On corruption in international arbitration: Exploring the topic through the lens of the MOL v. Croatia saga

Abstract

With the MOL v. Croatia arbitration saga finally concluding in 2022, an opportunity has arisen to revisit the topic of corruption which to this day remains rather divisive. The two arbitral proceedings that involved MOL and Croatia had at their core the allegation of corruption, namely that two contractual arrangements between the two parties had been procured by MOL bribing the then Croatian Prime Minister Ivo Sanader. Besides the two arbitral proceedings, criminal proceedings were initiated in Croatia that culminated in guilty verdicts for Ivo Sanader as well as the Chairman-CEO of MOL Zsolt Hernádi. This article starts by discussing the importance of adequately addressing corruption in international arbitration. To this end, the argument is put forth that, to the extent possible, arbitral tribunals ought to fine- tune their procedures in order to minimise the possibility of upholding a transaction or an arrangement that is plagued by corruption. Next, the article turns to the MOL V. Croatia saga. After providing a summary of the proceedings, the article explores the challenges that permeated Croatia’s attempts to prove its allegation. The article concludes with the observation that the tribunals could have conducted the arbitral proceedings differently in recognition of the difficulties that arise in proving allegations of corruption as well as the negative impact that corruption exerts beyond the parties to the dispute.