State responsibility for corruption in international investment arbitration

Abstract

International investment tribunals have increasingly been confronted with allegations of corruption. This includes investors alleging corrupt conduct by public officials as the basis for a claim, and host States alleging corruption between an investor and host State public officials as a defence. In these contexts, a question arises as to the responsibility of the host State for the corrupt conduct of its public officials. Tribunals have thus far shown a general reluctance to hold a host State internationally responsible in these circumstances. This article argues that such an approach is not consistent with principles of State responsibility. Instead, the article proposes an approach based on the ILC Articles on State Responsibility that considers, inter alia, the investor's conduct, the host State's conduct and the ostensible capacity in which the corrupt public official has acted. The article also considers the consequences of a host State's international responsibility for corruption, including the host State's ability to invoke that same corruption as a defence.