The Relationship between Allegations of Economic Crimes in Foreign Investments and the Adjudicative Power of Investor–State Tribunals

Abstract

The article falls within the broad areas of investment and financial law and, in particular, it focuses on various challenges that emerge from allegations of economic crime in investor–State arbitration. In particular, what is examined is how the adjudicative power and authority of investor–State tribunals is affected by alleged investors’ economic crimes. The two examples of economic crimes discussed are money laundering and corruption, due to their growing prominence in the field of investment arbitration. The existing legal framework regarding corruption and money laundering at international and multinational levels is analysed first, as arbitrators should base their decisions on it when they face an allegation of the two aforementioned economic crimes. Afterwards, the article identifies and evaluates three possible options for arbitrators: first, to deny jurisdiction over the particular dispute; second, to refer to relevant principles of international public policy; and, third, to apply the mandatory provisions of a law other than the one applicable in the particular dispute. After critically analysing each of the three options, the article concludes with some suggestions on how arbitrators should deal with alleged cases of economic crime, and, further, how bilateral and multilateral investment treaties could be adjusted so as to tackle this evolving problem.