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money laundering.Arbitration. corruption and fraud Dossiers ICC Institute of World Business Law Edited by Kristine Karsten and Andrew Berkeley The world business organization DOSSIERS ICC INSTITUTE OF WORLD BUSINESS LAW 1 .

ARBITRATION: MONEY LAUNDERING. Cours Albert 1er 75008 Paris – France Copyright © 2003 International Chamber of Commerce. ICC Publication 651 ISBN 92 842 1320 7 This text is the work of independent authors and does not necessarily represent the views of ICC. No part of thìs work may be reproduced or copied in any form or by any means – graphic.A. taping. recording. CORRUPTION AND FRAUD Published in September 2003 by ICC PUBLISHING S. 2 DOSSIERS ICC INSTITUTE OF WORLD BUSINESS LAW . or information retrieval system – without the written permission of ICC Publishing S. electronic. including photocopying.A. No legal imputations should be attached to the text and no legal responsibility is accepted for any errors. ICC All rights reserved. or mechanical. omissions or misleading statements caused by negligence or otherwise. An affiliate of ICC: the world business organization 38.

Issues of arbitrabilit. Challenge to arbitration 41 By Mark Pieth The 1997 OECD convention against trans-national bribery: 4. making: The cases of bribery. By Arthur Harverd Arbitration case law on bribery: 7.ycontract validity. corruption and money laundering: 2.co-editors Money laundering: 1. CONTENTS Contents FOREWORD 5 By Serge Lazareff. How it works and why you should be concerned 15 By Kristine Karsten Fraud. Cairns The role of the expert in arbitration 93 6. Effective monitoring and implementation 47 By Giorgio Sacerdoti Trans-national public policy in international arbitral decision- 5. The approach of an international law firm 29 By Alan Jenkins Trans-national commercial bribery: 3. Chairman. A. merits and evidence 109 By Antonio Crivellaro DOSSIERS ICC INSTITUTE OF WORLD BUSINESS LAW 3 . ICC Institute of World Business Law CONTRIBUTORS 7 INTRODUCTION 11 By Kristine Karsten & Andrew Berkeley. money laundering and fraud 65 By Bernardo Cremades & David J.

money laundering and fraud: 8. The role of the tribunals 149 By Allan Philip Final remarks 159 9.ARBITRATION: MONEY LAUNDERING. corruption. CORRUPTION AND FRAUD Arbitration. By Robert Briner QUESTIONS AND ANSWERS 163 ICC AT A GLANCE 187 SELECTED ICC PUBLICATIONS 189 4 DOSSIERS ICC INSTITUTE OF WORLD BUSINESS LAW .

Berkeley and Kristine Karsten. we decided to call on “external” prestigious experts: Alan Jenkins. Our first publication is therefore devoted to our November 2002 Annual General Meeting. ICC Institute of World Business Law What a pleasure! At last the Institute is resuming its publications. FOREWORD Foreword By Serge Lazareff Chairman. We will in our regular programmes – PIDAs and IAAPs – select for publication certain of the papers submitted by our speakers. Indeed. as this knowledge and expertise had to be shared and publicized. Of course. but also duty to society in general. led by Andrew W. but also suspected offenses. and the tremendous input they gave to this Annual Meeting. When the group. rather than merely to compile information that already existed. In addition to these valuable speakers from the group. but we shall try to offer a range of studies covering topics of interest – particularly current ones. including Bernardo Cremades and Antonio Crivellaro. the Council found the matter so rich and dense that we all agreed to dedicate the next Annual Meeting. Arthur Harverd and Allan Philip. the duty of the parties. This raises the fundamental DOSSIERS ICC INSTITUTE OF WORLD BUSINESS LAW 5 . I would like to take this opportunity to thank them all for the remarkable work they did. One of the aims of this conference was to create doctrine. Laws today tend to implicate lawyers in the reporting of not only offenses which clearly have been committed. as well as a second publication. the most prestigious annual event of the Institute.A. corruption and fraud” was approved by the Institute Council as a topic and we decided to set up a working group to study this very delicate question. all of them are good. We intend to publish yearly the proceedings of our Annual General Meeting. presented the results of their reflections. the best of. a tradition successfully established by the ICC Institute’s founder. “Arbitration. Professor Pierre Lalive. it would have been a pity not to spread the ideas expressed by this group. We found that the papers and discussions centered around the duty of the arbitrator when money laundering is suspected. Giorgio Sacerdoti. to this matter. money laundering. Mark Pieth.

ARBITRATION: MONEY LAUNDERING. which will be held on 1 December 2003 in Paris on the topic of “Arbitration and oral evidence. CORRUPTION AND FRAUD question of the freedom of the lawyer and of the arbitrator. at our 23rd Annual General Meeting. I am convinced it will throw new light on the subject. entrusted with a sacred mission of rendering an award. I look forward to meeting all of you. Is counsel to report somebody coming to him for advice? Is the arbitrator. and hope that every reader will enjoy these pages as much as we enjoyed working on them. our first in a long time.” 6 DOSSIERS ICC INSTITUTE OF WORLD BUSINESS LAW . bound to report a case if he has only a suspicion that something is wrong? These are essential questions in the society of today and I am certain that you will find the answer in the present publication – may I repeat. readers and speakers.

Paris. He is President of the Spanish Court of Arbitration. specializing in international commercial arbitration and commercial law. DOSSIERS ICC INSTITUTE OF WORLD BUSINESS LAW 7 . ICC (UK) and in that capacity has represented British Industry in the negotiation of international trade and investment conventions. Council Member of the ICC Institute. FCIARB. He is also former Chair of the Section on Business Law of the International Bar Association (IBA) and Member of the International Council for Commercial Arbitration (ICCA). Chairman of the Global Center for Dispute Resolution Research. is a Barrister and Arbitrator. He is also a consultant to the Multinationals Group. He has written numerous publications. and a Member of the International Council for Commercial Arbitration. ROBERT BRINER is Chairman of the ICC International Court of Arbitration. at the law firm Lenz & Staehelin in Geneva. Counsel of law. including the OECD Convention for Combating the Bribery of Foreign Government Officials. and telecommunications industries. CONTRIBUTORS Contributors ANDREW W. the International Council of Arbitration for Sport and the Executive Board of the Swiss Arbitration Association. particularly on the subject of arbitration. and Attorney. oil and gas. having previously headed three legal departments in major British enterprises in the chemical. Member of the Energy and Utilities Panel of the CPR Institute for Dispute Resolution. BERNARDO CREMADES is the senior partner of the law firm B. He has practised as an international commercial arbitrator for ten years. He was the first Chairman of the International Arbitration Club of London. Former Member of the Claims Resolution Tribunal for Dormant Accounts in Switzerland and Former President of the Iran-United States Claims Tribunal in The Hague. Cremades y Asociados in Madrid.. BERKELEY.A. He is Panel Chairman of the United Nations Compensation Commission. New York and First Vice President of the ICC Institute.

involving complex fraud across-borders. in an inter- national environment. He is a past Chairman of The Chartered Institute of Arbitrators and is on the Board of Directors of the LCIA and the International Dispute Resolution Centre. especially in the field of construction and investment disputes. Paris. but is more particularly specialized in banking and financial law. CORRUPTION AND FRAUD ANTONIO CRIVELLARO is a Council Member of the ICC Institute. Milan office. and Milan Chamber of Arbitration. she has acquired a certain familiarity with the techniques used in money laundering operations and commercial fraud and is often called upon to assist banks and businesses in developing 8 DOSSIERS ICC INSTITUTE OF WORLD BUSINESS LAW . and partner in the law firm Bonelli Erede Pappalardo. As the former head of a panel of independent accountants which assists Scotland Yard’s Metropolitan Fraud Squad. London. She has had broad experience in various fields of corporate law. as well as real estate law. an international law firm. Bangkok Arbitration Office. ARTHUR HARVERD is a Chartered Accountant and Chartered Arbitrator and is a consultant to Carter Backer Winter. Professor of International Trade Law at Padua University. and Council Member of the ICC Institute of World Business Law. He now mainly practices as an arbitrator. published by Sweet & Maxwell. In this context. London. His most recent case was the criminal trial involving those accused of the Lockerbie bombing. France. where he heads the “International Litigation Department”. He has extensive experience of trans-national litigation and arbitration. He is the author of the chapter on investigations in International Commercial Fraud. Cairo Centre of International Commercial Arbitration. SCC. Before his appointment to that position he was a partner in the commercial litigation group. LCIA. KRISTINE KARSTEN is a partner of Eversheds Frere Cholmeley. either as party’s counsel or arbitrator. ALAN JENKINS is a partner and head of International at Eversheds. ICSID. he has undertaken many fraud and money laundering investigations and has acted as an expert accountant in several high-profile trials. He has extensive experience in international commercial arbitration. He has acted and is acting before ICC.ARBITRATION: MONEY LAUNDERING.

M. Denmark. SERGE LAZAREFF is a Member of the Paris Bar. partner of Lazareff & Associés. ALLAN PHILIP is senior partner. most notably as a Member of the Financial Action Task Force on Money Laundering (FATF). he has acquired extensive experience in international fora. Copenhagen. Switzerland. Member of the Institut de Droit International and of the Curatorium of the Hague Academy of International Law. He was formerly General Counsel for Inter- national Operations and Vice-President Asia-Pacific of Pechiney. He is Doctor of Law of the University of Paris and holds an LL. Philip & Partners. from Harvard. CONTRIBUTORS and implementing procedures aimed at reducing their exposure to these crimes. A frequent speaker at conferences on the subject. DOSSIERS ICC INSTITUTE OF WORLD BUSINESS LAW 9 . as Chairman of an Intergovernmental Expert Group of the UN to determine the extent of illicit trafficking in drugs and as the Chair of the OECD Working Group on Bribery in International Business Transactions. the Chemical Action Task Force on Precursor Chemicals. France. He is Chairman of the ICC Institute and Chairman of the French Arbitration Commission of ICC. He is former Head of Section on Economic and Organised Crime in the Swiss Federal Office of Justice (Ministry of Justice and Police). He is former Professor at the University of Copenhagen and Dean of the Law School. Chairman of the Panel on Oil Sector Claims in the United Nations’ Compensation Commission for the Gulf War. Delegate of Denmark to a number of diplomatic conferences on private international law and maritime law. as well as Member of the Chartered Institute of Arbitrators and the International Arbitration Club of London. one of the leading French industrial groups. Ms Karsten has also been an active speaker at conferences on other topics organized by ICC. As an official and later as a consultant to governments. MARK PIETH is Professor of Criminal Law and Criminology at the University of Basel.

and formerly Vice- Chairman of the OECD Working Group on Bribery in International Business Transactions. He was a member of the OECD Working Group since its establishment in 1989 until 2001 as a delegate and expert for Italy. Geneva. Milan. CORRUPTION AND FRAUD GIORGIO SACERDOTI is an attorney. 10 DOSSIERS ICC INSTITUTE OF WORLD BUSINESS LAW . Member of the Appellate Body of the WTO.ARBITRATION: MONEY LAUNDERING. He chaired the Group of Experts that prepared the draft of the OECD Convention against Bribery in 1996-97 and was active in the negotiation of the Convention’s text. professor of international law at Bocconi University. He is an expert on international trade and investment law and on the law of international contracts and arbitration.

other professionals and businessmen attended to hear the ten speakers and participate in the lively discussion sessions. The Editors and the ICC. held at ICC Headquarters in Paris. Indeed. call for “an intensification of the war against corruption” without considering the efficacy of what they propose or its unintended side effects on legitimate enterprise and traditional rights and DOSSIERS ICC INSTITUTE OF WORLD BUSINESS LAW 11 . this area is rapidly evolving. Their authors and promulgators range in skill and learning from the heights of Professor Pieth and Professor Sacerdoti. In his foreword. the editors believe. rather mindlessly. Certainly. Mr. under the Presidency of Serge Lazareff. as an institution. INTRODUCTION Introduction By Kristine Karsten and Andrew Berkeley Co-editors This collection of papers results from the proceedings of the 2002 Annual General Meeting of the ICC Institute of World Business Law. treaties. to those who. who were instrumental in the formulation of the influential and successful OECD Convention of 1998. we in the business and legal worlds are today faced with “a cascade of norms. Lazareff says that he hopes that the Institute will have contributed to the formation of “doctrine” on the treatment of corruption. conventions and codes of conduct proliferate. fraud and money laundering in arbitration. But. to borrow a phrase from the magisterial paper by Professor Cremades. corruption and fraud. 95 lawyers. With this publication. resumes its tradition of making available in book form the thinking of its distinguished members and participants on topics of interest and importance in law and business–especially in the international field. the Institute of World Business Law.” Laws. on the topic of arbitration in the face of money laundering. there are incisive and well considered statements in all of the papers and it may be that there are points of coalescence about arbitration practice when it has to deal with the evils that are the subject of this book. which showed both the interest and sophistication of the audience. are most grateful to all of the speakers and participants. We reproduce here the text of the contributions and a selection of the questions and comments.

is devoted to context. and notably the treatment of foreign subsidiaries and the working of off-shore financial centers. As is clear from their two papers. be taken by professionals to detect and combat such activities are also increasingly sophisticated. we also present the papers by Professors Pieth and Sacerdoti– eminent criminal law and international law specialists. It may be of assistance to the reader if we say something about the method adopted in putting together the program on which this book is based. respectively. we concentrate directly on the problems raised for arbitrators by money laundering. the OECD Convention. respectively. Professor Sacerdoti gives a thorough analysis of one of the most highly successful international instruments. the scientific authority of the papers in this collection will. the ICC Institute can make an important contribution. the activities of money launderers and fraudsters. Further evolution of the legal environment being inevitable. well-being and integrity of business. Nonetheless. Since ICC is among the most well-known of international business organizations. Further. we hope. In the second part. it is doubtful that a definitive body of doctrine as to how arbitrators should deal with money laundering. who describe. as one of the architects of that new order. and ends with suggestions about new areas of activity for the OECD work group. which are of relevance to many international arbitrations. Drawing on Professor Cremades’ 12 DOSSIERS ICC INSTITUTE OF WORLD BUSINESS LAW . The first part of the program. The section opens with a significant paper by Bernardo Cremades and David Cairns. in particular. fraud and bribery. and thus of this book. Especially interesting is Professor Pieth’s conclusion that an international public policy banning bribery is emerging and his challenge. CORRUPTION AND FRAUD freedoms. since both legislators (domestic and international) and the general world are not well informed about the process of arbitration. In this first section. are increasingly sophisticated and pernicious and the actions that can and must. its reflections should be based on an objective and thorough examination of the current environment and directed to the efficiency. Kristine Karsten and Alan Jenkins. We start with two practicing lawyers. to arbitrators about how they are going to reflect it in their practice. fraud and corruption can yet be settled. He concedes that the decisions will be difficult. have a beneficial influence. in the emerging regulatory environment. the nature of the problems which they and other professionals face and the solutions which they adopt in their daily business.ARBITRATION: MONEY LAUNDERING.