1. CCCOBIN 2014 Compliance Conference Friday, 13 June 2014
Corruption in the projects context
Why MDB sanctions regimes matter for lenders and their customers and issues arising when disputes are to be resolved by arbitration in London
Elizabeth Barrett and Nick Gray
CCCOBIN 2014 Compliance Conference
Friday, 13 June 2014

2. Overview of MDBs' sanctions regimes
Who?
What?
How?
Why?
When?

3. MDBs - who are they? Most commonly: The World Bank
The African Development Bank (AfDB)
The Asian Development Bank (ADB)
The European Bank for Reconstruction and Development (EBRD)
The Inter-American Development Bank (IADB)

4. MDBs - what do they do?
Provide financial assistance to developing countries:
Project vs. policy support
Concessional vs. non-concessional support
Funds committed in latest reported FY:
US $52.6 billion (World Bank Group)
US $53.27 billion (Other MDBs)

5. MDBs – what do they do in Africa?
AfDB's 2013 commitments = US $6.76bn
WB commitments = US $8.24bn
Over 400 projects funded
Key counter-cyclical role
Significant infrastructure and other spending

6. MDBs – why have sanctions regimes?
Protect the project
Protect bank funds
Ensure fair competition
Administrative regime
Punishment or deterrence?

7. MDBs – what are sanctionable practices?
Corruption
Fraud
Collusion
Coercion
Obstruction

8. MDBs - what are the sanctions?
Reprimand
Restitution or other financial remedies
Conditional non-debarment
Fixed term debarment
Debarment with conditional release
Permanent debarment

9. MDBs – how they assert jurisdiction
CONTRACTUAL ROUTE
MDBs
Companies/
Individuals
INVESTIGATIONS, AUDITS, SANCTIONS
CONTRACTS
LOAN
AGREEMENT
Borrower

10. MDBs – how they assert jurisdiction
LOAN
AGREEMENT
MDBs
Borrower
FIDUCIARY DUTY
INVESTIGATIONS, AUDITS, SANCTIONS
Employees
Group Co.'s
Companies/
Individuals
Contractors

11. MDBs – how does the process work?
Investigate / adjudicate / appeal
Early temporary suspension / temporary suspension
MDB information sharing
Collaboration with national authorities
Publicity

12. MDBs – where can this lead?
Agreement for Mutual Enforcement of Debarment Decisions
De facto cross-debarment
Business reputation
Referrals to national authorities
Self-cleaning

13. MDBs – where can this lead?
Corporate groups
Successors and assigns
Individuals
New employers

14. MDBs – why are sanctions regimes of concern?
Severe business consequences
Growing area of AfDB activity
Uncharted waters
Due process
Immunity from suit
Opaque/severe settlements

15. MDBs – why are sanctions regimes of concern?
Lending to MDB-involved parties:
Impact on customers' business
Reputational damage
Regulatory intevention
KYC and DD

16. MDBs – why are co-lenders in a different position?
Pros:
DD legwork
Tough on loan documents
Reduce political risk
Cons:
Intercreditor terms
Relationship issues
Hair trigger

17. Summary Wide coverage of MDB-financing
Potentially serious corporate liability
Risk management
What happens in the event of a dispute?

18. London as a Centre for International Arbitration:
A Practical Perspective

19. The rise of Arbitration
Parties agree to arbitrate rather than go to Court
A popular choice in international contracts
One arbitrator or three
Confidentiality
Finality
Enforceability – the New York Convention
Speed?

20. How popular is London?
London is the number one choice for international arbitration
Recent survey of 136 major international companies worldwide:
Arbitration in West Africa (and throughout Africa) is increasing
London: 30%
Geneva: 9%
Singapore: 7%
Tokyo: 7%
Paris: 7%
New York: 6%

21. West Africa Region
Arbitration is actively used in Nigeria, Ghana and the Côte d'Ivoire, especially in cross-border transactions
Modern arbitration laws and high adherence to Model Law
3 major arbitral institutions in the region: the Lagos Regional Centre for International Commercial Arbitration, the Ghana Arbitration Centre, and the Court of Arbitration Côte d'Ivoire
Lagos Court of Arbitration opened in November 2012

22. Why is London so popular? (1)
Legal infrastructure (62%) – Arbitration Act 1996
Neutrality and impartiality of judiciary (34%)
Arbitration friendliness (25%)
Governing law (46%) – English law
Convenience (45%)

23. Why is London so popular? (2)
4. Arbitration Act 1996
5. The English courts' strong pro-arbitration stance in their:
Respect for the autonomy of the process
Willingness to protect the process
Readiness to enforce arbitral awards
6. Home to the London Court of International Arbitration (LCIA)

24. LONDON COURT OF INTERNATIONAL ARBITRATION (“LCIA”)
A leading international institution for commercial dispute resolution
Administration of Arbitration regardless of location, and under any system of law
Rules govern procedures from Request for Arbitration to Final Award
Over 80% of parties in pending LCIA cases are not English
Experienced arbitrators, mediators and experts from many jurisdictions
Cost effective services
LCIA – Mauritius International Arbitration Centre

25. Challenging an arbitral award in England
Unless otherwise agreed, the award is final and binding
Limited grounds for challenging an arbitral award:
Point of law – by consent or with leave (s.69)
s.69 is frequently excluded (e.g. by the ICC and LCIA Rules)

26. Managing delay?
Analysis of 100 recent cases from Request for Arbitration to Final Award shows:
50% concluded within 12 months or less
72% concluded within 18 months

27. Questions?

28. Contact details
Elizabeth Barrett T +44 (0) E
Nick Gray T +44 (0) E