By Meg Utterback Monique Carroll and Emily Rich King & Wood Mallesons’ Dispute Resolution Group
Bribery and corruption is increasingly an issue of concern for multinational companies, especially when seeking to invest in “high risk” jurisdictions. Historically, the primary concern in this area has been exposure to civil and criminal penalties for contravention of anti-bribery and corruption legislation. However, recent years have seen a growing trend towards governmental expropriation of investments alleged to have been obtained by bribery and corruption. This poses a significant additional risk to foreign investors. Investors who are found to have engaged in corrupt practices will have difficulty defending against expropriation or seeking compensation for expropriation that might otherwise have been obtainable under either domestic or public international law. Unfortunately, in some cases, foreign officials may take retaliatory action against an investor for failing to pay a bribe. Organisations doing business abroad must remain vigilant about anti-bribery and corruption compliance. They must also consider what protections may be available under investment treaties for unfair or arbitrary state conduct that equates to an expropriation or another breach of applicable international standards.
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