Archive for December, 2015

The main part of the title is taken from an article by Nicholas Peacock, Donny Surtani, and Pritika Advani, of Herbert Smith Freehills  – here is a link to the article.   The argument, I suggest, is not restricted to India.  Every time the crime of fraud arises in arbitration, whether in Claim or Counterclaim or even in incidental evidence or argument, an arbitrator has to look into his or her appointment and, indeed, conscience, to know what to do.

I have argued long and often that arbitration is no process at law.  Arbitration has no role to play in criminal law.  An arbitrator’s decision can neither convict a criminal nor can it give effect to truly criminal acts and intentions.

Like any other proposition, any assertion of fraud relevant to the outcome of an arbitration must be tested and assessed according to the balance of probabilities, that is to say that, to succeed,  they must be found more probable than not.  Whether or not there is fraud alleged is a private matter within the arbitration and it is submitted that the mere fact of fraud and its consequences in the arbitration can be decided by the arbitrator or arbitrators,

There is no direct link between the private process of arbitration and the public processes of the criminal courts.  A decision of fraud in an arbitration is private and remains so.  However, an arbitrator who is satisfied, from the evidence, that a fraud may have been committed, may have a duty – either to his own country or another country affected by the offence – to report the suspicion.  Confidentiality, if it exists at all, exists from the nature of the arbitration agreement itself.  It cannot override the public duty to report the crime.

It could be sufficient for an arbitrator to rely upon a party or Counsel to report a fraud.  It is possible, but unlikely, that the parties will be complicit in some fraud against a third party.  It is hard to envisage Counsel as being complicit in such a fraud.  However, arbitrators are not concerned with the regulation of party representatives who may be anyone of a party’s choice.  The representatives may themselves be selected to be privy to the fraud.

In my opinion, an arbitrator should be very reluctant to report a fraud unless he or she is certain beyond a peradventure that a fraud has taken place and the perpetrator can be identified.  If there is no more than a suspicion, however strong, the correct action should be to withdraw from the reference.  It may be necessary to account to the parties with an explanation, but that may have to be very carefully worded,

Having said that, the arbitrator may be compelled to report his suspicions, should he or she consider that the is a risk to the person.

If the arbitrator has a duty to report a fraud, is that duty owed to the seat of the arbitration, to the domicile of one or other or both parties or to the place of performance of the contract (as when constructing a building)?

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