Calgary as a guest of Niko Canada.53 The tribunal found this to establish Niko’s corrupt conduct for the purposes of the ICSID arbitrations.54 The tribunal, however, noted that while Niko had engaged in corruption, the Canadian authorities were unable to establish that any influence was obtained as a result of the benefits provided to the Minister.55 This is due to the fact that the purpose of the corruption was to obtain a gas purchase and supply agreement on the best terms possible, but the Minister had resigned shortly after the corrupt acts (as a result of his receipt of the LandCruiser becoming public),56 and the Niko GPSA was not concluded until 18 months thereafter.57 Nonetheless, the Respondents argued that ‘ … jurisdiction must be denied because the Claimant has violated the principles of good faith and international public policy’ and that the tribunal was empowered to dismiss claims which represented a violation of fundamental principles of law.58 Importantly in this regard, the Respondents did not argue that either the Niko JVA or Niko GPSA was void or voidable as a result of corruption (as was the case in World Duty Free).59 Instead, the Respondents contended that Niko did not bring its claims with ‘clean hands’ and its claims should therefore be dismissed.60 For the purposes of the clean hands defence, the Respondents contended that it was not relevant whether or not Niko’s bribery achieved its purpose,61 Niko’s intention was said to found the violation of good faith and international public policy.62 In considering the consequences of the corruption, the tribunal noted that it was well-established that the prohibition of bribery forms part of international public policy.63 The consequence of this, the tribunal held, was that the prohibition of bribery overrides the general principle of party autonomy.64 That is, the parties’ autonomy to submit disputes to arbitration is overridden where the underlying contract is contrary to international public policy, the effect of which is that arbitrators cannot give effect to the contract.65 However, the tribunal sought to distinguish the case at hand with cases in which the contract in question was a contract for corruption—as opposed to a contract obtained by corruption. Contracts for corruption, the tribunal observed, had been denied effect by international arbitrators, while the latter required consideration of whether the acts of corruption affected the validity of the contract in question or the arbitration clause contained therein.66 The tribunal proceeded to conduct this analysis with respect to the Niko JVA and Niko GPSA. In doing so, the tribunal referred to the approach taken by the tribunal in World Duty Free. In particular, the tribunal referred to the passage that: ‘ … claims based on contracts of corruption or on contracts obtained by corruption cannot be upheld by this Arbitral Tribunal’.67 While generally agreeing with the passage, the tribunal sought to distinguish between the consequences flowing from contracts of corruption and contracts obtained by corruption. The tribunal considered the consequences stated in the above quoted passage in World Duty Free (‘cannot be upheld by this Arbitral Tribunal’) apply to the former category of contracts—contracts of corruption—but that the consequences flowing from the latter category—contracts obtained by corruption—required more detailed consideration.68 Following such consideration, including Article 50 of the Vienna Convention on the Law of Treaties that deals with corruption by State representatives in treaty making, the tribunal concluded that, absent evidence of the proper law of the contract requiring otherwise, contracts obtained by corruption were not void, but merely voidable.69 That is, the innocent party has the right to elect whether to affirm or avoid the contract. In the case at hand, the Respondents had not elected to avoid either the Niko JVA or the Niko GPSA. Accordingly, the tribunal concluded that neither agreement was avoided or invalid.70 The tribunal then went on to consider the Respondents’ contention that, due to its corrupt conduct, Niko should be deprived of being able to rely on the agreements to submit the disputes to ICSID arbitration. The Respondents advanced this contention on three bases: (i) the offer of ICSID arbitration applies only to investments made in good faith, (ii) accepting jurisdiction would jeopardize the integrity of the ICSID dispute settlement mechanism, and (iii) the doctrine of clean hands prevented Niko’s claims being heard.71 With respect to the first basis, the tribunal distinguished between the doctrine of good faith applicable to disputes submitted pursuant to contractual arbitration agreements and disputes submitted pursuant to treaty-based arbitration agreements.72 Having made this distinction, the tribunal held that, in contract-based arbitration (like the case at hand), an alleged lack of good faith is not a jurisdictional matter, but one reserved for the merits of the dispute.73 Accordingly, the tribunal dismissed the Respondents’ jurisdictional objection based on a violation of good faith.74 On the second basis (that hearing the dispute would undermine the integrity of the ICSID dispute settlement mechanism), the tribunal recognized the importance of protecting the integrity of the ICSID dispute resolution system, but disagreed with the Respondents that not hearing Niko’s claims promoted the system’s integrity. Instead, the tribunal considered resolution of a dispute between parties to a valid arbitration agreement protected the integrity of the dispute settlement system more than the tribunal not hearing the claims.75 With respect to the third basis for the Respondents’ objections (the clean hands doctrine), the tribunal first noted that the existence of the international law doctrine of clean hands remained controversial and, if it did exist, its precise content was ill-defined.76 Following a review of international authorities, the tribunal held that the Respondents were not able to rely on the corrupt acts that resulted in the Canadian conviction of Niko Canada as a basis for the tribunal to refuse to hear the merits of the case at hand.77 In reaching this conclusion, the tribunal had particular regard to the decision of an arbitral tribunal constituted under the United Nations Convention on the Law of the Sea (‘UNCLOS’) to determine a maritime boundary dispute between Guyana and Suriname.78 In that case, the tribunal considered that any doctrine of clean hands existing under international law may only be invoked where three criteria are satisfied: (i) the breach concerns a continuing violation, (ii) the remedy sought is protection against continuance of that violation in the future, not damages for past violations, and (iii) there is a relationship of reciprocity between the obligations considered.79 The Niko tribunal found that the case at hand did not satisfy these criteria and, therefore, the Respondents could not rely on the clean hands doctrine to bar Niko’s claims.80 Additionally, drawing on what seem to be principles of recognition or estoppel, the tribunal observed that the Respondents had entered into the Niko GPSA after it had knowledge that Niko had engaged in corrupt conduct. In this regard, the tribunal stated that: ‘If and to the extent the Claimant or its parent company had unclean hands, the Respondents disregarded this situation. They may not now rely on these events to deny jurisdiction under an arbitration agreement which they then accepted.’81 Accordingly, the tribunal dismissed the Respondents’ objections based on corruption.82 (iv) Wena Hotels v Egypt Wena Hotels v Egypt (‘Wena’) concerned a dispute in relation to a hotels project in Egypt. Wena Hotels Ltd. (Wena) and the Egyptian Hotels Company (EHC), an Egyptian public-sector company affiliated with the General Public Sector Authority for Tourism, entered into a lease and development agreement for the Luxor Hotel in Luxor and a similar agreement for the Nile Hotel in Cairo.83 Shortly after the agreements were executed, disputes arose between Wena and EHC as to their respective obligations. The disputes escalated and resulted in EHC seizing the hotels. Egypt did not dispute the wrongfulness of EHC’s seizures and Egypt’s Minister of Tourism, Fouad Sultan, gave evidence that he considered EHC’s seizure of the hotels to be ‘wrong’.84 Indeed, the Chief Prosecutor of Egypt had ruled that the seizure of the Nile Hotel and the Luxor Hotel was illegal and that Wena was entitled to have possession of the hotels returned.85 When the hotels were eventually returned to Wena, they had been significantly damaged.86 Wena never operated the Nile Hotel again and was not able to properly operate the Luxor Hotel due to the Ministry of Tourism denying Wena a permanent operating licence for the hotel.87 Wena sought compensation from the Egyptian government but none was forthcoming. Wena then commenced commercial arbitration with EHC under each of the two lease agreements. Both tribunals found in favour of Wena, but the award under the Luxor Hotel lease agreement was set aside by the Cairo Court of Appeal.88 Wena then commenced ICSID arbitration against Egypt for violation of the 1975 Agreement between the United Kingdom and the Arab Republic of Egypt for the Promotion and Protection of Investments (‘UK–Egypt BIT’). In addition to denying it violated the UK–Egypt BIT, Egypt alleged that the lease agreements for the Luxor Hotel and the Nile Hotel had been procured by corruption.89 In particular, Egypt alleged that Wena ‘improperly sought to influence the Chairman of EHC [Mr. Kamal Kandil] with respect to the award of the leases … ’.90 The improper influence was said to have been facilitated by a consultancy agreement entered into between Wena and Kandil for ‘advice and assistance to the company as to the opportunities available to the company for developing its hotel business in Egypt’.91 The existence of the consultancy agreement was not disputed.92 In fact, Wena’s founder, Nael El-Farargy, gave evidence that the Egyptian government was aware of the consultancy agreement between Wena and Kandil.93 Minister Sultan, however, denied that he had personal knowledge of the consultancy agreement and stated that upon first learning of the consultancy agreement he referred the matter to the prosecutor ‘requesting a full fledged investigation’.94 The parties agreed that the investigation had been closed and Kandil was never prosecuted in connection with the consultancy agreement.95 Indeed, at the time of the arbitration, Kandil was an advisor to a senior member of Egyptian parliament.96 Furthermore, no information about the investigation requested by Minister Sultan was provided to the tribunal. As a result, the tribunal commented that: ‘Regrettably, because Egypt has failed to present the Tribunal with any information about the investigation requested by Minister Sultan, the Tribunal does not know whether an investigation was conducted and, if so, whether the investigation was closed because the prosecutor determined that Mr. Kandil was innocent, because of lack of evidence, or because of complicity by other government officials.’97 The tribunal went on to hold that, because the Egyptian government was made aware of the consultancy agreement by Minister Sultan but, for whatever reason, decided not to prosecute Kandil, the tribunal was ‘reluctant to immunize Egypt from liability’ on the basis that the consultancy agreement was illegal under Egyptian law.98 The tribunal did, however, note that, if the corruption allegations had been established, Wena’s claims would be dismissed as the lease agreement would have been procured by corruption and, as a result, contrary to international bonos mores.99 (v) EDF v Romania EDF v Romania (‘EDF’) is unlike the cases considered above in that corruption was alleged by the claimant as the basis for its claims (as opposed to being deployed by the host State as a defence to the investor’s claims).100 The case concerned two incorporated joint-ventures entered into by EDF (Services) Limited (‘EDF’) and Romanian state-owned entities for the operation of duty-free stores at Romanian airports and the in-flight sale of duty-free products on Romania’s national airline. The first joint-venture agreement (the ‘ASRO JVA’) was entered into between EDF and two state-owned entities, C.N. Bucarest Aeroport Otopeni (‘AIBO’) and C.N. Casrom S.A (‘Casrom’). The ASRO JVA primarily concerned the lease of premises for duty-free operations at various airports in Romania through E.D.F. ASRO S.R.L. (‘ASRO’), a company established for an initial period of 10 years and extendable for a further 10 years. The second joint-venture agreement (the ‘SKY JVA’) was entered into between EDF, Romania’s national airline, Compania de Transportationuri Aeriene Romane Tarom S.A. (‘TAROM’), and Ion Staicu. The SKY JVA established SKY SERVICES (ROMANIA) S.R.L. (‘SKY’), who was to provide in-flight duty-free services on-board TAROM’s aircraft. The dispute between EDF and Romania concerned both ASRO and SKY. The ASRO dispute concerned a successful challenge by EDF’s then former joint-venture partner, AIBO, to EDF’s attempt to extend ASRO’s existence beyond the initial 10-year period stipulated in the ASRO JVA (which had at that time elapsed) and the Romanian government’s enactment of Government Emergency Ordinance No. 104 (‘GEO 104’). GEO 104, in effect, revoked other duty-free licences held by ASRO. Around the same time, TAROM also terminated the SKY JVA and proceeded to itself operate in-flight duty-free services on its aircraft. EDF alleged that Romania’s measures and the conduct of its state-owned entities, AIBO and TAROM, (which EDF contended were attributable to Romania) were a response to EDF’s refusal to pay a US$2.5 million bribe solicited on behalf of the Prime Minister of Romania and in violation of various protections in the Agreement between the Government of Great Britain and Northern Ireland and the Government of Romania for the Promotion and Reciprocal Protection of Investments (‘UK–Romania BIT’).101 In particular, EDF contended that the Prime Minister’s solicitation of a bribe was attributable to Romania and, therefore, in violation of the FET standard in the UK–Romania BIT. Romania denied the allegations that a bribe had been solicited. The tribunal agreed with EDF that such solicitation, if proven, would violate the FET standard, as well as international public policy: ‘The Tribunal shares the Claimant’s view that a request for a bribe by a State agency is a violation of the fair and equitable treatment obligation owed to the Claimant pursuant to the BIT, as well as a violation of international public policy, and that exercising a State’s discretion on the basis of corruption is a […] fundamental breach of transparency and legitimate expectations.’102 (footnotes omitted) However, the tribunal went on to find that the evidence before the tribunal did not provide ‘clear and convincing evidence’ that the alleged bribe had in fact been solicited by the Prime Minister.103 The tribunal also commented that the claimant needs to not only adduce clear and convincing evidence to establish the fact of the solicitation, but also to establish that ‘such request had been made not in the personal interest of the person soliciting the bribe, but on behalf and for the account of the Government authorities in Romania, so as to make the State liable in that respect’.104 The tribunal, therefore, dismissed EDF’s claims based on the alleged solicitation of a bribe by the Prime Minister of Romania. B. Observations The cases considered above highlight the reluctance of IIA tribunals to hold host States internationally responsible for the corrupt conduct of its public officials. The most striking example is World Duty Free, in which the tribunal did not attribute the corrupt acts of Kenya’s most senior public official, President Moi, to the State. This was despite the tribunal’s discomfort at the fact that Kenya had been able to avoid liability on the basis of a bribe its President had solicited and for which he was not prosecuted.105 A similar reluctance to attribute the corrupt conduct of public officials to the host State is evident in EDF, in which the tribunal stated that attribution was limited to corrupt conduct that was on behalf and for the account of the host State government—thereby excluding the usual situation where a public official solicits a bribe for private gain.106 The reluctance to hold the host State internationally responsible for the corrupt conduct of its public officials is more subtle in Metal-Tech. In allocating costs, the Metal-Tech tribunal commented that the host State was party to the corruption which led to the dismissal of the claims and should, therefore, share the costs of the arbitration.107 Interestingly, however, the tribunal did not attribute that same conduct to the host State with respect to the substantive aspects of the claim. That is, the tribunal did not consider the host State’s participation in the corruption to have any effect on its preliminary objections based on that same corruption. So, effectively, the Metal-Tech tribunal was only prepared to hold Uzbekistan responsible for corruption for the purposes of costs. The tribunal did not provide any principled justification for differing approaches to attribution vis-a-vis the substance of the claim and the allocation of costs. The cases considered above also show that IIA tribunals have taken differing approaches to the consequences of corruption. On the one hand, the World Duty Free, Wena and EDF tribunals considered that an investment obtained by corruption violates international public policy and thereby precludes an investor’s claims. The Niko tribunal, however, distinguished investments obtained by corruption and investments for corruption. The tribunal considered that the latter category of investments to be ipso jure invalid and preclude an investor’s claims, while an investment obtained by corruption was merely voidable at the election of the victim of the corruption. Section 5 considers these competing views and the consequences of corruption where the host State is held internationally responsible for that corrupt conduct. 4. IS A HOST STATE INTERNATIONALLY RESPONSIBLE FOR THE CORRUPT ACTS OF ITS PUBLIC OFFICIALS? The starting point for considering a host State’s international responsibility for corruption is the Articles on Responsibility of States for Internationally Wrongful Acts (‘ARSIWA’).108 The ARSIWA was adopted by the International Law Commission in 2001 and as Crawford explains, codifies and progressively develops the international law of State responsibility.109 As such, it is generally regarded, save for some exceptions, as reflective of customary international law.110 For present purposes, the starting point within the ARSIWA is Article 1. Article 1 provides that ‘[e]very internationally wrongful act of a State entails the international responsibility of that State’.111 Article 2 then goes on to provide that a State commits an internationally wrongful act when an act or omission: (a) is attributable to the State under international law, and (b) constitutes a breach of an international obligation of the State. Accordingly, for a host State to be internationally responsible for the corrupt conduct of its public officials, that conduct must satisfy both elements (a) and (b) of Article 2. A. Attributable to the State under International Law With respect to the first element, Articles 4 and 7 of the ARSIWA frame the analysis for whether corrupt conduct of public officials is attributable to the host State. Article 4(1) provides that: ‘The conduct of any State organ shall be considered an act of that State under international law, whether the organ exercises legislative, executive, judicial or any other functions, whatever position it holds in the organization of the State, and whatever its character as an organ of the central Government or of a territorial unit of the State.’112 The broad language of Article 4(1) does not distinguish between the conduct of high-level public officials, such as Heads of State and ministers, and that of lower level officials. This is affirmed by the words ‘whatever position [the State organ] holds in the organization of the State’. In light of this, the commentary to the ARSIWA (‘ARSIWA Commentary’) observes that all that is required under Article 4 is for the public official to be acting in his or her official capacity.113 But of course, no (or cynically, few) States prescribe the solicitation and receipt of bribes and other corrupt conduct within the official duties of a public official. That is where Article 7 of the ARSIWA comes in. Article 7 attributes ultra vires conduct of public officials to the State: ‘The conduct of an organ of a State or of a person or entity empowered to exercise elements of the governmental authority shall be considered an act of the State under international law if the organ, person or entity acts in that capacity, even if it exceeds its authority or contravenes instructions.’114 Accordingly, the standard by which the official capacity of a public official is determined is not the public official’s actual capacity, but his or her ostensible capacity. The ostensible nature of this capacity is reinforced by Article 4(2) of the ARSIWA, which provides that ‘[a]n organ includes any person or entity which has that status in accordance with the internal law of the State’ (emphasis added).115 The inclusive nature of this reference is significant. As Crawford observes, Article 4(2) ensures that a State cannot rely on its own internal laws and governmental structure to disclaim responsibility on the basis that a public official did not have actual authority.116 Furthermore, in the specific context of corruption, the ARSIWA Commentary notes that ‘[o]ne form of ultra vires conduct covered by article 7 would be for a State official to accept a bribe to perform some act or conclude some transaction’.117 This confirms that corrupt conduct of public officials, which is not ordinarily within the actual capacity of a public official, is, at least in some circumstances, attributable to the State. While this scope for attribution of corrupt conduct is recognized, IIA tribunals have, as set out in Section 3 of this article, exhibited a general reluctance to attribute the corrupt conduct of public officials to the host State. For example, the World Duty Free tribunal refused to attribute the corrupt conduct of the President of Kenya, President Moi, to Kenya, despite, as the tribunal recognized, the evidence pointing to President Moi being the person who solicited the bribe demanded from the investor as a precondition to doing business with the Kenyan government.118 The World Duty Free tribunal’s reasoning on this point appears to be based on the fact that the payment was a ‘covert bribe’.119 Such an approach is, however, difficult to reconcile with the principle embodied in Article 7 of the ARSIWA.120 Notably, nowhere in Article 7 does it provide that covert conduct is not attributable. While it may be that the covert nature of the conduct informs whether or not the public official was acting in his or her official capacity, it seems an overreach to draw the broad conclusion the World Duty Free tribunal did whereby all corrupt conduct, engaged in covertly, cannot be attributed to the host State. One of the fundamental difficulties with this approach is that all corruption is likely to be covert. Adopting the World Duty Free tribunal’s approach would, therefore, result in corrupt conduct by public officials falling outside the scope of attributable conduct—when the ARSIWA Commentary expressly contemplates its attribution.121 EDF is another example of a case in which an IIA tribunal was reluctant to attribute corrupt conduct of a public official to the host State.122 In that case, the tribunal seemed to consider that a host State could not be responsible for a public official acting for private gain.123 That is, the tribunal considered that, to be attributable, the bribe must have been solicited for the benefit of the Romanian government.124 That, respectfully, cannot be correct. Fundamentally, leading definitions of corruption provide that corruption is the abuse of entrusted power for private gain.125 If, as the EDF tribunal considered, a host State cannot be internationally responsible for corrupt conduct of a public official where the official has acted for private gain, then, by definition, a host State can never be internationally responsible for the corrupt conduct of its public officials. This anomalous consequence is heightened by the EDF tribunal’s holding that only bribes procured on behalf and for the account of the government are attributable to the State.126 Is that even a bribe? Arguably, it is simply discriminatory taxation. Not only is the reasoning of the World Duty Free and EDF tribunals problematic in the abovementioned respects, but their approaches to attribution are also inconsistent with the approach of international tribunals outside of investment law. One of the leading cases on the attribution of ultra vires conduct of a public official is Mallén (Mexico) v United States (‘Mallén’).127Mallén concerned two assaults on a Mexican national, Francisco Mallén, by an American deputy constable, Juan Franco. Mexico commenced a claim against the US before the US-Mexican General Claims Commission on Mallén’s behalf alleging that the US was responsible for, inter alia, Franco's unlawful assault of Mallén. The first assault occurred when Franco, who was off-duty, saw Mallén on the streets of El Paso, Texas. The Commission found Franco had a ‘profound aversion’ to Mallén and had, upon seeing him, pronounced to bystanders that he would ‘get’ and ‘kill’ Mallén.128 Five minutes later, Franco walked up to Mallén and slapped him in the face and knocked his hat off. Franco was escorted away and later prosecuted and fined $5 for disturbing the peace. Mexico did not contend that the US was directly responsible for the first assault on Mallén by Franco.129 Indeed, the Commission commented that Franco’s conduct was ‘… a malevolent and unlawful act of a private individual who happened to be an official; not the act of an official’.130 Mexico did, however, allege that the US was directly responsible for Franco’s second assault on Mallén, which happened in a street car travelling between Mexico and the US. Mallén was on-board the street car and was seen by Franco, who then boarded the street car and told the conductor that he would ‘get’ his man.131 Once the street car was in the US, Franco walked up behind Mallén and violently struck him in the head, causing Mallén to hit his head against a door or window, felling him and rendering him momentarily unconscious. Franco then continued to strike Mallén while he was on the floor. Franco then drew his pistol and drove Mallén at the point of it to the rear of the street car. He then made the street car stop and took Mallén to the El Paso county jail. Franco contended that he arrested Mallén for unlawfully carrying a gun, an explanation that the Commission found to be incredible. Instead, the Commission found that Franco’s assault on Mallén was motivated by ‘private vengeance’.132 Despite the private nature of Franco’s motivation, the Commission considered Franco to have acted in his official capacity. In this regard, the Commission noted that Franco showed his badge to assert his authority and considered that he could not have taken Mallén to jail if he had not been acting as a police officer.133 In so concluding, the Commission stated that: ‘Though his act would seem to have been a private act of revenge which was disguised, once the first thirst of revenge had been, satisfied, as an official act of arrest, the act as a whole can only be considered as the act of an official.’134 Accordingly, the Commission held the US liable for the second assault.135 Mallén, therefore, demonstrates that the private purpose behind an unlawful act committed by a public official is not determinative of whether or not the conduct is attributable to the State. Instead, Mallén shows that the real question for attribution is whether, in light of the particular circumstances, the public official ostensibly acted in his or her official capacity. This was also the approach taken by the Iran–US Claims Tribunal in Yeager v Iran (‘Yeager’).136Yeager concerned losses suffered by a US national, Kenneth Yeager, when he and his family were forced to leave Iran at the time of the Iranian Revolution. Yeager claimed that his landlord and two men, who the landlord had said were Revolutionary Guards, attended his apartment in February 1979. The Revolutionary Guards were said to be dressed in plain clothes but were carrying rifles and wore distinctive arm bands said to indicate their association with the new Iranian government. The Revolutionary Guards informed Yeager and his wife that they had 30 minutes to pack whatever belongings they wished to take, before escorting them to the Hilton Hotel in Tehran. Yeager claimed losses for, inter alia, possessions he was forced to leave behind in Iran. Iran denied that the men who forced Yeager and his wife to leave their apartment were authentic Revolutionary Guards and, in any event, denied responsibility for the actions of the Revolutionary Guard, as the Revolutionary Guard had not been formally recognized until a decree issued a few months after the relevant events took place. The tribunal disagreed with Iran and attributed the conduct of the two men to the State. The two questions relevant to attribution were: (i) whether the two men who visited Yeager’s apartment were acting on behalf of the Revolutionary Guard; and (ii) whether the acts of the Revolutionary Guard were attributable to Iran. On the first question, the tribunal was satisfied that the two men who visited Yeager’s apartment were acting on behalf of the Revolutionary Guard. Key to the tribunal’s finding was that, despite wearing plain clothes, the two men wore distinctive arm bands signifying their association with the new Iranian government, and that the two men took the Yeagers to the Hilton Hotel, which had the previous day been captured by the revolutionary forces. On the second question, the tribunal found that, despite the Revolutionary Guard not being formally recognized until months after Yeager’s forced departure, there was sufficient evidence to establish a presumption (which Iran did not successfully rebut) that the Revolutionary Guard was acting de facto on behalf of the new Iranian government at the time, or at least exercised elements of governmental authority in the absence of official authorities, in operations of which the new government must have had knowledge and to which the government did not object. Accordingly, the tribunal held Iran responsible for the acts of the two men who visited the Yeagers’ apartment. Yeager also concerned a second issue of attribution. In January 1979, prior to Yeager’s forced departure, he had arranged for his three children to fly home to the US. The airport was in chaos on the day of departure and flights had been cancelled. Yeager alleged that, despite being in possession of confirmed tickets, he was only able to get his daughter onto her flight by paying a ‘special fee’ of 20,000 Rials to a representative of State-owned airline, Iran Air.137 Yeager argued that Iran was responsible for the solicitation of this unlawful payment by the Iran Air representative and sought compensation. The tribunal held that the unlawful conduct of the Iran Air representative could not be attributed to Iran. The ‘critical question’ for the tribunal was whether the Iran Air representative was acting in his official capacity or his private capacity.138 The tribunal held that there was insufficient evidence to demonstrate that the agent was acting in his official capacity on behalf of Iran Air, and hence as an organ of the State. Instead, the tribunal found that the Iran Air representative was acting in his private capacity when he solicited the unlawful payment.139 In this regard, the tribunal stated that ‘[a]cts which an organ commits in a purely private capacity even if it has used the means placed at its disposal by the State for the exercise of its function, are not attributable to the State’.140 As Crawford observes, the distinction between the conduct of the two Revolutionary Guards and the Iran Air representative for the purposes of attribution is that the guards held themselves out as agents of the State, whereas the Iran Air representative did not.141 The question of capacity was also considered by the French–Mexican Claims Commission in Caire (France) v Mexico (‘Caire’).142Caire concerned a French national, Jean-Baptiste Caire, who was shot and killed by three Mexican army officers. The Mexican officers were not on duty and were not acting on orders from the French authorities. Instead, the Mexican officers had, of their own volition, attempted to extort money from Caire with the threat of death if he did not comply. Caire refused to pay the money. The officers left, but one returned to Caire’s lodgings that evening accompanied by the captain of the brigade to which the officers belonged. The two then took Caire to their barracks, where he was stripped and then taken to a nearby village where he was shot and killed. The Commission, to which France submitted a claim for the wrongful killing of Caire, found Mexico internationally responsible for the unlawful conduct of the army officers. On the question of attribution, the Commission held that that it was irrelevant that the officers acted outside their actual authority. Instead, the critical factor for the Commission was that the officers acted while cloaked in their status as Mexican army officers and had used means provided to them by virtue of their capacity as officers.143 In this regard, it was significant that the officers visited Caire in army uniform and then took him to their barracks. In light of the above cases, it is argued that the approach taken by some IIA tribunals to the attribution of corrupt conduct of public officials is not consistent with the principles of State responsibility under international law. Considerations such as the public official acting for private gain and the corrupt conduct being covert are not determinative of whether or not the conduct is attributable to the State. The real question is whether or not the public official was ostensibly acting in his or her official capacity. As Mallén, Yeager and Caire demonstrate, this is a factual question to be determined on a case-by-case basis. Factors such as the official being dressed in uniform (like the Revolutionary Guards in Yeager and the army officers in Caire), the official formally asserting his or her authority (as the deputy constable in Mallén did by showing his badge), the conduct occurring at an official place (like the barracks to which Caire was taken), the conduct involving the exercise of powers that are inherently official in nature (like the deputy constable's arrest of Mallén) and the host State having knowledge of the conduct and not objecting (as in Yeager) will, inter alia, be relevant to whether the public official has exercised official capacity. While the abovementioned factors focus on the public official’s conduct and the surrounding circumstances, Llamzon suggests that the investor’s conduct may also be relevant to assessing whether the public official has exercised his or her official capacity.144 In particular, Llamzon contends that: ‘[the investor's] participation even after full knowledge that the public official is acting with private enrichment in mind arguably negates the application of ordinary attribution rules, at least with respect to the bilateral relationship between investor and host State, as the investor would know that the public official was not ‘act[ing] in that capacity’ (see Article 7) and could thus not be engaging in an act of State. Corruption that would ordinarily have been subject to the attribution-for-ultra vires-acts doctrine would thus be precluded in the case of the investor.’145 While the investor’s conduct may be relevant, it is argued that Llamzon affords it too much weight. In particular, Llamzon contends that the investor’s participation ‘negates the application of ordinary attribution rules’.146 Llamzon’s contention is based on the investor’s participation constituting the investor’s knowledge that the public official is not acting in his or her official capacity.147 It is, however, unclear why investor participation should ‘negate’ the ordinary rules of attribution. The ordinary rules of attribution are capable of reaching the same conclusion. The only difference is that the assessment of official capacity would be made holistically, having regard to the investor’s conduct, the public official’s conduct and the surrounding circumstances, instead of just the investor’s participation. Given that the ultimate question remains unchanged—whether the public official ostensibly exercised his or her official capacity—a holistic approach would seem more apt to providing the best answer. In particular, a holistic assessment of the factual circumstances would allow a more comprehensive assessment of the investor’s participation, including whether the investor participated freely, or, for example, subject to the ‘hostage factor’ referred to by the World Duty Free tribunal.148 Accordingly, while the investor’s conduct, including its participation in the corrupt conduct, is relevant to whether the public official exercised his or her official capacity, it is submitted that the investor’s participation should not negate the ordinary rules of attribution, nor be per se determinative of whether the public official exercised his or her official capacity. The investor’s conduct is simply one factor to be considered. Finally, in addition to where a public official has acted in his or her official capacity, the public official’s conduct may be attributable to the host State where the host State is taken to have acknowledged and adopted the conduct.149 As Vattel observes, the principle is based on the notion that the State is not responsible for every act of its citizens, but will be held responsible where the State has approved and ratified the individual’s conduct, thereby making the State ‘le véritable auteur de l'injure’ (the real author of the injury) and the individual merely its instrument.150 Article 11 of the ARSIWA embodies the modern formulation of this principle: ‘Conduct which is not attributable to a State under the preceding articles shall nevertheless be considered an act of that State under international law if and to the extent that the State acknowledges and adopts the conduct in question as its own.’151 One of the well-known cases in which the principle has been applied is United States Diplomatic and Consular Staff in Tehran (‘Tehran Hostages’).152 The case concerned the militant occupation of the US Embassy in Tehran and the taking of hostages within the Embassy. While the militant student group were not organs of the Iranian State nor acting on the instructions of the Iranian State at the time of the occupation, the International Court of Justice (‘ICJ’) found the conduct of the militants to be attributable to Iran.153 Attribution was made on the basis that Iranian officials and religious leaders had endorsed the militants' conduct. In particular, Iran's Foreign Minister announced that the actions of the militants ‘enjoys the endorsement and support of the government, because America herself is responsible for this incident’, and Ayatollah Khomeini issued a decree stating that the Embassy and the hostages would remain as they were until the US handed over the former Shah for trial and returned his property to Iran.154 The ICJ held that Iran’s adoption of this policy of using the occupation of the Embassy and the hostages as political leverage fundamentally transformed the legal nature of the situation, such that the actions of the militants became acts of the Iranian State.155 The principle expressed in Article 11 of the ARSIWA was also considered by the Commission in Mallén, albeit in obiter. As discussed above, Mallén involved unlawful acts committed by an American deputy constable against a Mexican national. While the Commission attributed one of the two assaults by the deputy constable to the US, the Commission went on to consider the fact that the deputy constable had been promoted to deputy sheriff, after he had been convicted of the assault, suggested a condoning of the deputy constable’s unlawful conduct by the US.156 The Commission considered that while the deputy constable’s promotion did not contribute to the unlawful conduct itself, it was a factor that the Commission could take into account when considering whether to attribute the deputy constable’s conduct to the US.157 In this regard, the Commission stated that ‘ … there can be no question as to responsibility in this case, in view of the fact that either an inadequate penalty or no penalty at all was imposed on Franco’. A similar approach was taken by the Mixed Swedish and Norwegian Claims Commission in the Bovallins and Hedlund Cases.158 The cases concerned claims by Swedish and Norwegian nationals for harm suffered at the hands of revolutionary forces in Venezuela. The umpire in that case attributed the conduct of the revolutionary forces to Venezuela. Amongst the factors he relied on for attribution was the fact that the Venezuelan authorities had not prosecuted the individuals who caused the harm and had appointed principals of the revolutionary forces to public office. The umpire considered this constituted tacit approval by Venezuela of the unlawful conduct of the revolutionary forces, and thereby made Venezuela responsible for the acts of the revolutionary forces.159 What these cases show is that while a public official (or any other person for that matter) may have acted in his or her private capacity, and hence outside the scope of Article 4 of the ARSIWA, the public official's conduct may nonetheless be adopted by the host State. While the conduct constituting adoption may be express like in Tehran Hostages, the adopting conduct may also be more tacit. In the latter regard, Mallén and the Bovallins and Hedlund Cases show that the State’s endorsement of a person by, for example, failing to prosecute him or her, despite the State’s knowledge that the person has committed the unlawful conduct in question, may in appropriate circumstances constitute the State’s adoption of the unlawful conduct. The World Duty Free tribunal’s disquiet about Kenya’s failure to prosecute President Moi, even after discovering his corrupt conduct, is perhaps an example of where Article 11 of the ARSIWA might be relevant. However, as Crawford cautions, tribunals should not infer adoption lightly.160 The circumstances should be considered in detail and in light of all the circumstances before conduct is attributed to the host State under the principle embodied in Article 11 of the ARSIWA. B. Constitutes a Breach of an International Obligation of the State The second element of Article 2 of the ARSIWA that must be established before a host State may be held internationally responsible for the conduct of a public official is that the conduct must constitute a breach of an international obligation of the host State. (i) Violation of international obligation Chapter III of the ARSIWA provides the framework for determining whether there has been a breach of an international obligation of the host State. In particular, Article 12 of the ARSIWA provides that ‘[t]here is a breach of an international obligation by a State when an act of that State is not in conformity with what is required of it by that obligation, regardless of its origin or character’.161 In the context of corruption, a public official’s solicitation of a bribe is, as the EDF tribunal stated, a ‘fundamental breach of transparency and legitimate expectations’ and, hence, a violation of the FET standard.162 While the EDF tribunal’s comments were made with reference to the particular FET standard in the UK–Romania BIT, that standard substantively reflects FET standards found in many other investment treaties: ‘Investments of nationals or companies of each Contracting Party shall at all times be accorded fair and equitable treatment and shall enjoy full protection and security in the territory of the other Contracting Party.’163 Accordingly, where an investment dispute arises under an instrument containing an FET standard similar to that in the UK–Romania BIT, the host State will be in breach of an international obligation, including for the purposes of Article 2 of the ARSIWA. In addition to the FET standard, the solicitation of a bribe by a host State would likely violate the customary international law minimum standard of treatment of foreigners and their property. While there is debate as to the precise scope of the modern minimum standard of treatment,164 the most onerous threshold (from the perspective of an investor) is set out in Neer (United States) v Mexico (‘Neer’): ‘The treatment of an alien, in order to constitute an international delinquency, should amount to an outrage, to bad faith, to willful neglect of duty, or to an insufficiency of governmental action so far short of international standards that every reasonable and impartial man would readily recognize its insufficiency.’165 Even on this higher standard in Neer, solicitation of a bribe by a host State public official, which the EDF tribunal recognized as a fundamental breach of transparency and legitimate expectations,166 would violate the customary international law minimum standard—an international obligation of the host State. Finally, some commentators have argued that corruption may be prohibited by a more general obligation arising under customary international law. In 2002, Marong contended that the discourse on corruption within the United Nations and regional organizations has generated shared understandings on corruption and illustrates the emergence of an international normative consensus against corruption.167 This consensus is said to represent the emerging opinion juris of the international community and, hence, the beginning of the process of formation of a customary international law on corruption.168 As Klaw observes, the evidence of State practice and opinion juris has only grown since Marong’s contentions and is likely to continue to do so.169 If such a customary international law prohibition against corruption has emerged (or does emerge), corrupt conduct that is attributable to the host State would be a violation of this international obligation of the host State. (ii) Investor’s participation While the position with respect to solicitation of a bribe by a public official is relatively straightforward, the position is more complex where the investor has consummated the solicitation by paying the bribe. In this situation, there is a question whether the investor’s participation in the corruption precludes a breach of the host State’s international obligations. Relevantly, Article 20 of the ARSIWA provides that: ‘[v]alid consent by a State to the commission of a given act by another State precludes the wrongfulness of that act in relation to the former State to the extent that the act remains within the limits of that consent’.170 The wording of Article 20 reflects the fact that the ARSIWA were conceived primarily for inter-State relations. However, as the ARSIWA Commentary states, ‘Article 20 reflects the basic international law principle of consent’ adopted into the particular context of Part I of the ARSIWA.171 That basic international law principle is that ‘consent by a State to a particular conduct by another State precludes the wrongfulness of that act in relation to the consenting State’.172 The principle arguably applies mutatis mutandis to an investor’s conduct in the public–private context of IIA. Indeed, the ARSIWA Commentary states that ‘[i]nternational law may also take into account the consent of non-State entities such as corporations or private persons’.173 Accordingly, an investor would be able to consent to a host State’s otherwise internationally wrongful corrupt conduct. However, as Article 20 of the ARSIWA provides, the relevant consent must be valid consent. The ARSIWA Commentary states that, to be valid, consent must be ‘clearly established’ and ‘actually expressed by the State rather than merely presumed on the basis that the State would have consented if it had been asked’.174 However, Crawford observes that this requirement for actual expression does not require consent to be communicated in any formal way—valid consent can be tacit or implicit.175 As such, an investor’s participation in corrupt conduct may, without formal agreement, constitute consent, as long as the conduct can be construed as a clear expression of the investor’s consent to the corrupt act. In addition, the ARSIWA Commentary provides that, to be valid, the consent must be ‘freely given’.176 The investor’s consent to corrupt conduct, whether by participation or otherwise, cannot therefore constitute valid consent if the investor participated in the relevant conduct under duress. In this regard, the existence of a ‘hostage factor’, as spoken of by the World Duty Free tribunal, may preclude the investor’s consent to the corrupt conduct from being valid.177 But a distinction needs to be made between different types of coercion. For instance, it may be that an investor pays a bribe where there is a threat to safety, similar to Yeager paying the bribe to an Iran Air official to get his daughter out of Iran at the time of the Iranian Revolution. In these circumstances, the investor’s conduct would likely not be free, in the sense contemplated by Article 20 of the ARSIWA. However, an investor paying a bribe to obtain a new concession, which it would not have obtained without the bribe, like in World Duty Free, presents a different scenario. In this situation, the investor does not stand to lose anything other than the opportunity to invest in the host State that is soliciting the bribe. Arguably, this opportunity cost alone does not constitute duress that vitiates the investor’s free participation in the corrupt conduct, as the investor has the option to walk away without suffering any non-opportunity-based loss. While these are relatively straightforward examples, the distinction between freely given consent and consent under duress should be assessed on a case-by-case basis. The ARSIWA Commentary also states that Article 20 of the ARSIWA requires the person consenting to be duly authorized.178 While the ARSIWA Commentary discusses this aspect in the context of a representative of a State being duly authorized, the same would arguably be required for a representative of an investor to validly consent to corrupt conduct. Finally, as Article 26 of the ARSIWA provides, consent cannot validly preclude international responsibility for violation of jus cogens. Corruption, however abhorrent, does not constitute such a violation.179 Accordingly, in light of the principle embodied in Article 20 of the ARSIWA, where an investor has validly consented to the host State's corrupt conduct, a host State will not have committed an internationally wrongful act, at least between it and the investor. Where this is the case, element (b) of Article 2 of the ARSIWA will not be satisfied and the host State will not be internationally responsible to the investor for the relevant corruption.180 It would not, however, preclude the host State's international responsibility for that same conduct to the extent it falls outside the investor's consent or towards anyone other than the consenting investor.181 (iii) Prosecution of public officials As noted in sub-section 4.A, the host State’s failure to prosecute a corrupt public official may be relevant to whether the corrupt conduct is attributable to the host State. But what about the converse: does the host State’s prosecution of a corrupt public official prevent the host State violating its international obligations? No. Fundamentally, where corrupt conduct is attributable, a host State's violation of its international obligations does not arise from its failure to prosecute the corrupt public official. The violation arises from the public official’s corrupt conduct.182 As a result, the prosecution of the public official does not prevent or cure the host State’s breach of its international obligations. Indeed, if this was so, it would be akin to allowing a host State to rely on its domestic laws to preclude or remedy a violation of its international obligations—which is inconsistent with well-established principle.183 Accordingly, a host State may not rely on its prosecution of a corrupt public official to preclude its international responsibility for the corrupt conduct. 5. IMPLICATIONS OF HOST STATE RESPONSIBILITY FOR CORRUPTION If a host State is internationally responsible for a public official’s corrupt conduct, what are the implications? As Section 3 of the article demonstrates, corruption can be invoked as a sword for the investor or a shield for the host State. The former is already considered in Section 4—ie corruption for which the host State is internationally responsible violates the international minimum standard of treatment and an applicable FET standard. This section considers how a host State’s international responsibility for corruption affects its ability to invoke that same corruption as a defence to an investor’s claim. A. Jurisdiction Host States have defended claims by invoking illegality as an objection to the tribunal’s jurisdiction. Where an investment is obtained by corruption, and the applicable definition of ‘investment’ requires that the investment be made in accordance with host State law, a host State may object to jurisdiction on the basis that the investment was obtained in violation of host State anti-corruption laws and, therefore, not within the tribunal’s jurisdiction ratione materiae.184 (i) Nullus commodum capere de sua injuria propria While this type of objection is straightforward when the unlawful conduct is on the part of the investor alone, what happens when the host State is internationally responsible for the unlawful conduct? As Cheng observes, there is a general principle of international law that ‘[n]o one should be allowed to reap advantages from his own wrong’ (nullus commodum capere de sua injuria propria).185 The principle was applied by the Permanent Court of International Justice (‘PCIJ’) in the Chorzów Factory case between Germany and Poland.186 In that case, the PCIJ held that Poland could not object to the PCIJ’s jurisdiction on the basis that the relevant German companies had not submitted the dispute to the Germano-Polish Mixed Arbitral Tribunal, as provided for under the German-Polish Convention concerning Upper Silesia, in circumstances in which the dispute itself concerned Poland’s failure to comply with that Convention.187 In this regard, the PCIJ stated that: ‘[i]t is, moreover, a principle generally accepted in the jurisprudence of international arbitration, as well as by municipal courts, that one Party cannot avail himself of the fact that the other has not fulfilled some obligation or has not had recourse to some means of redress, if the former Party has, by some illegal act, prevented the latter from fulfilling the obligation in question, or from having recourse to the tribunal which would have been open, to him’.188 Cheng also observes that the principle has a slightly different application where a State’s acquiescence in a breach of its own law amounts to connivance—a situation akin to where a host State is internationally responsible for the corrupt acts of its public officials.189 In this situation, Cheng states that the State is prevented from invoking the breach to the disadvantage of the other party either to found a right or as a defence.190 Similarly, Fitzmaurice notes that: ‘[t]he general principle is that States cannot profit from their own wrong, or plead their own ommisions [sic] or negligences as a ground absolving them from performances of their international obligations; and similarly that rights and benefits cannot be derived from wrong-doing’.191 In accordance with this principle, it is argued that, where a host State is internationally responsible for corruption in relation to an investment, the host State cannot invoke that same corruption as a defence to the investor’s claims. This includes as an objection to the tribunal’s jurisdiction ratione materiae. But restraining the host State is not the end of the matter. Under certain arbitral rules, such as the ICSID Arbitration Rules, a tribunal may consider its jurisdiction sua sponte.192 However, as discussed above, the principle nullus commodum capere de sua injuria propria not only restrains a State from invoking its own wrong in its defence, but also prevents the State from benefiting from its own wrong.193 Accordingly, it is argued that, even where a tribunal is able to consider its jurisdiction sua sponte, the principle nullus commodum capere de sua injuria propria prevents a tribunal from finding that it does not have jurisdiction on the basis of corruption for which the host State is internationally responsible, as doing so would allow the State to benefit from its own international wrongdoing. (ii) In pari delicto potior est conditio defendentis There is, however, a principle that competes with nullus commodum capere de sua injuria propria: in pari delicto potior est conditio defendentis (in equal fault, the position of the defendant is the stronger). The practical application of this competing principle is to prevent a court or tribunal assisting a plaintiff with a cause of action founded on an immoral or illegal act.194 The only known application of the principle by an IIA tribunal is in World Duty Free, albeit as a principle of English law, as was applicable in that case.195 There has been no publicly available decision in which an international tribunal has applied the principle as a matter of international law. Indeed, its application would be inconsistent with the approach of the PCIJ in the Chorzów Factory case in which the Court held that the relevant German companies' non-compliance with the German-Polish Convention concerning Upper Silesia could not be invoked by the respondent (Poland) as a defence to its own non-compliance with the Convention. Furthermore, it is notable that even English law no longer recognizes in pari delicto potior est conditio defendentis as good law.196 So, if the World Duty Free dispute had arisen today, the tribunal would not have applied the principle. Accordingly, it is submitted that in pari delicto potior est conditio defendentis is not a principle of international law and is, therefore, not capable of defeating an investor’s international law claims in relation to an investment obtained by corruption. (iii) Estoppel In his dissenting opinion in the ICJ’s Advisory Opinion on the Interpretation of Peace Treaties (2nd Phase), Judge Read applied essentially the same principle as nullus commodum capere de sua injuria propria, but by reference to the State being ‘estopped from alleging its own treaty violation in support of its own contention [that the tribunal lacked competence]’.197 While Judge Read’s analysis on this point did not consider estoppel in detail, the international law doctrine of estoppel may also provide a basis to preclude a host State from invoking corruption for which it is internationally responsible as an objection to jurisdiction. While investment treaties are silent as to estoppel, Dolzer and Schreuer observe that the doctrine applies in international investment law as a general principle of law.198 Indeed, the investor in Kardassopoulos v Georgia successfully relied on the doctrine to hold Georgia estopped from objecting to the tribunal’s jurisdiction.199 In that case, Georgia argued that the tribunal lacked jurisdiction ratione materiae as the joint-venture agreement and concession at issue were entered into by Georgian state-owned entities ultra vires.200 However, as the tribunal noted, the concession had been ratified by the Minister of Fuel and Energy and Georgia had at no stage in the years prior to the arbitration protested or claimed the agreements to be invalid.201 In these circumstances, the tribunal held Georgia estopped from objecting to the tribunal’s jurisdiction on the basis that the agreements were invalid.202 Similarly, while not holding the Philippines estopped on the facts, the tribunal in Fraport v Philippines recognized that a host State would be held ‘estopped from raising violations of its own law as a jurisdictional defense when it knowingly overlooked them and endorsed an investment which was not in compliance with its law’.203 While IIA tribunals have held host States estopped from raising objections to jurisdiction, the doctrine is not applicable in every situation. As Bowett observes, certain essential elements must be established before a host State is held estopped.204 Specifically, an estoppel requires: (a) a clear and unambiguous statement of fact, (b) which is made voluntarily, unconditionally and authorized, and (c) which is relied on in good faith to the detriment of the relying party or to the advantage of the party making the statement.205 Hepburn doubts whether these requirements can be established where there is a violation of international public policy, such as corruption.206 He considers the inability to be ‘quite intuitive’ as: ‘where an investment has been procured by corruption or bribery of state officials, the investor could hardly be permitted to argue that the state acquiesced in its investment or gave representations of its legality, since the covert acquiescence forms the whole basis of the corruption finding’.207 In this regard, Hepburn refers to Arif v Moldova (‘Arif’), in which the tribunal held that, while it could not ignore a ‘mutual assumption of legality’ when considering its jurisdiction ratione materiae, the tribunal was not required to show deference to that mutual assumption where the illegality is ‘concealed illegality’ or the investment was made ‘fraudulently or on the basis of corruption’.208 While Hepburn’s contention is not without merit, for the purposes of this article, it must be considered in light of the host State’s international responsibility for the corruption at issue. As Section 4 considers, a host State will only be internationally responsible for corruption where its public official has ostensibly exercised official capacity, or it has adopted the public official’s conduct, and any participation by the investor was under duress. In these circumstances, it is difficult to reach the same conclusions as the Arif tribunal. Specifically, such an instance of corruption would not be ‘concealed’ from the host State, as the host State is internationally responsible for the conduct, and the violation of international public policy was initiated by the host State’s own conduct, in which the investor participated only under duress. Furthermore, given the heart of estoppel concerns fairness and restraining unconscionability,209 it would be surprising for the doctrine to allow a host State to benefit from its own internationally wrongful conduct at the expense of an investor that only participated in the conduct under duress. Accordingly, it is submitted that, where a host State is internationally responsible for corruption, the host State may—when the requirements for estoppel are satisfied—be estopped from invoking that same corruption as an objection to the tribunal’s jurisdiction. (iv) Acquiescence In addition to estoppel, both Llamzon and Lim argue that the related, but distinct, doctrine of acquiescence may preclude the host State from invoking corruption as an objection to a tribunal’s jurisdiction.210 Bowett observes that the doctrine effectively precludes a State from changing its position where it fails in its duty to speak out or act.211 Similarly, in the context of illegality, MacGibbon states that the doctrine of acquiescence may apply to constitute a State’s conduct as an admission or recognition of legality or serve to validate a matter that was originally illegal.212 The Arbitral Award made by the King of Spain on 23 December 1906 is an example of where acquiescence has precluded a State from objecting to the tribunal’s jurisdiction.213 In that case, Nicaragua challenged the validity of the award made by the King of Spain in relation to a boundary dispute between Nicaragua and Honduras on, inter alia, the bases that the treaty pursuant to which the King acted as arbitrator lapsed prior to his appointment and that there were irregularities in the King’s designation as arbitrator. The ICJ held that Nicaragua had fully participated in the arbitral proceedings before the King, even after the King had been designated as arbitrator, and that it was, therefore, ‘no longer open to Nicaragua to rely on either of these contentions as furnishing a ground for the nullity of the Award’.214 Accordingly, where a host State is internationally responsible for corruption, and fails to take timely steps to challenge the validity of the investment on the basis of that corruption, the doctrine of acquiescence may bar the host State from subsequently raising that same corruption as an objection to the tribunal's jurisdiction. B. Admissibility Where an investment has allegedly been obtained illegally, host States have objected to the admissibility of an investor’s claims on the following bases: (i) the principle nemo auditur propriam turpitudinem allegans (no one can be heard to invoke his own turpitude), (ii) international public policy, and (iii) the clean hands doctrine.215 Each is considered below in the context of corruption for which the host State is internationally responsible. (i) Nemo auditur propriam turpitudinem allegans In Plama v Bulgaria (‘Plama’) the tribunal held the investor’s claims inadmissible pursuant to the principle nemo auditur propriam turpitudinem allegans.216 The Plama tribunal found the investor in that case had obtained its investment in Bulgaria through fraudulent misrepresentation as to its financial and managerial capabilities.217 While the tribunal found it had jurisdiction to hear the claims,218 it held that the investor’s misrepresentations constituted violations of Bulgarian law and international law, so as to preclude the application of the treaty protections claimed by the investor.219 The tribunal noted that affording the investor treaty protections in these circumstances would be contrary to the principle nemo auditur propriam turpitudinem allegans.220 While applicable on the facts of Plama, it is argued that the principle does not have the same application where a host State is internationally responsible for the illegality at issue. That is because, as the tribunal in Inceysa v El Salvador (‘Inceysa’) recognized, nemo auditur propriam turpitudinem allegans operates to preclude a person benefiting from his or her own fraud. In Inceysa that fraud was the investor’s deceitful conduct in a public bidding process through which it obtained the investment, and in Plama the fraud was the investor’s fraudulent misrepresentation.221 As such, the principle speaks to a person’s conduct, not whether the investment is tainted by illegality. In light of this, and remembering that a host State will only be internationally responsible for corruption where the investor has not freely participated in the corruption, nemo auditur propriam turpitudinem allegans will not preclude an investor's claim where the host State is internationally responsible for the corruption at issue, as the investor's conduct was under duress and not a fraud as contemplated in Plama and Inceysa. (ii) International public policy The second basis on which the Plama tribunal held the investor’s claims inadmissible is the international public policy that a tribunal should not enforce a contract obtained by unlawful means.222 As discussed in Section 3, a similar approach was adopted by the World Duty Free tribunal, which found the investor’s claims inadmissible as its investment had been obtained through bribery and was, therefore, contrary to international public policy.223 In reaching this conclusion, the World Duty Free tribunal had regard to domestic laws, international conventions and the decisions of courts and tribunals that show bribery is contrary to the international public policy of most, if not all, States.224 It is, however, notable that the decisions considered by the World Duty Free tribunal did not concern situations where an agreement had been obtained by corruption, but situations where the agreement was for corruption.225 While the World Duty Free tribunal extended the principles applicable to contracts for corruption to contracts obtained by corruption, the tribunal in Niko paused to consider the significance of the distinction.226 In particular, the Niko tribunal noted that: ‘[t]here is indeed a fundamental difference between the two types of situations. In contracts of corruption, the object of the contract is the corruption of a civil servant and this object is intended by both parties to the contract. In contracts obtained by corruption, one of the parties normally is aware of the corruption and intends to obtain the contract by these means. But this is not necessarily the case for the other side …’.227 The Niko tribunal then went on to note that, where a contract is obtained by corruption, the innocent party may have a justified interest in preserving the contract.228 That is, a contract obtained by corruption is not void ab initio, but voidable. The Niko tribunal noted that, in the context of treaties, this is both a general principle of public international law and a general principle of law applicable to contracts concluded by States.229 Accordingly, the tribunal held that a contract that did not contain illegality in the content of the agreement or in its performance was not, as a matter of international law, automatically invalid.230 This position is endorsed by Raeschke-Kessler and Gottwald who observe that recent multilateral instruments give a strong indication that the international community does not support ipso jure nullity of contracts obtained by corruption.231 Instead, the authors conclude that ‘ … the rule of ipso iure and ab initio nullity does not belong to the shared legal and moral values of contemporary states and that international public policy does not contain this rule’.232 Accordingly, it is argued that while international public policy may be a basis to hold an investor’s claims inadmissible, not every finding of corruption has that consequence. Instead, the way international public policy treats the type of corruption at hand needs to be considered. For example, where a contract is for corruption, international public policy will hold claims in relation to that contract inadmissible.233 On the other hand, where a contract is obtained by corruption, as both the Niko tribunal and Raeschke-Kessler and Gottwald observe, international public policy only gives the innocent party the right to have the contract declared void—there is no ipso jure nullity.234 The same principle would arguably apply beyond contracts. That is, international public policy precludes ipso jure the admissibility of claims in relation to investments for corruption, but not investments obtained by corruption. Claims arising out of the latter category are only inadmissible where the victim of the corruption elects to avoid the investment. Where a host State is internationally responsible for corruption pursuant to which an investment is obtained, that election is with the investor (who only participated in the corruption under duress). (iii) Clean hands doctrine Finally, host States have objected to the admissibility of an investor's claim on the basis of the clean hands doctrine.235 There is however considerable uncertainty as to the existence and scope of the doctrine under international law. As to its existence, the Yukos v Russia tribunal, Rousseau, Crawford and Dugard have each refrained from recognising the doctrine as a part of international law.236 Rousseau in particular observed that, ‘il n’est pas possible de considérer la théorie des mains propres comme une institution du droit coutumier general’ (it is not possible to consider the clean hands doctrine to be a part of general customary law).237 Furthermore, as the Guyana v Suriname tribunal observed, the ICJ has avoided considering the application of the doctrine on a number of occasions238 and has never relied on it to bar the admissibility of a claim.239 The doctrine was, however, applied by Judge Schwebel in his dissenting opinion in Military and Paramilitary Activities in and Against Nicaragua, in which he held that Nicaragua had through its own illegal conduct deprived itself of standing to complain against the US’ illegalities.240 The Guyana v Suriname tribunal, while not reaching a conclusion on the existence of the doctrine at international law, took a narrow view as to its scope, in accordance with Judge Hudson’s individual opinion in the Diversion of Water from the Meuse.241 Under this narrow view, the doctrine requires the violation forming the basis of the unclean hands to be ongoing, and the remedy sought by the claimant to be future protection against the respondent’s violation of a corresponding obligation.242 The Guyana v Suriname tribunal’s approach was adopted by the Niko tribunal, albeit again without forming a view on the existence of the clean hands doctrine at international law.243 In light of the above, it is argued that the clean hands doctrine is not a recognized principle of international law and is, therefore, not capable of defeating the admissibility of an investor’s claim. C. Liability Illegality has also been invoked by host States as a defence to liability. For example, in Genin v Estonia (‘Genin’), Estonia denied liability on the basis that the revocation of a banking licence was justified by various regulatory failures by the bank. These failures included the bank's submission of incorrect or misleading shareholder information, its failure to obtain relevant shareholding permissions and its refusal to provide information concerning shareholders and related parties.244 The tribunal agreed with Estonia and found that the bank’s failure to comply with banking regulations and requests by the Estonian central bank justified the revocation of the banking licence.245 Similarly, in Thunderbird v Mexico (‘Thunderbird’), Mexico denied liability for shutting down the investor's gaming operations on the basis that the investment was illegal under Mexican anti-gambling laws and that its measures were, therefore, bona fide law enforcement actions in respect of illegal operations.246 The tribunal agreed with Mexico and found that it had not breached its treaty obligations, including that the investor could not have had legitimate expectations that it would be allowed to operate its gaming facilities, because it knew when it chose to invest that gambling was illegal in Mexico.247 Accordingly, like in Genin and Thunderbird, it would be open to a host State to argue that its measures that form the basis of an investor's claim are a bona fide regulatory response to an investment obtained by corruption and therefore do not breach any substantive investment protections. This may be an appropriate approach in situations like in Genin and Thunderbird, where culpability for the illegality is with the investor, but the situation is arguably different where a host State is internationally responsible for the corruption at issue. Specifically, much like with objections to jurisdiction, the principle nullus commodum capere de sua injuria propria would restrain the host State from invoking its own internationally wrongful conduct to its benefit. That is, a host State would be precluded from avoiding liability for a violation of investment protections on the basis that its measures were a bona fide regulatory response to corruption for which it is internationally responsible. In addition, also like with respect to objections to jurisdiction, the doctrines of estoppel and acquiescence may preclude a host State from invoking its own internationally wrongful conduct to shield itself from liability.248 D. Normative Considerations If a host State is internationally responsible for corruption, this article contends that a host State is precluded from invoking that corruption as a defence to an investor’s claim. While some, including the Metal-Tech tribunal,249 may find it disconcerting to allow an investor with a corruptly obtained investment to be heard, and possibly granted relief, it is argued that the approach proposed in this article upholds the rule of law and aids the eradication of corruption better than existing approaches. First, and fundamentally, it should be noted that this article does not contend that claims in relation to investments for corruption should be heard. It only contends that claims in relation to investments obtained by corruption should be heard, and only where the host State is internationally responsible for that corruption. As discussed in Section 4, a host State will not be internationally responsible for corruption where the investor has freely participated in the corrupt conduct. As such, by limiting it to where the host State is internationally responsible for the corruption at issue, the approach effectively only allows a tribunal to hear a claim of an investor who has not participated in the corruption or participated under duress. It is argued that allowing investors to bring claims in these circumstances promotes the eradication of corruption in a number of ways. First, it allows host States and their corrupt public officials to be held accountable for corruption. That is, if an investment is obtained by corruption, and that alone is dispositive of an investor's claim, there will be no inquiry into the perpetrators of the corruption or the circumstances in which the corruption occurred. Whereas, by allowing claims where the host State is internationally responsible for the corruption, that analysis itself requires consideration of the persons involved and the circumstances in which the corrupt acts were solicited and performed. That consideration, it is argued, is more conducive to identifying and exposing corrupt actors and institutional deficiencies. Secondly, the proposed approach avoids the perverse incentive recognized by both Kreindler and Lim for host States to encourage corruption.250 That is, if a host State is able to invoke corruption as a complete defence to an investor’s claim, even where the host State is internationally responsible for the corruption, and the investor only participated under duress, it is in the host State’s interests to ensure that all investments in its territory are obtained by corruption, so as to have a complete defence to any future claims. Under the approach proposed in this article, that incentive is removed. Indeed, it is argued that the inability of a host State to invoke corruption as a blanket complete defence encourages the opposite of the perverse incentive identified: it encourages the host State to exercise greater diligence in the supervision of its public officials, as it knows that it cannot necessarily rely on the misbehaviour of its public officials as a defence to an investor's claim. In fact, that misbehaviour might itself give rise to a claim—reinforcing the host State’s incentive to better supervise its public officials.251 Thirdly, the proposed approach better encourages host States to investigate and prosecute corrupt public officials. That is because, as identified in Section 4, a host State may become internationally responsible for a public official's conduct, even if that conduct falls outside his or her official capacity, if the host State is taken to have adopted the conduct. While express adoption, like in Tehran Hostages, is rare, a host State’s failure to prosecute a public official it knows to have been corrupt, or the host State’s promotion of that corrupt public official, may raise serious questions as to whether the host State should be taken to have adopted, and thereby have become internationally responsible for, the corrupt conduct of the public official. Fourthly, the proposed approach is also likely to encourage investors to exercise greater diligence when investing abroad. That is because, by limiting a corruptly obtained investment’s protection to where the investor did not participate in the corruption or participated under duress, the investor is incentivized to ensure that neither it, nor its agents, behave in a manner that would make the investor a free participant in any corruption (and thereby consent to the corrupt conduct in the sense contemplated by the principle embodied in Article 20 of the ARSIWA). In particular, if a host State can establish that an investment was obtained by corruption to which the investor was participant, the burden of proof will fall on the investor to establish that it was an unknowing or unwilling participant in the corruption. Reckless behaviour by an investor or an absence of due diligence will not assist an investor discharge this burden.252 Fifthly, the proposed approach would encourage investors to report, and possibly commence IIA claims, where a host State public official has solicited a bribe from the investor. The problem with the current situation is that the EDF tribunal’s approach casts doubt as to when solicitation of a bribe by a public official is attributable to the State. In particular, the EDF approach creates uncertainty as to whether the bribe has to be solicited on behalf and for the account of the host government for it to be attributable to the host State.253 But the approach set out in this article clarifies much of that uncertainty through its application of the framework in the ARSIWA and the international law of State responsibility. Accordingly, in light of the above considerations, it is argued that the approach to a host State’s international responsibility for corruption proposed in this article is able to better assist the eradication of corruption than the approaches adopted by IIA tribunals that have refused to hear claims on the basis that the investment is obtained by corruption. In this regard, not only is the proposed approach consistent with established principles of State responsibility, but by better assisting the eradication of corruption it also furthers one of the key objectives of international investment law: the encouragement of foreign investment. 6. CONCLUSION Despite international efforts, corruption remains an ‘insidious plague’ that infects many aspects of life, including foreign investment.254 As a result, it is unsurprising that IIA tribunals have increasingly been confronted with allegations of corruption. One of the most contentious legal issues that has arisen from this increase is whether host States may be held internationally responsible for the corrupt acts of its public officials, and the consequences of any such responsibility. As Section 3 demonstrates, IIA tribunals have been reluctant to attribute the corrupt conduct of public officials to the host State. This reluctance seems to stem from an uneasiness on the part of tribunals to be seen as assisting an investor with an investment obtained by corruption. However, as this article argues, a blanket refusal to attribute the corrupt conduct of public officials to the host State is not consistent with well-established principles of State responsibility. In particular, the article argues that when the international law of State responsibility is applied, there are circumstances in which a host State may be held internationally responsible for the corrupt conduct of its public officials. As Section 4 considers, the critical factor for attribution is whether the public official ostensibly exercised official capacity when he or she engaged in the corrupt conduct. A range of factors, including the public official’s conduct, the host State’s conduct, the investor’s conduct and the surrounding circumstances are relevant to this holistic assessment. Attribution is, however, not the end of the matter. For a host State to be internationally responsible for the corrupt conduct of its public official, that conduct must also violate the host State’s international obligations. While solicitation of a bribe is prima facie internationally wrongful, this article argues that the investor’s free participation in the corruption will preclude a violation of the host State’s international obligations between the host State and the investor. That is, where an investor freely participates in corruption, the host State cannot be held internationally responsible for that corruption inter se. But where a host State is internationally responsible for corruption, that responsibility has consequences for the host State. First, it may be the basis for an investor's claim that the host State has violated the international minimum standard of treatment of foreigners and their property or an applicable FET standard. Secondly, it may affect the host State’s ability to defend a claim by the investor. Specifically, the article argues that the host State’s international responsibility for corruption will preclude it from invoking that same corruption as an objection to the jurisdiction of the tribunal or as a defence to the host State’s liability. The article also argues that a host State’s international responsibility for corruption will prevent the corruption giving rise to any of the bases upon which host States have objected to the admissibility of an investor’s claims on the basis of corruption. While some may find it disconcerting that the approach proposed in this article may allow claims in relation to investments obtained by corruption to be heard, it is argued that the proposed approach is not only consistent with the international law of State responsibility, but also better assists the eradication of corruption. In particular, the article contends that the proposed approach better incentivizes host States to ensure that their public officials are not engaging in corruption, and also encourages investors to exercise greater diligence in respect of corruption when investing abroad. The benefit of this is not only a potential reduction in corruption, but also reduced corruption risk for foreign investment. This article was originally prepared as a thesis in partial fulfilment of the requirements for the degree of Master of Law at the University of Cambridge. I wish to thank Dr Rumiana Yotova, for her guidance and comments, and Audley Sheppard QC, for his comments on an earlier version of the article. Any remaining errors are my own. All views expressed in the article are my own and do not reflect the opinions of any person or entity with which I am affiliated. Footnotes 1 See, for example, EDF (Services) Limited v Romania, ICSID Case No ARB/05/13, Award dated 8 October 2009. 2 See, for example, World Duty Free Company Limited v Republic of Kenya, ICSID Case No ARB/00/7, Award dated 4 October 2006; Metal-Tech Ltd v Republic of Uzbekistan, ICSID Case No ARB/10/3, Award dated 4 October 2013. 3 Travaux préparatoires of the negotiations for the elaboration of the United Nations Conventionagainst Corruption (2010), 51, n 122. 4 The World Bank, Helping Countries Combat Corruption: The Role of the World Bank (September 1997), 8–9. 5 Transparency International, What is corruption? <https://www.transparency.org/what-is-corruption> accessed 29 March 2018. 6 United Nations Convention Against Corruption, opened for signature 31 October 2003, 2349 UNTS 41 (entered into force 14 December 2005, Foreword, iii. 7 ibid. 8 OECD Anti-Bribery Convention;OECD, OECD Convention on Combating Bribery of ForeignPublic Officials in International Business Transactions.<http://www.oecd.org/corruption/oecdantibriberyconvention.htm> accessed 28 March 2018. 9 The World Bank, Combating Corruption (26 September 2017)<http://www.worldbank.org/en/topic/governance/brief/anti-corruption> accessed 28 March 2018. 10 Transparency International, Global Corruption Report 2009: Corruption and the Private Sector (2009). 11 Report of the Secretary-General, Progress towards the Sustainable Development Goals, UNEconomic and Social Council, UN Doc E/2017/66 (11 May 2017), 17. 12 Marco Arnone and Leonardo S Borlini, Corruption: Economic Analysis and International Law (Edward Elgar 2014) 33–36, 60–63. 13 Shang-Jin Wei, ‘Why Is Corruption so Much More Taxing than Tax? Arbitrariness Kills’. NBER Working Paper Series (National Bureau of Economic Research, November 1997). 14 ibid 14–15. 15 See generally, Rudolph Dolzer and Christoph Schreuer, Principles of International Investment Law (2nd edn, OUP 2012) 22. 16 World Duty Free v Kenya (n 2); Aloysius P Llamzon, Corruption in International Investment Arbitration (OUP 2014) 103; While one of the arbitrators in Southern Pacific Properties (Middle East) Limited v Arab Republic of Egypt made a dispositive finding of corruption, the majority found insufficient evidence to make such a finding: Southern Pacific Properties (Middle East) Limited v Arab Republic of Egypt, ICSID Case No ARB/84/3, Award dated 20 May 1992 and Dissenting Opinion of Mohamed Amin El Mahdi dated 20 May 1992. 17 World Duty Free v Kenya (n 2), [158]. The ambiguity as to applicable law was not material as the relevant rules of Kenyan law largely reflected the position at English law. 18 World Duty Free v Kenya (n 2), [68]–[74]. 19 ibid [105]. 20 ibid [66]. 21 Paras 12 and 17 of Ali’s statement dated 30 November 2002, at World Duty Free v Kenya (n 2) [130]. 22 Paras 13 and 14 of Ali’s statement dated 30 November 2002, at World Duty Free v Kenya (n 2) [130]. 23 Para 18 of Ali’s statement dated 30 November 2002, at World Duty Free v Kenya (n 2) [130]. 24 World Duty Free v Kenya (n 2) [105]. 25 ibid [110]. 26 ibid [136]. 27 ibid [157]. 28 ibid. 29 ibid [182]. 30 ibid [169]. 31 ibid [177]. 32 ibid [178]. 33 ibid [180]. 34 Metal-Tech v Uzbekistan (n 2). 35 ibid [37]. 36 ibid [107]. 37 ibid [110]. 38 ibid [110]. 39 ibid [195]. 40 ibid [218], [221], [226], [351]. 41 ibid [327]. 42 ibid [372]–[374]. 43 ibid [372]–[374]. 44 ibid [389]. 45 ibid [389]. 46 ibid [422]. 47 Niko Resources (Bangladesh) Ltd v Bangladesh Petroleum Exploration & Production Company Limited and Bangladesh Oil Gas and Mineral Corporation, ICSID Case No ARB/10/18, Decision on Jurisdiction dated 19 August 2013. 48 ibid [2]. 49 ibid [2]–[3]. 50 ibid [373]. 51 ibid [382]. 52 ibid [384]. 53 ibid [385]. 54 ibid [428]; The Respondents made further allegations of corruption, but the tribunal found that there was no evidence to make any findings of corruption beyond the matters the subject of the Canadian conviction: [428]. 55 Niko v Bangladesh (n 47) [429]. 56 ibid [60]. 57 ibid [454]. 58 ibid [374], [376]. 59 ibid [377]; World Duty Free v Kenya (n 2) [182]. 60 Niko v Bangladesh (n 47) [376], [457]. 61 ibid [376]. 62 ibid [376]–[377]. 63 ibid [433]. 64 ibid [434]. 65 ibid [434]. 66 ibid [434]–[439]. 67 World Duty Free v Kenya (n 2) [157], quoted at Niko v Bangladesh (n 47) [440]. 68 Niko v Bangladesh (n 47) [442]. 69 ibid [477]. 70 ibid [462]–[464]. 71 ibid [466]. 72 ibid [470]–[472]. 73 ibid [470]. 74 ibid [467]–[472]. 75 ibid [473]–[475]. 76 ibid [477]. 77 ibid [476]–[485]. 78 ibid [477]; Arbitral Tribunal Constituted pursuant to Article 287, and in accordance with Annex VII of the United Nations Convention on the Law of the Sea in the Matter of an Arbitration between Guyana and Suriname, Award of 17 September 2007. 79 Guyana v Suriname, ibid [420]–[421], quoted at Niko v Bangladesh (n 47) [481]. 80 Niko v Bangladesh (n 47) [476]–[485]. 81 ibid [484]. 82 ibid [485]. 83 Wena Hotels Ltd. v Arab Republic of Egypt, ICSID Case No ARB/98/4, Award dated 8 December 2000. 84 ibid [32], [52]. 85 ibid [54]. 86 ibid [56]. 87 ibid [56]. 88 ibid [62]. 89 ibid [76]. 90 ibid [76]. 91 Second paragraph of the consultancy agreement, quoted at Wena v Egypt (n 83) [70]. 92 However, in English court proceedings between Wena and Kandil, Kandil had disputed that he had signed the consultancy agreement: Wena v Egypt (n 83) [72]. 93 Wena v Egypt (n 83) [115]. 94 ibid [74], [116]. 95 ibid [74]. 96 ibid [59]. 97 ibid [116]. 98 ibid [116]. 99 ibid [111]. 100 EDF v Romania (n 1). 101 The evidence adduced by EDF was that the Chief Executive Officer (‘CEO’) of EDF and the Chief of Cabinet to the Prime Minister of Romania met in the car park of the Hilton Hotel in Bucharest at which the Chief of Cabinet solicited a US$2.5 million bribe for the renewal of ASRO's duty-free lease, which EDF’s CEO refused to pay: Wena v Egypt (n 83) [71]. EDF also adduced evidence that the State Secretary to the Prime Minister repeated the request for a bribe to a director of EDF soon thereafter at the State Secretary’s home. 102 EDF v Romania (n 1) [221]. 103 ibid [232]. 104 ibid [232]. 105 World Duty Free v Kenya (n 2) [180]. 106 EDF v Romania (n 1) [232]. 107 Metal-Tech v Uzbekistan (n 2) [422]. 108 ‘Articles on Responsibility of States for Internationally Wrongful Acts’, in Report of the International Law Commission on the Work of Its Fifty-third Session, UN GAOR, 56th Sess, Supp. No 10, UN Doc A/56/10 (2001), p 43 (‘ARSIWA’). 109 James Crawford, The International Law Commission’s Articles on State Responsibility:Introduction, Text and Commentaries (CUP 2002) 60. 110 James Crawford, State Responsibility: The General Part (CUP, 2014), 43. 111 ARSIWA (n 108), art 1. 112 ibid, art 4(1). 113 ibid 87. 114 ibid, art 7. 115 ibid, art 4(2). 116 Crawford (n 110) 124–26. 117 ARSIWA (n 108) 102, fn 157. 118 World Duty Free v Kenya (n 2) [169], [180]; See sub-section 3.A(i) for discussion of World Duty Free v Kenya. 119 ibid [169]. 120 Lim argues that the ARSIWA were not applicable in World Duty Free v Kenya as the dispute was governed by Kenyan and English law: Kevin Lim, ‘Upholding Corrupt Investors’ Claims Against Complicit or Compliant Host States – Where Angels Should Not Fear to Tread’ in Yearbook on International Investment Law and Policy (2011/2012) (OUP 2011) 613–16. However, as Llamzon notes, customary international law forms a part of English law (with some conditions) and, possibly, Kenyan law: Llamzon (n 16) 251–52. Accordingly, to the extent the ARSIWA reflect customary international law, those principles were likely applicable in World Duty Free v Kenya. 121 ARSIWA (n 108) 102, fn 157. 122 EDF v Romania (n 1). 123 ibid [232]. 124 ibid [232]. 125 World Bank (1997), 8–9; Transparency International, What is corruption? <https://www.transparency.org/what-is-corruption> accessed 29 March 2018. 126 EDF v Romania (n 1) [232]. 127 Francisco Mallén (United Mexican States) v United States of America (1927) IV RIAA 173, Mexico–US General Claims Commission. 128 ibid 174–75. 129 Mexico’s claims in relation to the first assault related to the US’ responsibility for the investigatory and prosecutorial processes following the assault. 130 Mallén (n 127) 174. 131 ibid 176. 132 ibid 177. 133 ibid 177. 134 ibid 177. 135 ibid 177. 136 Yeager v Iran (1987) 17 Iran–US CTR 92. 137 ibid [9]. 138 ibid [65]. 139 The tribunal did, however, note that the State may be responsible for conduct engaged in in a private capacity if it can be shown that the State expressly or tacitly approved the conduct, or that it negligently failed to exercise appropriate control over the person: Yeager [66]. The evidence in Yeager did not support such a finding. 140 Yeager (n 136) [65]. 141 Crawford (n 110) 138. 142 Gustave Caire (France) v Mexico (1929) V RIAA 516, French-Mexican Claims Commission. 143 ibid 531. 144 Aloysius P Llamzon, ‘State Responsibility for Corruption: The Attribution Asymmetry in International’ (2013) 10(3) Transnational Dispute Management <www.transnational-dispute-management.com/article.asp?key=1958> 56–57. 145 ibid 57. 146 ibid. 147 ibid. 148 World Duty Free v Kenya (n 2) [178]. 149 ARSIWA (n 108), art 11. 150 Emer de Vattel, Le Droit Des Gens: Ou Principes de La Loi Naturelle, Appliqués à La Conduite et Aux Affaires Des Nations et Des Souverains (Carnegie Institution of Washington 1916), Book 2, s 74. 151 ARSIWA (n 108), art 11. 152 United States Diplomatic and Consular Staff in Tehran (United States of America v Iran), Judgment, ICJ Reports 1980, p 3. 153 ibid [70]–[74]. 154 ibid [70]. 155 ibid [74]. 156 Mallén (n 127) 181. 157 ibid. 158 Bovallins and Hedlund Cases, Award, (1903) X RIAA 768, Swedish–Venezuelan Commission, 768. 159 ibid 768–69. 160 Crawford (n 110) 188. 161 ARSIWA (n 108), art 12. 162 EDF v Romania (n 1) [221]. 163 Agreement between the Government of Great Britain and Northern Ireland and the Government of Romania for the Promotion and Reciprocal Protection of Investments, signed 13 July 1995, Treaty Series No 84 (1996) (entered into force 10 January 1996), art 2(2). See, for example, Agreement between the Government of the State of Israel and the Government of the Republic of Uzbekistan for the Promotion and Reciprocal Protection of Investments, signed 4 July 1994 (entered into force 18 February 1997), art 2(2); Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Kenya for the Promotion and Protection of Investments, signed 13 September 1999, Treaty Series No 8 (2000) (entered into force 13 September 1999), art 2(2); Agreement on encouragement and reciprocal protection of investments between the Kingdom of the Netherlands and the Argentine Republic, signed 20 October 1992 (entered into force 1 October 1994), art 3. 164 Dolzer and Schreuer (n 15) 134–41. 165 LFH Neer and Pauline Neer (United States of American) v United Mexican States (1926) IV RIAA 60, Mexico–US General Claims Commission, 60–61. 166 EDF v Romania (n 1) [221]. 167 Alhaji BM Marong, ‘Toward a Normative Consensus against Corruption: Legal Effects of the Principles to Combat Corruption in Africa’ (2002) 30(2) Denver Journal of International Law and Policy 99, 101. 168 ibid. 169 Bruce W Klaw, ‘State Responsibility for Bribe Solicitation and Extortion: Obligations, Obstacles, and Opportunities’ (2015) 33(1) Berkeley Journal of International Law 60, 87. 170 ARSIWA (n 108), art 20. 171 ibid 173. 172 ibid. 173 ibid 165. 174 ibid 164. 175 Crawford (n 110) 284. 176 ARSIWA (n 108) 175; The ARSIWA Commentary identifies error, fraud and corruption as other circumstances that vitiate consent. 177 World Duty Free v Kenya (n 2) [178]. 178 ARSIWA (n 108) 165. 179 Lim (n 120) 637–38. 180 ARSIWA (n 108) 173–77. 181 ibid 165. 182 EDF v Romania (n 1) [221]. 183 Elettronica Sicula S.p.A. (ELSI) (United States of America v Italy), Judgment, ICJ Reports 1989, p 15, 51. 184 See, for example, Metal-Tech v Uzbekistan (n 2) [375]–[390]. 185 Bin Cheng, General Principles of Law as Applied by International Courts and Tribunals (CUP 2006) 150. 186 Factory at Chorzów (Germany v Poland) (Jurisdiction) [1927] PCIJ (ser A) No 9 (‘Chorzów Factory’). 187 ibid 25–31. 188 ibid 31. 189 Cheng (n 185) 150–51. 190 ibid. 191 Gerald Fitzmaurice, The General Principles of International Law: Considered from the Standpoint of the Rule of Law (Sijthoff 1958) 117. 192 ICSID Arbitration Rules, art 41(2). 193 Cheng (n 185) 150–51; Fitzmaurice, (n 191) 117; Chorzow Factory (n 186) 25–31. 194 Holman v Johnson (1775) 98 ER 1120, 1121. 195 World Duty Free v Kenya (n 2) [161], [181]. 196 Patel v Mirza [2016] UKSC 42. 197 Interpretation of Peace Treaties Advisory Opinion (2nd Phase), ICJ Reports 1950, p 65, 244 (Dissenting Opinion by Judge Read). 198 Dolzer and Schreuer (n 15) 18. 199 Ioannis Kardassopoulos v Republic of Georgia, ICSID Case No ARB/05/18, Decision on Jurisdiction dated 6 July 2007, [194]. 200 ibid [50]. 201 ibid [191]–[192]. 202 ibid [194]. 203 Fraport AG Frankfurt Airport Services Worldwide v Republic of the Philippines, ICSID Case No ARB/03/25, Award dated 16 August 2007, [346]; See also, Desert Line Projects LLC v Republic of Yemen, ICSID Case No ARB/05/17, Award dated 6 February 2008, [118]. 204 Derek Bowett, ‘Estoppel before International Tribunals and its Relation to Acquiescence’ (1958) 33 The British Yearbook of International Law 176, 202. 205 ibid. 206 Jarrod Hepburn, Domestic Law in International Investment Arbitration (OUP 2017) 160–61. 207 ibid 160. 208 Franck Charles Arif v Republic of Moldova, ICSID Case No ARB/11/23, Award dated 8 April 2013, [376]. 209 R v East Sussex County Council, ex parte Reprotech (Pebsham) Ltd [2003] 1 WLR 348, [33]; Fraport v Philippines (n 203) [346]. 210 Llamzon (n 16) 272–75; Lim (n 120). 211 Bowett (n 204) 198. 212 IC MacGibbon, ‘The Scope of Acquiescence in International Law’ (1954) 31 British Yearbook 143, 182. 213 Arbitral Award made by the King of Spain on 23 December 1906 (Honduras v Nicaragua) ICJ Reports 1960, p 192. 214 ibid 209. 215 See, for example, Niko v Bangladesh (n 47) [430]–[485]; Inceysa Vallisoletana SL v Republic of El Salvador, ICSID Case No ARB/03/26, Award dated 2 August 2006; Plama Consortium Limited v Republic of Bulgaria, ICSID Case No ARB/03/24, Award dated 27 August 2008. 216 Plama v Bulgaria, ibid [146]. 217 ibid [135]. 218 ibid [144]–[146]. 219 ibid [135], [139]. 220 ibid [143]. 221 Inceysa v El Salvador (n 215) 72–74; Plama v Bulgaria (n 215) [135]. 222 Plama v Bulgaria (n 215) [143]. 223 World Duty Free v Kenya (n 2) [157]. 224 ibid [138]–[157]; See, Pierre Mayer and Audley Sheppard, ‘Final ILA Report on Public Policy as a Bar to Enforcement of International Arbitral Awards’ (2003) 19(2) Arbitration International 249, 257 for consideration of corruption as a violation of international public policy. 225 ibid. 226 Niko v Bangladesh (n 47) [440]–[464]. 227 ibid [443]. 228 ibid [444]. 229 ibid [446]. 230 ibid [464]. 231 Hilmar Raeschke-Kessler and Dorothee Gottwald, ‘Corruption’ in P. Muchlinski, F. Ortino and C. Schreuer (eds), The Oxford Handbook of International Investment Law (OUP 2008) 595. 232 ibid 595. 233 Mr X, Buenos Aires v Company A (1963), ICC Case No 1110, Award, (1994) 10 Arbitration International 282; Niko v Bangladesh (n 47) [434]–[464]. 234 Niko v Bangladesh (n 47), [464]; Raeschke-Kessler and Gottwald (n 231) 595. 235 See, for example, Niko v Bangladesh (n 47) [476]–[485]. 236 Yukos Universal Limited (Isle of Man) v Russian Federation, UNCITRAL, PCA Case No AA 227, Final Award dated 18 July 2014, [1362]; Charles E Rousseau, Droit International Public, Tome V: Les Rapports Conflictuels (Sirey 1983) 177; Crawford (2002), 162; James Crawford, Special Rapporteur, Second report on State responsibility, UN Doc A/CN.4/498 and Add.1–4 (17 March and 30 April, 19 July 1999), [336]; John Dugard, Special Rapporteur, Sixth report on diplomatic protection, UN Doc A/CN.4/546 (11 August 2004), [18]. 237 Rousseau, ibid 177. 238 See, for example, Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, Advisory Opinion, ICJ Reports 2004, p 136, [63], Oil Platforms (Islamic Republic of Iran v United States of America), Judgment, ICJ Reports 2003, p 161, [100]. 239 Guyana v Suriname (n 78) 116. 240 Military and Paramilitary Activities in and against Nicaragua (Nicaragua v United States of America), Jurisdiction and Admissibility, Judgment, ICJ Reports 1984, p 39, 392–94. 241 Diversion of Water from the Meuse (Netherlands v Belgium) [1937] PCIJ (ser A/B) No 70, 77 (Individual Opinion by Judge Hudson). 242 Guyana v Suriname (n 78) [420]–[421]. 243 Niko v Bangladesh (n 47) [477]–[485]. 244 Alex Genin, Eastern Credit Limited, Inc and A.S. Baltoil v Republic of Estonia, ICSID Case No ARB/99/2, Award dated 25 June 2001, [298]. 245 ibid [363], [371]–[373]. 246 International Thunderbird Gaming Corporation v The United Mexican States, NAFTA UNCITRAL, Award dated 26 January 2006, [207]. 247 ibid [164], [166], [208]. 248 See sub-sections 4.A(iii)–(iv) for discussion of the doctrines. 249 Metal-Tech v Uzbekistan (n 2) [389]. 250 Richard Kreindler, ‘Legal Consequences of Corruption in International Investment Arbitration: An Old Challenge with New Answers’ in Liber amicorum en l’honneur de Serge Lazareff (Editions Pedone 2011) 390; Lim (n 120) 678. 251 See, for example, EDF v Romania (n 1). 252 Churchill Mining PLC and Planet Mining Pty Ltd v Republic of Indonesia, ICSID Case No ARB/12/14 and 12/40, Award dated 6 December 2016, [516]–[527]. 253 EDF v Romania (n 1) [232]. 254 UNCAC (n 6) Foreword, iii. © The Author(s) 2019. Published by Oxford University Press. All rights reserved. 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TI - State Responsibility for Corruption in International Investment Arbitration
JO - Journal of International Dispute Settlement
DO - 10.1093/jnlids/idz006
DA - 2019-06-01
UR - https://www.deepdyve.com/lp/oxford-university-press/state-responsibility-for-corruption-in-international-investment-zwfRWzch0d
SP - 248
VL - 10
IS - 2
DP - DeepDyve
ER -