Corruption as a defense in International Investment Arbitration

By Shivansh Jolly*

The Issue

The developing jurisprudence in international investment arbitration has lately been confronted with the question of whether claims arising from contracts tainted with a blot of corruption in the international fora can be validly upheld. A classic example to describe such an instance would be where a private party in one country obtains a contract for infrastructural development in another country while illegally colluding with a minister of the host State which would prove decisive in the said contract being awarded to the concerned private party. With the contract being awarded and necessary investments being made in the host State, relationship between the parties reach a roadblock due to a possible reluctance of a new government regime to honour the terms of the tainted agreement in existence.

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