by Bruna Castro e Vinícius Novo (translation)
Foreign investment and international arbitration are fundamental components of international economic law, yet they may intersect with criminal law in various dimensions. When arbitration proceedings involve criminal conduct, such actions can be subject to investigation and prosecution across multiple jurisdictions. In this context, a detailed analysis is essential to ensure the protection of investors’ rights.
This integration of international, economic, and criminal law demands an interdisciplinary approach, where arbitration serves as a mechanism for resolving disputes without overlooking the potential occurrence of criminal offenses.
Foreign investments are protected by Bilateral Investment Treaties (BITs), which provide safeguards such as protection against arbitrary expropriation and discrimination. Mechanisms like those established under the Washington Convention (ICSID) ensure dispute resolution through neutral forums, particularly international arbitration. These instruments aim to provide legal security to attract investments.
Criminal law becomes relevant in cases involving irregularities or illicit practices connected to investments or arbitration, including corruption, money laundering, and forgery. In cases of corruption, state authorities may engage in illicit practices to attract or protect investments or to influence the outcomes of international arbitrations. Corporations may offer bribes to secure favorable contracts or avoid penalties, violating laws such as Brazilian Law No. 12,846/13, the U.S. Foreign Corrupt Practices Act (FCPA), and the OECD Anti-Bribery Convention.
Money laundering can occur when foreign investments are used as a facade to legitimize illicit funds, concealing their origins through intricate networks of transnational transactions. In cases of forgery, companies may falsify documents to justify investments or initiate international arbitration, resulting in disputes based on fraudulent transactions, which impact both investors and states.
Violations of economic sanctions further demonstrate the interplay between these areas of law. Investors may target markets or sectors subject to sanctions despite being aware of the legal restrictions, constituting violations of international treaties and exposing the responsible parties to criminal and economic penalties.
Key challenges include ensuring the neutrality and transparency of arbitration proceedings, reconciling the decisions of criminal courts and arbitral tribunals, and strengthening investment regulations to prevent abuses.
To protect investors’ rights while combating illicit practices, certain guiding principles should be emphasized: bolstering international cooperation, developing robust compliance policies, and ensuring accurate interpretations and applications of criminal norms.
