Arbitral Tribunals have a Public Duty to Consider Evidence of Corruption

It was recently held, in Lao Holdings NV v Government of the Lao People’s Democratic Republic and another matter [2021] SGHC(I) 10, that arbitral tribunals have a public duty to consider evidence of corruption, even if this is contrary to a prior agreement between the parties not to add any new claims or evidence, nor to seek any additional reliefs.

In August 2019, two Singapore-seated bilateral investment treaty tribunals (“BIT Tribunals”) rejected the claims against the Lao Government worth USD1 billion brought by the Claimants. The BIT Tribunals held that the claims were not supported by evidence and found that the Lao Government’s allegations of illegality, bribery and corruption were made out on a balance of probabilities. Further, the Claimants were disentitled from any treaty reliefs sought as they had dealt in bad faith with the Lao Government.

Thereafter, the Claimants sought to set aside both BIT Tribunals’ final awards on the following grounds:

1.     The BIT Tribunals exceeded their jurisdiction and dealt with matters beyond the express scope by            considering the Lao Government’s new allegations of illegality, bribery and corruption; and

2.     The BIT Tribunals had admitted additional evidence introduced by the Lao Government in breach            of a prior express agreement between the parties not to do so.

The Singapore International Commercial Court (“SICC”) rejected the Claimants’ arguments and held that the additional allegations of bribery and fraud introduced by the Lao Government were not fresh claims as they formed part of the Lao Government’s defence of corruption, bribery, illegality and/or bad faith. The reliefs were also not new as the Lao Government had always sought a dismissal of the Claimants’ claims. As to the new evidence of bribery and fraud, questions of evidence are procedural matters and do not go to jurisdiction. Notably, the SICC indicated that arbitral tribunals have a public duty to consider evidence of corruption, even in cases where the evidence indicates possible corruption.