The Power of Arbitration in Determining the Responsibility of Various Factors in the Occurrence of Corruption in Foreign Investment

Document Type : Original Article

Authors

1 Department of Private Law, Faculty of Law, Farabi Campus, University of Tehran, Tehran, Iran

2 Department of Private Law, Farabi Faculty, University of Tehran, Tehran, Iran

Abstract

The importance of investment and the necessity of its legality and the occurrence of corruption due to the involvement of many factors in the investment process make its investigation inevitable, especially in arbitration (Study motivation). Corruption may be caused by foreign investors and the pressures of their respective governments or intermediaries affiliated with them. in the form of paying bribes and colluding with the host government's internal officials or threatening them. The incidence of corruption, moreover, may arise from structural weakness or corrupt processes in the host government system. Sometimes, social factors from all the mentioned factors, along with the involvement of third parties, create a corrupt and illegal process in the matter of investment. Given that arbitration is a private process, the main question is whether the arbitration has the authority and authority to examine and determine the responsibility of each of the mentioned factors? (Problem definition) In the light of analytical documentary review, it was found that, firstly, arbitration tribunals do not have the power to investigate criminal behavior and related investigations; Second, it is difficult to collect and maintain the security of evidence within the host state's jurisdiction due to secrecy and threats against witnesses;Third, ICSID has sometimes relied on the "law of probabilities" and to a large extent on "corruption flags" and anti corruption organizations.Fourthly, pay attention to the factor that initiates corruption, the degree of influence of contributing factors (the extent of the prevalence of corruption in the host government and the extent of the host government's participation in the occurrence of corruption), considering the "state of emergency" and "Hostage status" to the investor and the nature of the bribe, depending on the case. lead to the complete condemnation of the investor or the reduction of responsibility or exemption of the host government (research results)

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Iranian Journal of International and Comparative Law

Articles in Press, Accepted Manuscript
Available Online from 15 February 2025

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