Combatting Corruption through International Investment Treaty Law

Corruption plays an important role in investment arbitration. Parties to arbitral proceedings make allegations of bribery with increasing frequency. However, the lack of unambiguous guidelines on how to treat such allegations arguably has contributed to a shortage of affirmative decisions, even where further evidence might have been available to the arbitral tribunal. This is problematic, as the inflow of illicit moneys through investment projects can severely undermine anti-corruption efforts in the host state. This paper investigates options for integrating the strong legal regime of investment arbitration — which brings together foreign investors and host states as principal actors in transnational corruption — further into the fight against corruption. It is based upon an analysis of investment treaties, investment arbitration awards, subject literature and expert interviews. It is submitted that states should press for explicit anti-corruption provisions in investment treaties. The aim of these provisions must be to exclude corruption-tainted assets from the protections afforded by investment treaties. An anti-corruption Model Clause is proposed as a reference for drafters and negotiators of future investment treaties. The Model Clause makes access to arbitral procedures subject to the investor’s compliance with international anti-corruption law.