Potential hazards in enterprise: Detailing significant indicators of ICC's anti-corruption watch list approach
The International Chamber of Commerce (ICC) has published a groundbreaking document titled "Red Flags or Other Indicators of Corruption in International Arbitration". This framework, released in November 2024, aims to assist tribunals, judges, and arbitration institutions in identifying and analysing corruption-related warning signs, or "red flags", in international arbitration cases.
The ICC's document proposes a three-step methodology for evaluating allegations or suspicions of corruption.
Identify the Red Flags
The first step is to identify the relevant red flags. These can be general or specific to the counterparty, transaction, or specific circumstances. Red flags are often indicative of potential risks of corrupt practices, most commonly bribery involving a public official.
Assess the Red Flags
Step 3, called 'Assess', involves a 'big picture' analysis to ascertain the collective import of validated red flags in evidentiary terms. The ICC offers several tools that the tribunal can use in making its factual assessment. These include drawing adverse inferences, using expert opinion, pursuing lines of inquiry with the parties, relying on publicly available findings, invoking principles of estoppel and waiver, and potentially leveraging the data mapping and predictive functions of artificial intelligence.
Weigh Up the Red Flags
Red flags must be assessed by being weighed up against each other and considered concurrently. Specific red flags generally carry greater weight, inferring a higher likelihood of the alleged conduct, as opposed to general red flags.
The ICC's framework serves to reinforce compliance and vigilance duties in international arbitration by encouraging systematic scrutiny of suspicious facts or behaviours linked to bribery, fraud, undue influence, or other corrupt practices. It also encourages enhanced due diligence and transparency in procedural conduct, and decisions informed not only by direct proof but also by the cumulative presence of various red flags.
The document complements ongoing global efforts to embed compliance, vigilance, and anti-corruption standards into arbitration practice, contributing to stronger institutional mechanisms against corruption in cross-border dispute resolution.
The English High Court set aside a US$11 billion arbitral award in the case of Nigeria v Process and Industrial Developments Ltd [2023] EWHC 2638 (Comm) due to fraud and conduct contrary to public policy. Without further analysis, red flags are not probative of corrupt conduct, but they command further delving into the facts through the rules of evidence to ascertain whether corruption has occurred.
The ICC Task Force on Corruption's comprehensive report on corruption in international arbitration, set to be released in the future, will include guidance on other related matters such as burden of proof and parallel proceedings.
In conclusion, the ICC’s "Red Flags" document is designed as a practical tool that promotes early detection and decisive response to corruption risks to uphold trustworthiness in international arbitration proceedings. This document provides a synthesis of material and offers valuable guidance to arbitrators, contributing significantly to the fight against corruption in international arbitration.
The ICC's three-step methodology for evaluating corruption allegations, as outlined in the "Red Flags or Other Indicators of Corruption in International Arbitration" document, includes the use of technology in the form of artificial intelligence for data mapping and predictive functions during the 'Assess' stage.
The comprehensive report on corruption in international arbitration by the ICC Task Force, to be released in the future, is expected to provide guidance on the use of technology for various purposes, such as enhancing evidence collection and analysis.
