This paper will give the general background and overview of the subject matter of red flag of Corruption in International Arbitration including critical examination of burden of proof in allegation of corruption and fraud lying in international arbitration. Red flags are not evidence of corruption in itself. However they are indicators of corruption that should alert arbitrators that further investigation should apply to the facts of the case. Red flags are part of circumstantial evidence which can give rise to evidence of corruption.

When we talk about the corruption, we talk about the proof of corruption at international level or we can say corruption in international arbitrations who are related to both commercial and state level. The focus of this corruption both at commercial level and state level is on red flag. Red flags are basically related with analysis and assessment of anti corruption risk. The evidence or risk of red flag is to find corrupt practices. In this Article I put my efforts toward Red flags of corruption which means indicator of risk or analysis which are for the benefit of International Arbitrations. As we all know one of the greatest challenges for the arbitrators are how to obtain and assess the evidence of practices. The main emphasis and arguments of this paper will focus on aspect of corruption on international arbitrations.


Corruption is a term with multiple moral under pinnings. It effect is on every human society. Its meaning cannot be in absolute term because it is related with or it may attract with many dimensions. Corruption is a act of doing something or to be done in past with an intent to give some advantage related with official duty and rights of citizen of society or procurement/attainment of some advantage either personally or professionally or something else. Corruption simply related with abuse of duty which are related with public or any third person. There are two scenarios in which arbitrators may become aware of corruption. First is the parties must dispute to raise the allegation of corruption. Second is the parties must dispute to raise the allegation of corruption but one or more arbitrators may be at stake.
Corruption is related with very tropical issue related with international arbitration. In this we discuss various aspects which are related with context of international arbitrations involving allegation or red flag of corruption. Part I of this article describes about the discussion on the issue whether it is related with capacity of the arbitrator or not to deal with a claim of corruption specially when there is large volume of acceptance of corruption at public policy. Part II of this article relate with various elements of corruption that related the adjudication of corruption by an arbitrator. And last not least Part III of this article relate with legal consequence followed by the arbitrators in international arbitration to find red flag corruption. These all three parts are explained as follow in order to understand the concept of red flag in international arbitration in brief manner:-
PART I) Discussion on the issue whether it is related with capacity of the arbitrator or not to deal with a claim of corruption specially when there is large volume of acceptance of corruption at public policy :-

The main point of this is whether allegation of the corruption are capable of being referred to or settled by the arbitrator. Which means that whether arbitrator have capacity to settle the corruption or not. Every state have their own policies to deal with this kind of corruption which are to be kept out of the jurisdiction of an arbitral tribunal in accordance with its own political, social, and economic policies. Some commentators point out the point that every country have different legal aspects on which they are based. They have their own perspective of legality or illegality. Some countries like Brazil accord different treatment to any problem, issue or infringement or you can say validity issue. Therefore while issuing some licence, trademark, agreement, disputes are there which are related with validity raise public order issues which render them inarbitrable In conclusion of the above national legal systems in respect of some problems or you can say issue related with involvement of corruption or bribery which perturbs to almost every jurisdiction. It has further divided into two parts
a) Arbitration and Public Policy :-

Public policy is very difficult to define. But in layman language it means that principle of legal things which have no existence of law matter of any act which has tendency to be injurious to the public and public good. The public policy bring distinction between international public policy and transnational public policy. International public policy is sate based or state oriented policy which means that its content, originality, aspects, elements are based on state where it exist. Transnational public policy are related which the facts, elements, figure, content etc at universal level. It is universally accepted principle. International arbitrators have or face some difficulty in finding out this policy as it relate with many facts and contents which need to be studied deed by international arbitrators. Arbitrability and public policy have deep connection if there any kind of disputes arise which are related with public policy of the country then it come under this section like dispute related with intellectual property.
b) Corruption and exception of public policy rule in arbitration :-

We all know corruption and bribery is a worldwide problem that harm the good governance system in that country and may lead to deep impact on various commercial agreement. As every people of one country may engage with the import and exports of good which may lead toward the enhancement of their business? Cross border transaction may also lead toward embracement in term of bribery or corruption. This principle related with world duty free case wherein the court noticed that the bribery or corruption is international public policy at all states. as we all know over the years , owing doctrine of separability there has been great general acceptance both at national and international level that an allegation of corruption does not itself deprive of arbitrator over disputes. If an allegation of corruption is made on simple plain page then the arbitrators are under the duty to define whether it is proved or not.
PART II Adjudicating Corruption in international Arbitrations :-

At international level, the only allegation of corruption made by one party against other party have to bear as it is likely to have an adverse impact on the reputation or goodwill of the state policy. When the scrutinizing of issue of corruption in the field of international commercial arbitration, the following three points are to be considered which are as follow:-
There is possibility of proof of evidence of bribery or corruption which may relate with the term burden of proof.
Invalid or indirect evidence are critically evaluated at initial stage and then present it before the court
There is s need of strengthen the basic proof of evidence specially in case of bribery or corruption when it is related with public policy.
PART III) Elements of finding of Corruption : –

The dilemma is not come to end with issue of arbitrability and standard of proof which is required in case of corruption. Once we find the corruption either by proof or evidence led by the parties or by investigation. It is the duty of the arbitrator to find the consequence or element in respect of claim of the parties. It is the duty of the arbitrator to find relevant proof in this case so that there will no such kind of act in future.

After this what will be the next question which come in my mind is how Red Flags to help the arbitrators in identifying the Corruption or bribery at international level where there exist some intermediates to make their business successful. So there are various cases where red flags for corruption emerge which are as follow:-
The person who are act as intermediaries are not located or present in that country from where he/she perform his service or foreign transaction.
The commission which are paid to the intermediaries are not according to the work performed or work completed by them and the expenses which are claimed by the intermediaries are not in correct manner as expenses incurred.
There is intangible of work performed by them which means that the is not tangible in nature. This make difficulty to intermediaries as they are not able to get physical copy of documentation or proof of service provided.
The qualification of person who are known as intermediaries are not disclosed or hide which make service provider in doubtful manner.
The time limit of service intervention is short.
The intermediaries demand payment , commission or bonus in advance before work is completed.
The financial statement provided by them is inaccurate and not in proper manner.
The intermediaries is not bound by code of conduct.
The attitude of the company toward intermediaries who complete their work in proper manner.


The above discussion brought to the light on corruption that the issue/ birth of corruption is marred by difficulty as it raises tension or burden between public policy matter in respect which it is difficult to strike a balance. Corruption exists in different shapes and sizes depending upon the size of the country. At international arbitrations, the corruption is public official in the host state by a foreign investors. Red flag is the indicator of illicit conduct or vague action. At international arbitration red flag play a role where there exist an intermediaries to carry on business in foreign country.

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