PROMISES UNFULFILLED: HOW INVESTMENT ARBITRATION TRIBUNALS MISHANDLE CORRUPTION CLAIMS AND UNDERMINE INTERNATIONAL DEVELOPMENT

In recent years, the investment-arbitration and anti-corruption regimes have been in tension . Investment tribunals have jurisdiction to arbitrate disputes between investors and host states under international treaties that provide substantive protections for private investments . But these tribunals will typically decline to exercise jurisdiction over a dispute if the host state asserts that corruption tainted the investment . When tribunals close their doors to aggrieved investors, tribunals increase the risks for investors and thus raise the cost of international investment . At the same time, the decision to decline jurisdiction creates a perverse incentive for host states to turn a blind eye to corruption . Together, these distorted incentives hinder developmental goals and undermine the fight against corruption . To correct these problems, this Note proposes a framework to guide arbitral tribunals when faced with a corruption-tainted dispute . Specifically, this Note argues that when both parties participate in corruption, arbitral tribunals should invoke equitable estoppel to accept jurisdiction over the dispute . When considering the corruption claims, investment tribunals should use a contributory-fault approach that evaluates each party's role in the corrupt act to determine the final award . This framework not only helps align the investment-arbitration and anti-corruption regimes but also advances developmental objectives.