Corruption and foreign investments: Empirical lessons from treaties and arbitration cases

Abstract As legally binding instruments for the protection of cross-border investments, international investment agreements (IIAs) increasingly include anti-corruption provisions. This article empirically analyzes international investment agreements and the practice of investor–state tribunals related to corruption in foreign investments. It introduces a typology of treaty provisions and discusses their limited practical effectiveness and perverse incentives they create. The article also addresses the broader question of how to deal with corruption-related obligations of investors and states in the context of public international law. It presents and analyzes new empirical data showing that parties to investor–state disputes increasingly allege corruption, and states are responsible for most of such allegations. However, in most cases, tribunals either ignore such allegations or decide that they have not been proven. In the small number of cases where tribunals found allegations proven, they declined jurisdiction or declared the investor’s claim inadmissible. The article makes proposals on how international investment law can become more effective in tackling the supply and demand side of corruption and discusses the relevant obligations of investment tribunals.