It is our great privilege to conclude this edition of Global Arbitration Review’s The Guide to Advocacy with a topic that touches on the role of arbitration advocate, not as master of persuasion but as master of strategy. By now, the reader will have absorbed the prescient insight of our fellow authors. You will have learned how the greatest arbitration advocates devise a winning strategy, draft incisive prose, break down their opponent’s case with a thoughtful set of closed questions, and more. You will have gleaned the wisdom tucked into the enlightening anecdotes and counsel of the Guide’s text box authors. Now you arrive at the last chapter in this compendium and, perhaps, uncharted territory. Let us assume that you have recently been named counsel in an arbitration with a parallel criminal aspect. Your client may be the victim of criminal misconduct seeking redress in arbitral proceedings, or your client may be the accused – whether these allegations are made for the first time in the arbitration or in parallel criminal proceedings. So now what?
You have been named counsel in an arbitration with a criminal law element
While the other chapters in this Guide have focused on advocacy as the art of persuasion, this chapter takes a broader approach, focusing on orchestrating and executing a multifaceted legal strategy. The reality is that the arbitration advocate is no longer simply a hired gun called upon to switch on his or her rapier tongue in the hearing room and then move on. Today’s arbitration advocate is a master strategist in a complex, multidimensional world.
As arbitration advocate, your immediate goal will be to convince the tribunal that the position you advance is superior to that of the opposing party, and you have various tools in your skill set to do so. However, obtaining a successful result in the arbitration may not be the only – or even the most important – client objective. Arbitration may be but one element of a legal strategy aimed at seeking redress through multiple legal channels, or one front in your client’s battle to defend itself from allegations of wrongdoing. As proceedings progress before different forums, new facts will come to light and new issues will come into play. Acting as arbitration advocate, you must not only master matters within your ken, you must also advance the client’s interest beyond the confines of the arbitration. As you leave the familiar world of arbitration, you may soon realise that you are not in Kansas any more. Don’t panic. Come to terms with the gaps in your knowledge and develop the reflexes that will allow you to ask the right questions. Be wary of hidden pitfalls and know how to use your expertise, and that of others, to advance your client’s interests.
A host of imponderable issues may sprout throughout the course of an arbitration:
- a challenge to an arbitrator in the middle of the arbitration;
- a proceeding before antitrust authorities;
- a technical issue, such as delay analysis or a dispute involving an engineering issue in construction arbitration;
- an expert investigation, for example, regarding intellectual property or other complex, technical elements; or
- a parallel civil proceeding regarding a closely related issue, such as the parties having signed different contracts through multiple corporate entities, giving rise to overlapping legal disputes involving the same facts or legal issues.
Increasingly, however, the unfamiliar world for the arbitration practitioner will be a criminal law one, whether the criminal element is the central issue in the arbitration or a secondary one, such as possible criminal exposure for your client arising from disclosures made in the arbitration.
As one contributor to this Guide has explained in another work, the world of criminal justice is a ‘distant planet’ from the world of arbitration. While arbitration is born from the shared will of the parties, criminal law reflects a state’s sovereign prerogative to limit party autonomy and impose its mandatory laws. Although arbitrators lack the compulsory powers of most sovereign judges, a criminal law judge, on the other hand, will have robust coercive authority.
Even the tasks of the advocate will be different. Whereas the criminal law advocate will be guided by a comprehensive set of procedural rules drafted by legislators, the arbitration advocate can tailor the process to the needs and interests of his or her client. Whereas the criminal law advocate will be accustomed to pleading before judges with specialist knowledge of the applicable law and procedure, the arbitration advocate will expect to plead before distinguished arbitrators who, although sophisticated, may not be trained in the applicable law, let alone the applicable criminal law. Complicating matters still further, the arbitration advocate dealing with criminal proceedings in a common law jurisdiction will also have to simultaneously navigate prosecutors who jealously guard their investigations and do not want arbitration or other proceedings interfering with them in any way.
Notwithstanding this, as the reader may know all too well, the worlds of arbitration and criminal law can collide. There are two situations in which this may occur.
First, one or both of the parties may be the subject of criminal allegations or a victim of alleged misconduct. These accusations may be made for the first time in the arbitration itself – for example, an allegation that the underlying contract is invalid owing to its illegal purpose or because it was procured by corruption – or in parallel criminal proceedings.
Second, where the arbitration involves a state or a state entity, a party to the arbitration itself may use its police powers to pursue criminal allegations against the private party, or others relevant to the dispute. These proceedings may simply be secondary to the ongoing arbitration or, if the private party alleges in the arbitration that the state’s conduct breaches international law obligations, they may be the subject of the arbitration itself.
For you, the arbitration advocate, this multidimensional world is replete with promise and peril. Promise because, for example, criminal proceedings may allow you to obtain evidence and achieve objectives that would not otherwise be available within the confines of the arbitration. And peril because your training as an arbitration advocate alone will not prepare you to manage the high stakes of this unknown world.
Based on our own experience, we offer three simple rules for effective advocacy in arbitrations with parallel criminal law elements.
- Rule No. 1: Know your ethical obligations to avoid becoming part of the story and prejudicing your client, whether you simultaneously represent a client in arbitral and criminal proceedings or you handle the arbitration alone.
- Rule No. 2: Know how to navigate criminal law issues to cover any lacunae in your knowledge and capabilities.
- Rule No. 3: Know when to play offence and when to play defence to make sure the interests of your client are advanced.
We take each of these rules in turn.
Rule No. 1: Knowing your ethical obligations will help you effectively navigate arbitrations with parallel criminal law elements
With criminal matters, the greatest peril is for the advocate to become part of the story. An advocate’s credibility is the capital with which he or she will win or lose a case for the client. You must cultivate and preserve the tribunal’s trust and avoid engaging in injudicious conduct that might ultimately prejudice your client.
Of course, you should always be aware of your professional responsibility obligations – regardless of whether any criminal law interests weigh on your advocacy. However, where an arbitration involves an ongoing criminal matter – or even if criminal proceedings have not yet begun, but your adversary may make a criminal allegation or referral against the client – the advocate’s job is fraught with even greater risk. Criminal matters usually implicate serious allegations of wrongdoing, which, despite the presumption of innocence, can cast a shadow over the advocate’s independence – if, for example, a lawyer is accused of conspiring with his or her client to engage in criminal activity, such as producing a forged document, or even a less serious offence. If you represent a client in an arbitration against a state that has opened criminal proceedings against that client, the risk of becoming part of the story is particularly real. Even where the opposite side is a commercial counterpart, however, your adversary may seek to discredit your advocacy by making you a part of the story.
To avoid the pitfalls that your own advocacy may create for your client (and potentially for yourself) and to obtain a positive result for your client, keep in mind (1) your ethical obligations, (2) any applicable confidentiality obligations, and (3) the candour and honesty of your advocacy. These basic rules carefully followed will ensure that you effectively serve your client’s interests.
Be aware of your ethical obligations
Know your professional responsibility rules – in particular, any specific provisions that may apply where criminal conduct or proceedings are involved. For example, if you learn that your client is about to break the law, your professional responsibility rules will most likely require you to take some action. However, also keep in mind that another jurisdiction – namely the one in which criminal proceedings are pending – may also impose ethical obligations. For example, counsel may be subject to disclosure obligations to local authorities if he or she undertakes substantial work in a given jurisdiction, despite the fact that the disclosure may violate privilege in the lawyer’s home jurisdiction. You must take care to navigate what may in some cases be conflicting disclosure obligations with a particular focus on preserving your client’s right to avoid self-incrimination and on maintaining privilege protections. A disclosure in an arbitration that inadvertently violates either may result in a broad waiver of your client’s rights in a pending or future criminal proceeding.
The most difficult situations will be where compliance with one disclosure obligation will necessarily result in violation of another. This was the case for a German lawyer practising in the United Kingdom, who refused to make a disclosure of client information as required by the UK Proceeds of Crime Act 2002. The lawyer was convicted and imprisoned in the UK for refusing to disclose the information – even though the disclosure would have subjected him to disciplinary measures in Germany. Situations such as this are especially delicate and may require seeking out separate counsel to help you navigate them.
Also keep in mind that, as an advocate, your role will always be to advance your client’s interests. Therefore, you are likely to have an obligation not to do anything that would endanger your client – for example, by waiving privilege. An inadvertent disclosure may allow prosecutors to seize incriminating information protected by a constitutional right or other privilege. If your adversary in the arbitration seeks disclosure of documents containing such information, know how to explain to the tribunal why the documents simply cannot be produced, and consider whether there is an alternative means by which your adversary can obtain the desired information in a manner that will not violate your client’s privilege.
Think before you speak publicly
Throughout the course of the arbitration, you may need to take your advocacy to the public forum. Going public may be necessary to counter the negative public attention brought by criminal allegations or to apply pressure on an adverse party that has engaged in illegal activity. In particular, when the opposing party is a large corporation or a state, a media strategy can remedy the disequilibrium that may exist between the parties and encourage the opposing side to come to the negotiating table.
However, don’t forget that when there are parallel criminal proceedings, the confidentiality or secrecy obligations applicable to the criminal proceedings may extend to the arbitral proceedings. It is thus of vital importance that you understand and preserve criminal confidentiality obligations, such as the US rule of Grand Jury Secrecy, which provides an exception to the public nature of criminal proceedings in the United States at the stage when the charges to be brought against a suspect are being decided. You should understand which details you can share publicly and which you may not, at least until further order by the relevant authorities. When some manner of criminal proceeding is pending, going public without considering applicable obligations can have negative consequences for you and your client. In other words, you must figure out how to use information to advance your client’s interests without your disclosure becoming a disadvantage for the client. If you need to disclose information that you have obtained in the course of a criminal proceeding, explore whether you can obtain the information through other, non-protected means.
Even if criminal proceedings have not yet been opened, careless disclosures can have a negative effect on your client’s interest. Going public with a criminal allegation against your adversary in arbitration – for example, by making a criminal referral – may jeopardise your credibility with local authorities, which may suspect that your criminal allegation is simply a ploy to gain the upper hand in the arbitration.
Likewise, breaching the confidentiality obligations in the arbitration may cause a party to lose favour with the tribunal, lead to sanctions for counsel and even expose the client to an award of damages or costs. In Pope & Talbot v. Canada, for example, a North American Free Trade Agreement tribunal ordered the claimant to pay costs of US$10,000 after its counsel leaked to the media a draft document that was inadvertently sent by opposing counsel. In a decision that was made public, the tribunal found this disclosure to be ‘highly reprehensible’ and considered it either ‘an intentional violation’ of the tribunal’s confidentiality order or a ‘reckless breach’ thereof.
Breaching the confidentiality obligations imposed by criminal law jurisdictions – such as the rule of Grand Jury Secrecy or the confidentiality of criminal investigations – may lead to criminal sanctions and weaken the client’s position in criminal proceedings. For example, a French lawyer who violates the secret d’instruction – the mandatory secrecy applicable to any details of a pending criminal investigation conducted by a French juge d’instruction (equivalent in common law systems to a public prosecutor at the investigation stage) – may risk a year in prison and a €15,000 fine. A disclosure may also harm any goodwill that the advocate’s client may have with relevant authorities.
To ensure that there are no confidentiality breaches, you may wish to take two important steps.
- Make sure that you, as arbitration counsel, are involved in developing any media strategy to ensure that confidentiality obligations in respect of the arbitration are respected.
- Be aware of any confidentiality or secrecy obligations that the criminal proceedings impose on you.
Note that confidentiality or secrecy obligations in criminal proceedings may cover the documents disclosed in those proceedings, not just the existence of the proceedings and their status. In some jurisdictions, for example, documents exchanged in a criminal investigation will be classified and counsel may not even provide a copy to his or her client without approval. In other jurisdictions, the confidentiality or secrecy obligation may only cover the state’s criminal authorities, or a formal party to those proceedings, such as a suspect. Therefore, you should understand whether documents you receive from your client or criminal counsel may be produced in the arbitration, or cannot be disclosed because they are covered by those obligations. Likewise, be aware that the opposing party – whether a private party to criminal proceedings or the state itself – may be subject to a confidentiality or secrecy obligation such that its production of documents in the arbitration may violate those obligations.
Ensure that your advocacy of your client’s case does not violate your obligation of candour and honesty
Although no binding rules govern the professional responsibility of international arbitration advocates, many tribunals will recognise a duty of ‘candour and honesty’ owed by counsel to the tribunal. In a nutshell, you should not make any representation to the tribunal that you know to be false, and you should promptly correct any representation that you subsequently learn to be false. Failure to respect this obligation can lead to public shaming of counsel and even a sanction. At the very least, it will cause you to lose credibility with the tribunal.
While the mere fact that your client is involved in a criminal matter – whether as the subject of criminal allegations or as the party making the allegations – does not mean that your client will provide you with false information or fraudulent documents, you must remain vigilant. You do not want to jeopardise your client’s case in criminal proceedings by ceding points in the arbitration that are important in the criminal proceedings. At the same time, you must do all you can to maintain credibility with your arbitral tribunal. In one recent arbitration, the majority of a distinguished tribunal allocated costs against a party whose counsel, it concluded, committed ‘fraud on the tribunal’ when it advanced an argument based on a document that the majority considered clearly ‘false and misleading’. Although the majority stated that ‘sometimes counsel can be excused when the real facts are hidden by the clients’, it noted that ‘[t]here are limits to zealous advocacy, and it cannot be acceptable to continue to advance an argument that the evidence clearly shows is not true’. Such a finding may weaken an advocate’s ability to effectively present his or her case.
Rule No. 2: Know how to navigate criminal law issues
Arbitration is not a one-man sport. Even in a relatively simple case, you will need to rely on others for information and opinion in areas beyond your expertise. When an arbitral matter implies a criminal element, local criminal counsel will be both your source of specialised knowledge in the relevant criminal law and your gateway to the facts of the criminal proceeding. Whether you are local criminal counsel yourself and represent your client in both arbitral and criminal law matters (whether a criminal proceeding has been opened or is still being investigated) or you represent the client only in the arbitration, you will undoubtedly need to rely on experts to help you navigate the more complex issues with which you lack familiarity or experience. If you do not represent the client in respect of both matters, strong consideration should be given to integrating local criminal counsel into the arbitration team to help you (1) avoid interfering with the criminal proceedings either by antagonising the prosecutor or disclosing privileged information, and (2) leverage the facts of any criminal proceedings and any evidence obtained therefrom for the benefit of the arbitration proceeding, either to show how your client has been victimised or to explain your client’s innocence, as the case may be. Your ability to work with criminal counsel will be critical to the success or failure of your advocacy – at least in relation to the criminal matters. Get to know local criminal counsel well and gain his or her trust. Make sure that you remain aware of how each of these matters separately and together may advance your client’s goal. Where you seek to represent your client on multiple fronts, make sure you fully comprehend your client’s interests in each realm and advise on any trade-off.
In any event, you must (1) coordinate with local authorities so that the arbitration proceedings do not adversely affect criminal proceedings or investigations, (2) ensure that you understand the key facts at issue in the criminal case and are able to effectively communicate them to your tribunal – whether the criminal elements are central to the arbitration and go to the merits (for example, a claim of abuse by a state of its police powers in an investment treaty arbitration) or are only secondary (for example, if your client is the victim of criminal activity that has prevented it from meeting its obligations to its counterparty in the arbitration), and (3) use all means at your disposal to build the evidentiary record.
Coordinate with local authorities to avoid any surprises
While arbitration exists because states allow private actors to exercise some of their judicial functions, criminal law remains the preserve of the state and its application will be mandatory in the view of that state. Even if the state is not a party to the arbitration, local authorities may be interested in developments in the arbitration. This is true whether your client is the subject of a criminal investigation or has worked with authorities to open or further an investigation against another relevant party. When you act only as arbitration counsel, criminal counsel will be your bridge to local criminal authorities. When you represent your client in both criminal and arbitral proceedings, you must be that bridge.
Making sure that local authorities are not caught off guard by developments in the arbitral proceedings – all the while maintaining the element of surprise in relation to your adversary – is important and no one will be better able to facilitate this coordination than local criminal counsel. For example, the mere existence of the arbitral proceedings may be perceived by local authorities as a threat to their exclusive jurisdiction. You – or criminal counsel – should be prepared to explain that arbitral proceedings are not a way of bypassing local authorities and that arbitration is a legitimate forum in which your client is entitled to assert its rights. This is particularly true when your client is the victim of criminal misconduct and seeks to bring perpetrators to justice, though it is also true when your client is the suspect in criminal proceedings and seeking access to arbitration may be perceived as a way of achieving via ‘private justice’ what cannot be achieved before state courts.
Arbitration and criminal justice, as we have said, are different worlds. Even when, as in civil law jurisdictions, criminal law allows victims to seek redress by joining as civil parties to criminal proceedings, each forum will have its own raison d’être and its own advantages and disadvantages. However, local criminal authorities may not immediately understand this. You will have to explain this to them to effectively advance your client’s interests in both forums – regardless of whether you act as lead counsel in both jurisdictions.
Likewise, you may need to understand from local authorities whether and when producing a piece of evidence in the arbitration is appropriate. Premature disclosure of evidence obtained in a criminal investigation may foil the prosecutors’ element of surprise and tip off your adversary to the fact that it may soon be the subject of criminal investigations.
Understand the key issues in the criminal proceedings
As the arbitration advocate, you inevitably will need to explain the criminal aspect of your case – whether it is central to the arbitration or secondary – and it is critical that you get it right. Any errors or omissions in the presentation of the facts or law will cause you to lose credibility with the tribunal. Even worse, contradicting the client’s position in the criminal proceedings may also jeopardise your client’s interests in those proceedings.
In an arbitration in which one of the authors of this chapter acted as counsel to an investor, the opposing party, a state, took a position that was seemingly at odds with the prosecution’s case theory in parallel criminal proceedings. While this did not affect the course of criminal proceedings (a sad commentary on the criminal justice system in that state), the investor’s legal team used this point to undermine the state’s credibility and paint the state’s criminal accusations, which were central to the arbitration, as nothing more than a trumped-up attempt to ensnare the investor.
To avoid making such a careless mistake yourself, make sure that criminal counsel reviews all submissions that are liable to have any effect on criminal matters and make criminal counsel aware of your strategy in the arbitration. If criminal counsel is part of the arbitration team, this will be much easier and more straightforward. If you represent your client in both forums, make sure that you review all submissions in detail with a thorough understanding of the impact of your assertions in both criminal and arbitral proceedings.
Use all available avenues to build the evidentiary record
Close collaboration between arbitration and criminal counsel will not only avoid any mistakes that prejudice client or counsel, it may also provide arbitration counsel with a rare opportunity to harness the coercive force of a criminal law jurisdiction to collect evidence that may be used in the arbitration. The criminal procedure codes of most civil law jurisdictions allow private parties in criminal proceedings to play a role in the taking of evidence (i.e., by allowing for a neutral expert to investigate the technical aspects of the alleged wrongdoing); for example, in a case of alleged tax evasion, the expert might evaluate whether your client actually carried out construction work for which it later claimed a VAT credit – and prepare a report available to the parties; or forcing parties to disclose evidence they might otherwise refuse to provide. For their part, common law jurisdictions have a strong tradition of discovery, even outside criminal proceedings.
If arbitration counsel is properly apprised of the evidence-gathering procedures that domestic proceedings offer, he or she may suggest the use of those procedures in a way that will help him or her to build the evidentiary record in the arbitration. The criminal file will be a useful source of information and criminal counsel will be your guide to this vital resource. Know how to use existing evidence on record in criminal proceedings and understand how to harness the coercive powers of criminal law jurisdictions to obtain further evidence that may be useful in the arbitration.
Likewise, the arbitration proceedings themselves may offer a further opportunity to elicit evidence that exculpates your client or demonstrates how your client has been victimised. Know when and how to make effective document requests that will help advance your case not only in the arbitration proceedings, but in the criminal proceedings.
Notwithstanding the above, do not forget Rule No. 1: both the criminal and the arbitral proceedings may impose secrecy or confidentiality obligations that prevent the use of documents on record in the other proceedings.
Rule No. 3: Know when to play offence and when to play defence
Ultimately, an advocate’s job is to implement a strategy that will advance his or her client’s interests. At times, as we have noted, this will involve facts and issues foreign to you and outside your expertise. At other times, arbitration will be the ‘foreign’ element that is not central to the global strategy. As the arbitration advocate, you must know how to make the tools of arbitration available to advance your client’s overall strategy and to use external elements to strengthen your hand in the arbitration. To do so, we offer three suggestions: (1) know when making a claim of illegality will be to your client’s advantage; (2) use the criminal proceedings to advance the arbitral proceedings; and (3) use the arbitral proceedings to achieve objectives in the criminal proceedings.
Know when to use a claim of illegality to your client’s advantage
Illegality will not always be harmful to your client’s case. It may be an opportunity to advance your client’s goals. For example, whether the client is a state in an investor–state dispute or a private party in a commercial arbitration, showing that a benefit was procured through bribery may allow the arbitration advocate to easily dispose of the case. This may be so under two circumstances.
First, in an investor–state dispute, a showing of illegality may deprive the tribunal of its jurisdiction or render the opposing party’s claim inadmissible. The fact that the underlying contract was obtained through corruption may mean that this contract, which would otherwise give rise to an ‘investment’ under the applicable treaty, cannot allow the investor to invoke the substantive protections of the treaty – regardless of whether the treaty explicitly requires that an investment be made in accordance with the host state’s laws.
Second, in a commercial arbitration, showing that a contract’s purpose is to carry out illegal conduct, or that it was procured by corruption, may prevent the tribunal from granting relief that would give effect to such a contract. This may be because the contract itself will be considered void ab initio or because an award giving effect to such a contract is contrary to (international) public policy.
Even after the award has been rendered, and the illegality charge rejected, a showing of illegality may still thwart enforcement in some jurisdictions. A string of decisions has shown that French courts will review the merits of an arbitral award and make their own determination regarding a claim that a contract has been procured by corruption. This is true even if the party to the arbitration did not allege any corruption before the tribunal or if the party alleging corruption is only able to demonstrate ‘red flags’ – indicia that corruption may have occurred – rather than actual evidence of corruption. This may not be the case in other jurisdictions, which still grant deference to the findings of the arbitral tribunal, even in cases of corruption. For example, in Northrop v. Triad, the US Ninth Circuit Court of Appeals upheld an arbitral award – despite the allegation that the underlying contract was illegal – finding that the arbitrators’ conclusions on these issues were entitled to deference as they were ‘fully briefed’ on the point.
Address the issue at the earliest juncture
Experience dictates that when it comes to suspicions, allegations or even admissions of bribery and other criminal activity, the good-faith advocate must tread carefully and forthrightly. If the criminal activity at issue is on the side of the opposing party, then to be most helpful to the tribunal the advocate should elucidate to what extent that illegality affects jurisdiction, admissibility and liability, respectively, as well as enforceability at least at the seat (in commercial and non-ICSID cases). The effective advocate addresses these matters clinically, carefully and without lording the criminal aspects over the opposing side. By contrast, if the criminal activity at issue resides with the advocate’s own party and if the illegality is established, this advocate has the delicate task of addressing to the tribunal whether that activity makes the underlying contract void or voidable, whether the claim would be non-justiciable for reasons of ‘unclean hands’ and similar doctrines, or whether the illegality in fact has no bearing whatsoever on the procedural and substantive bases for the specific claim.
No matter whose side the criminal activity is said to impugn, the bona fide advocate must address the issue at the earliest juncture, and ensure appropriate transparency and evidentiary good faith towards the fact-finding tribunal. While the challenge might have different wrinkles depending on whether the matter is a contract-based or a treaty-based claim, at the end of the day both domestic and international public policy are likely to have a role, and the diligent advocate should promptly analyse the activity on both a national law and a cross-border level. In so doing, the advocate will be in the best possible position to effectively and accurately inform the tribunal of what the tribunal’s rights and duties are, if any, in investigating and drawing consequences from the criminal activity at issue. Here, the advocate must bear in mind the lack of full harmonisation of national laws respecting criminal activity (including burdens and standards of proof). He or she should also consider further the lack of consensus about the existence of a transnational public policy interdicting certain kinds of commercial activity (such as intermediary payments). As a result, the mindful advocate will appreciate that even the best-equipped tribunal may have its hands full sorting out the differing procedural and substantive standards. All the more reason for the forward-thinking advocate to assist the tribunal in this task promptly, clearly and with integrity.
– Richard Kreindler, Cleary Gottlieb Steen & Hamilton LLP
Regardless of whether your client stands to benefit from a finding of illegality, you must know how to use the facts to your client’s advantage. If your client is making an allegation of illegality, you are naturally in a position of strength. You may have more than one chance to prove your illegality allegation and you may benefit from a lower standard of proof. If the corruption allegation is made against your client, do not despair; you have plenty of arrows in your quiver. Understand whether relevant case law allows review of the merits of a corruption allegation at the enforcement stage; this will guide your understanding of the level of detail you will have to present to the tribunal. If a relevant jurisdiction will review the merits of the tribunal’s findings, make sure that your tribunal has all the evidence it needs to establish that the allegation is baseless. Even if it will not, make sure that the tribunal is ‘fully briefed’ so as to merit the deference of the enforcement court, where possible. Even where the opposing party’s corruption allegation is based on red flags, it can only benefit your client to explain to the tribunal why each of those elements does not point towards corruption.
Use the criminal proceedings to advance objectives in the arbitration
A criminal proceeding may also offer the arbitration advocate an opportunity to advance arbitral objectives in a criminal law forum. If your client is a party to criminal proceedings, those proceedings may provide evidence-collecting opportunities, as noted above. If your client is not a party to criminal proceedings, you may be able to apply pressure on the opposing party if there is any likelihood that the party has engaged in illicit conduct. For example, if your client has suffered damage as a result of the monopolistic conduct of its contractual counterparty or as a result of the counterparty’s corrupt practices, a criminal complaint or referral may be appropriate. This may initially occur if criminal proceedings are already pending or if local authorities are as yet unaware of any hint of criminal misconduct.
Remember that the same criminal misconduct may give rise to overlapping authorities, even in the same jurisdiction. For example, in the United States, the payment of a bribe could trigger an investigation by prosecutors for violations of criminal law, but may also be a breach of securities laws and fall under the jurisdiction of securities regulators. Also, remember that the laws of a jurisdiction that may not otherwise appear to have any relationship with the dispute may nonetheless be applicable – for example, where a company is listed on an international stock exchange found in that jurisdiction.
Notwithstanding the above, once criminal proceedings are likely, or have commenced, you must ensure that you do not in any way threaten the criminal proceedings in an effort to advance the arbitration. In general, you should keep three important points in mind.
First, your professional responsibility obligations may limit the conduct you can undertake – for example, your ability to threaten to bring criminal proceedings.
Second, when going to the local authorities, be careful not to waive your client’s right to invoke the arbitration clause. This may happen when a client seeks recourse in local proceedings before it begins arbitral proceedings – for example, where, in a civil law jurisdiction, the party seeks relief as a civil party in criminal proceedings.
Third, make sure that any criminal investigation will not backfire on your client – before seeking to precipitate a criminal investigation you must be sure that in doing so you will not waive your client’s right against self-incrimination, or that your client will be the subject of the investigation, or that the arbitral tribunal will consider the measure an unjustified guerilla tactic.
Also keep in mind that, where findings in the criminal proceedings may be relevant to the tribunal’s own findings, you may wish to seek a stay of the arbitral proceedings. This may be the case because you believe that a full briefing of criminal law issues by authorities with the coercive powers to conduct a proper investigation will benefit your client. Although the decision of a domestic court will not bind the tribunal strictly speaking, some tribunals have found foreign authorities ‘best placed’ to collect evidence relevant to the arbitration.
Use the arbitral proceedings to advance objectives in the criminal proceedings
Although an arbitral tribunal does not enjoy the same coercive powers as a criminal jurisdiction, a tribunal established in accordance with an investment treaty may have the power to order a state to comply with its treaty obligations. This will include the power to order a state to halt a pending criminal proceeding or to cease any other conduct relating to that proceeding. In one case, for example, a tribunal acting pursuant to the ICSID Convention ordered a state to suspend its criminal proceedings against three claimants and withdraw an extradition request against two of those claimants. While the state did not ultimately suspend criminal proceedings, the order compelled the court of a third-party state to refuse the extradition request, which is a significant development.
An order for provisional measures – temporary measures ordered by the tribunal to protect a right in the arbitration pending the arbitral proceedings – may also be used to prevent the state from confiscating key evidence that may be used for the arbitration, or to prevent the state from collecting evidence in a way that violates its own laws or the equality of the parties in the arbitration.
However, the tribunal’s power to order provisional measures is not a silver bullet. Tribunals have generally only ordered provisional measures in relation to ongoing criminal proceedings when the integrity of the arbitral proceeding was at stake. What is more, such a measure may not be part of the client’s overall goals. Criminal counsel may wish to work with local criminal authorities, and this coordination may be addled if the local authorities are antagonised with a provisional measures order. Before any action is undertaken, the arbitration advocate should understand whether an application for provisional measures is consistent with the client’s objectives.
Conclusion
An arbitration advocate in a brave new world
Advocacy is more than just the art of persuasion. A good arbitration advocate will not only effectively plead a client’s case before a tribunal, he or she will execute on a global strategy that balances risks and leverages the various proceedings for the client’s benefit. While the skills of persuasion may not help you in the brave new world in which your advocacy may take you, your instincts as an advocate will. We have developed the rules in this chapter from our own experience acting as counsel in arbitrations involving criminal matters. However, they are knowable to any advocate and they reflect general principles that should guide your advocacy in any arbitration.
Knowing your ethical obligations, and in particular your disclosure obligations, will ensure that you avoid prejudicing your client (and yourself) and that your client benefits, rather than suffers, from multiple simultaneous proceedings.
To the extent that there are pending criminal proceedings, understanding how to navigate the criminal law aspects – regardless of whether you are also criminal counsel or are relying on local criminal counsel – will allow you to leverage the criminal proceedings while balancing the attendant risks. Understand that you will almost invariably need to rely on others to help you achieve the client’s goals.
Know how the criminal and arbitration proceedings (separately and together) can advance the client’s objectives, whether this involves taking bold action in one or the other proceeding – such as making a provisional measures request or a criminal referral – or a more conservative approach.
A good arbitration advocate will be able to apply any of these skills to his or her practice.
Notes
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