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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 . money laundering.

taping. electronic.ARBITRATION: MONEY LAUNDERING.A. recording. ICC All rights reserved.A. 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. or mechanical. CORRUPTION AND FRAUD Published in September 2003 by ICC PUBLISHING S. omissions or misleading statements caused by negligence or otherwise. or information retrieval system – without the written permission of ICC Publishing S. Cours Albert 1er 75008 Paris – France Copyright © 2003 International Chamber of Commerce. No legal imputations should be attached to the text and no legal responsibility is accepted for any errors. An affiliate of ICC: the world business organization 38. 2 DOSSIERS ICC INSTITUTE OF WORLD BUSINESS LAW . No part of thìs work may be reproduced or copied in any form or by any means – graphic. including photocopying.

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

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

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

CORRUPTION AND FRAUD question of the freedom of the lawyer and of the arbitrator. and hope that every reader will enjoy these pages as much as we enjoyed working on them. I look forward to meeting all of you. at our 23rd Annual General Meeting. 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. entrusted with a sacred mission of rendering an award. I am convinced it will throw new light on the subject. which will be held on 1 December 2003 in Paris on the topic of “Arbitration and oral evidence. our first in a long time. readers and speakers.” 6 DOSSIERS ICC INSTITUTE OF WORLD BUSINESS LAW . Is counsel to report somebody coming to him for advice? Is the arbitrator.ARBITRATION: MONEY LAUNDERING.

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

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

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

10 DOSSIERS ICC INSTITUTE OF WORLD BUSINESS LAW . Member of the Appellate Body of the WTO. CORRUPTION AND FRAUD GIORGIO SACERDOTI is an attorney.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. He was a member of the OECD Working Group since its establishment in 1989 until 2001 as a delegate and expert for Italy. He is an expert on international trade and investment law and on the law of international contracts and arbitration. and formerly Vice- Chairman of the OECD Working Group on Bribery in International Business Transactions. professor of international law at Bocconi University. Geneva. Milan.

corruption and fraud. Their authors and promulgators range in skill and learning from the heights of Professor Pieth and Professor Sacerdoti. held at ICC Headquarters in Paris. we in the business and legal worlds are today faced with “a cascade of norms. Mr. to those who. other professionals and businessmen attended to hear the ten speakers and participate in the lively discussion sessions. fraud and money laundering in arbitration. as an institution. under the Presidency of Serge Lazareff. conventions and codes of conduct proliferate. The Editors and the ICC. rather mindlessly. In his foreword. on the topic of arbitration in the face of money laundering. to borrow a phrase from the magisterial paper by Professor Cremades. Indeed. which showed both the interest and sophistication of the audience. this area is rapidly evolving. 95 lawyers. 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. But. the editors believe. Certainly.” Laws. who were instrumental in the formulation of the influential and successful OECD Convention of 1998. We reproduce here the text of the contributions and a selection of the questions and comments. 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 . the Institute of World Business Law. With this publication. 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. are most grateful to all of the speakers and participants. Lazareff says that he hopes that the Institute will have contributed to the formation of “doctrine” on the treatment of corruption. treaties. 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 ICC Institute can make an important contribution. are increasingly sophisticated and pernicious and the actions that can and must. We start with two practicing lawyers. we hope. we concentrate directly on the problems raised for arbitrators by money laundering. who describe. Further. respectively. in particular. and notably the treatment of foreign subsidiaries and the working of off-shore financial centers. well-being and integrity of business. He concedes that the decisions will be difficult. it is doubtful that a definitive body of doctrine as to how arbitrators should deal with money laundering. the activities of money launderers and fraudsters. The first part of the program. since both legislators (domestic and international) and the general world are not well informed about the process of arbitration. be taken by professionals to detect and combat such activities are also increasingly sophisticated. Professor Sacerdoti gives a thorough analysis of one of the most highly successful international instruments. Nonetheless. Since ICC is among the most well-known of international business organizations. is devoted to context. the OECD Convention. we also present the papers by Professors Pieth and Sacerdoti– eminent criminal law and international law specialists.ARBITRATION: MONEY LAUNDERING. the nature of the problems which they and other professionals face and the solutions which they adopt in their daily business. As is clear from their two papers. Further evolution of the legal environment being inevitable. The section opens with a significant paper by Bernardo Cremades and David Cairns. in the emerging regulatory environment. In the second part. and ends with suggestions about new areas of activity for the OECD work group. fraud and bribery. Kristine Karsten and Alan Jenkins. CORRUPTION AND FRAUD freedoms. Especially interesting is Professor Pieth’s conclusion that an international public policy banning bribery is emerging and his challenge. as one of the architects of that new order. fraud and corruption can yet be settled. its reflections should be based on an objective and thorough examination of the current environment and directed to the efficiency. 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. In this first section. the scientific authority of the papers in this collection will. and thus of this book. have a beneficial influence. which are of relevance to many international arbitrations. respectively. to arbitrators about how they are going to reflect it in their practice. Drawing on Professor Cremades’ 12 DOSSIERS ICC INSTITUTE OF WORLD BUSINESS LAW .