Bribery in International Contracts Confronted

In a case which confronted head-on the burning issue of bribery in international contract negotiations, a company which was awarded over £12 million by arbitrators has successfully defended itself against accusations that it obtained the underlying contract through the payment of sweeteners.

A technology company (company A) was awarded a contract on behalf of a Dubai-based company (company B) to install an extra low-voltage system at a racecourse in Dubai. Company A had suspended work prior to completion of the project on the basis that its payments had dried up.

Company A submitted the dispute to arbitration under the rules of the Dubai International Arbitration Centre and was awarded approximately £12.6 million. It subsequently obtained an order from the High Court, in London, enabling it to enforce the award in the same manner as a judgment.

In challenging that order, company B argued that the contractual negotiations had been infected by bribery and that neither the contract nor the arbitration award should be accorded recognition as a matter of public policy. It was alleged that company A had paid a substantial bribe, under the ‘false cover’ of a payment in respect of lithography costs, in order to obtain the contract.

In rejecting those arguments, the High Court found that company B had no real prospect of establishing that ‘secret payments’ had been made by company A. The relevant evidence which was said to indicate bribery had in any event been available to company B at the time of the arbitration.

Whilst acknowledging that ‘bribery is clearly contrary to English public policy’, and that contracts to bribe are unenforceable, the Court observed that the same does not apply to contracts which have been procured by bribes. Company B’s other grounds of challenge to the arbitration award were also dismissed.