Critically examine the problem of corruption in the practice of Essay

Critically examine the problem of corruption in the practice of mediation and arbitration of international disputes - Essay Example onsequences for â€Å"stakeholders and society more broadly†.4While corruption is most often associated with bribery, corruption can occur by other means such as fraud, procurement of a specific outcome, conflicts of interests, improper enrichment and other dishonest mechanisms.5 Most states acknowledge that it is possible for an arbitral award to be obtained by virtue of corruption. At international law, the limited grounds upon which an arbitral award can be reviewed include the â€Å"procurement of the award by corruption† or corruption on the part of an arbitrator or arbitrators.6 Since mediators do not make binding decisions and merely help the parties arrive at their own resolution, the problems of corruption among mediators and parties in international disputes are not as problematic as corruption in binding arbitration.7 In either case, arbitrators and mediators are at risk of corruption charges in instances where the parties are denied equal treatment.8 Safegua rding against corruption in international mediation and arbitration is particularly important because it provides an alternative dispute resolution for parties suspicious of corruption among local judiciaries.9 For the most part, any business sector which might be entrusted with power is typically subjected to a code of conduct which is designed to engender trust in those sectors and thereby reduce perceptions of corruption. Some such codes are the European Code of Conduct for Mediators and the Code of Ethics for Arbitrators in Commercial Disputes. These codes define what amounts to tolerable standards of conduct, the role of the mediator/arbitrator and their duties and responsibilities.10 Setting standards of conduct however, does not by itself ensure that international arbitration and mediation are free of corrupt practices. In this regard, international conventions have established laws that indirectly identify corrupt practices and provide for enforcement techniques for corrupti on. For instance by virtue of Articles 34 and 36 of the UNCITRAL Model Law 1985 an arbitral award is subject to challenge and may not be enforced if the award is inconsistent with public policy.11 Article V(2) of the New York Convention 1958 makes a vastly similar provision.12 An award which is procured by or given under the auspices of corruption is typically perceived as inconsistent with public policy.13 As early as 1963 the ICC set a standard of conduct for dealing with cases in which corruption was obvious. The case was ICC Case No. 1110 in which arbitrator Lagergren did not determine the merits of a case when he found that there had been corruption. The case related to a contract in which an English company had agreed with an Argentine entity acting as intermediary for the acquisition of a utilities’ contract in Argentina. The agreement called for the Argentine entity to receive a commission of 10 per cent of the contract’s value. When the English company did not make good on the agreement, Lagergren ruled that he did not have jurisdiction since: Parties who ally themselves in an enterprise of the present nature must realize that they have forfeited any right to ask for assistance of the machinery of justice (national courts or arbitral tribunals) in settling their disputes.14 Developments since ICC Case No. 1110 indicate that arbitrators would rule on the merits of