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Arbitration, Corruption and Justice for Local Communities

28 June, 2024

A high-profile academic and arbitrator delivered the 2024 Roebuck Lecture, calling on arbitrators to take more account of citizens’ rights as stakeholders in arbitral proceedings involving corruption allegations, and increase fairness with reference to the Nigeria v P&ID case.

Arbitration will be held in higher esteem by giving local communities a say in the process, as they often bear the consequences of underlying corruption in disputes, but have little say in the process, according to academic and arbitrator Emilia Onyema of SOAS University of London, who delivered the Chartered Institute of Arbitrators (CIArb)’s 2024 Roebuck Lecture on Wednesday (26 June). Held at CIArb’s London headquarters, ‘Access to Arbitral Justice for Local Communities: Mitigating the cost of corruption and providing access to justice for local communities’ focused on local communities as oft-neglected stakeholders in the arbitral process where underlying corruption forms part of the dispute, against the backdrop of high-profile proceedings such as the Nigeria v P&ID litigation, a topic close to her heart as a Nigerian citizen who is “directly impacted by the core issues arising from that decision”. Onyema set the scene by framing certain key issues as questions: “What is arbitration doing about providing access to those impacted by outcomes? Why have these measures not worked, and how will local communities get access?” she asked. “The direct effect of corruption in commerce, whether it involves the state or not, falls on citizens,” citing the dieselgate scandal as an example, and asserting that local communities’ ability to access national courts to bring actions under tort or parent company liability provisions remains inadequate to dispense true justice. Several slides provided visual evidence alongside press clippings of industrial disasters, including the Union Carbide India (now Eveready Industries India) gas leak in Bhopal, the BP Deepwater Horizon oil leak, and the flooding of a Mozambican village attributed to irresponsible practices by Chinese mining company Haiyu. Weak regulation by governments and poor conduct by investors contributed to many of these disasters, “but allegations of corrupt practices are never too far away. Citizens and local communities are impacted the most; but those same communities lack access to any form of direct redress through arbitration”. If arbitration is a judicial process, then it follows that it should aim to deliver justice, and the rule of law suggests that parties who suffer a wrong should have access to justice. Yet commercial arbitration is a function of contract, to which citizens are not a party and thus lack standing. But all is not lost: “Investment arbitration is doing something, as it looks at transparency and [allows] submission of amici curiae briefs,” Onyema noted, pointing to the Mauritius Convention and UNCITRAL rules transparency in further improving the public’s knowledge of, and access to the process. She returned to the Nigeria v P&ID case, a now infamous England and Wales High Court case brought following a large arbitral award against the country, which raised multiple issues including discovery, corruption and extreme resource imbalances between the parties. Onyema explained that corruption allegations were not raised in the original arbitration because Nigeria was unaware of it at the time, “but several facts should have raised concerns with the tribunal” including Nigeria’s reputation for high levels of corruption in public officials, the lack of performance on the part of P&ID, and the high amount of damages being claimed. “To the average Nigerian, this is how they understand the case: ‘P&ID invested USD 40 million, and in two years reaped a bumper harvest of USD 6.6 billion’ – it is difficult to see the justice in this [award].” She cited the presiding judge in Nigeria v P&ID – Mr Justice Knowles – extensively, in coming to the conclusion that tribunals would improve justice by asking searching questions of both parties to an arbitration, to get to the bottom of the dispute. She acknowledged that arbitrators might be concerned about the appearance of impropriety or accusations of failure to follow due process by doing so, but countered that this should not be a problem provided it is done fairly: “If you give both parties an opportunity to respond, and corruption is raised, then the tribunal should deal with it, or raise their suspicions and give parties an opportunity to respond to the concerns. The problem in my opinion is when the tribunal turns a blind eye [to it].” She ended her lecture with the takeaway: “I would be grateful if you rethink your practice as an arbitrator and possibly your understanding of the role in arbitral process – can you reshape your role in the process so that understanding that this is a judicial process that should deliver justice to all those impacted by the decision? At least if you think about this, then my task has been successful; if I have not convinced you, then the Knowles judgment might persuade you,” Onyema concluded.