Warning signs in the International Criminal Court's approach to uncovering corruption
The International Chamber of Commerce (ICC) has published a comprehensive document titled "Red Flags or Other Indicators of Corruption in International Arbitration," outlining a structured approach for detecting and responding to corruption in arbitration cases.
The document provides a list of potential red flags, such as bribery, false evidence, misuse of privileged information, or attempts to manipulate the arbitration process. These red flags serve as indicators of potentially corrupt practices and require careful scrutiny when detected.
When red flags are identified, the ICC recommends a three-step process: Identify, Validate, and Respond. In the Identify step, relevant red flags are detected when an allegation of corruption is raised by a party or suspected by a tribunal.
The validation process involves a thorough examination of each red flag based on contemporaneous evidence. This process takes into account factors such as the qualifications of a third-party intermediary and the influence they may have with government. Validation may fail if the source lacks credibility or the particular action cannot be justified in the relevant factual and temporal context.
At the Assess step, the collective import of validated red flags is evaluated in evidentiary terms. Specific red flags carry greater weight than general red flags. Mitigating circumstances, such as the presence of a robust corporate compliance policy, neutral facts, alternative scenarios, gaps, or inconsistencies, must be considered at this stage.
The ICC's methodology emphasizes procedural fairness, confidentiality, and specialized arbitrator appointment. While addressing corruption concerns, the ICC’s approach balances confidentiality requirements with the need for transparency and disclosure, ensuring due process without compromising the arbitration’s integrity.
The ICC also proposes the use of various tools in making its factual assessment, including drawing adverse inferences, using expert opinion, pursuing lines of inquiry with the parties, relying on publicly available findings, invoking principles of estoppel and waiver, and potentially leveraging artificial intelligence.
Examples of red flags include the investor engaging government officials as consultants, making payments to these individuals, and failing to justify such payments. Red flags can be divided into two categories: general red flags related to the circumstances of the country, government administration, or business sector, and specific red flags related to the counterparty, transaction, or relationship.
The ICC's methodology allows for the detection and handling of corruption issues at various stages of arbitration, including pre-arbitration, during proceedings, or post-award. The methodology also includes provisions for appropriate disclosure mechanisms, including partial anonymization or redaction of documents, especially to relevant courts or authorities if insolvency or other related proceedings are involved.
This structured detection and response protocol is a significant step towards safeguarding the arbitration process against fraud and corruption, echoing broader international efforts to maintain the legitimacy and enforceability of arbitral awards.
For a detailed examination of the exact procedural steps or a checklist, the ICC document itself (November 2024) would be the definitive source. The Red Flags Document also discusses broader issues such as the procedural effects of red flags in arbitration, the role and responsibilities of the tribunal, and new and emerging issues like the growing role of corporate compliance measures and the role of artificial intelligence.
In the context of the ICC's comprehensive guide on detecting and responding to corruption in arbitration, specific red flags to be aware of in the finance and business sector include an investor engaging government officials as consultants, making payments to these individuals, and failing to justify such payments. This guide also encourages the use of various tools like artificial intelligence to aid in factual assessments and the handling of corruption issues at different stages of arbitration, such as in pre-arbitration, during proceedings, or post-award.
