In a public challenge to the UK government, the anti-corruption initiative Spotlight on Corruption expressed concern over the government’s refusal to amend the Arbitration Bill to tackle corruption. The group criticised this as a significant oversight, potentially turning UK courts into avenues for money laundering.
Recent high-profile court cases, as noted by Spotlight on Corruption, have highlighted the susceptibility of arbitration to misuse by corrupt individuals. An example cited is a ruling by Mr Justice Robin Knowles, who nullified an $11 billion award against Nigeria, citing fraudulent underpinnings. Such cases underscore the urgent need for legal reforms, including proposed amendments obliging arbitrators to report suspected corruption to law enforcement and refer contentious cases to the High Court to balance transparency and confidentiality.
During the bill’s second reading, the issue of corruption in arbitration was raised by Labour peer Lord Hacking, who drew from his experience in international arbitration related to Ukraine and Russia. He contended that corruption was a constant concern, necessitating careful deliberation in decisions.
However, the Justice Minister, Lord Ponsonby, rebutted the notion that amendments were necessary. He outlined the current safeguards within arbitral practices, such as ethics, experience, and conduct requirements, which are considered adequate in tackling corruption. He also indicated that a uniform amendment approach might undermine the UK’s appeal as an arbitration hub.
Lord Ponsonby further highlighted that major arbitral institutions had not supported changes to the bill, arguing that the Arbitration Act 1996 sufficiently addresses corrupt practices with its nuanced legal framework. His stance reflected the government’s agreement with the Law Commission’s assessment that no statutory rule could comprehensively address the needs of confidentiality and transparency in arbitration.
Susan Hawley, Spotlight on Corruption’s executive director, criticised consultations with arbitral bodies on corruption as flawed, comparing it to ‘consulting foxes about who should guard the henhouse.’ Hawley argued for proactive UK leadership in combating arbitration-related corruption, rather than waiting for international efforts such as those by the International Chamber of Commerce.
Spotlight on Corruption warns that inaction on arbitration reforms risks damaging the UK’s reputation as a leading arbitration centre. The group urges the government to take proactive measures to mitigate corruption before more damage occurs, following the controversial P&ID case.
