This is the third post on mediation and corrupt conduct that could have influenced the underlying dispute (here is the first post; here is the second). It concerns how mediators use red flags and considers two questions that flow from the second post: first, could mediators simply turn a blind eye in a mediation, even if there are red flags of corruption? And second, to what level do mediators need to suspect corrupt conduct before they should or must act on that suspicion?
Turning a blind eye?
In my view, this is not advisable. Mediators should take here guidance from the approach that emerged, albeit on different principles, in arbitrations: the “eyes open” approach.
This approach, which the ICC French National Committee succinctly encapsulated by stating that if they suspect “a criminal offence, the arbitrators cannot remain silent”,[1] is now widely accepted. As numerous commentators have pointed out, this supports the administration of justice; gives effect to international public policy to discourage corruption in global trade; avoids that arbitration, a trusted part of national and international justice systems, becomes a de-facto tool that – indirectly – protects corruption, and ensures that the award rendered by the arbitrator(s) is enforceable.
The same rationales should apply to mediators. Like arbitration, mediation is part of the national and international justice systems. It must thus be held to similar and similarly high standards and principles. Moreover, the eyes open approach also protects mediators. Turning a blind eye to possible corrupt conduct bears the risk that mediators become subject to hefty fines, professional sanctions, and even terms of imprisonment because many jurisdictions have bolstered their anti-corruption laws in line with international best practice – and are willing to enforce them. The next blog entry will take a closer look at this issue.
The level of suspicion
The second question is whether mediators must reach a certain level of suspicion before they should or must act on it. The issue is not without debate. Even within the arbitration community, the issue has been contested, though it now seems established that “mere” suspicion or a simple “hunch” would not be sufficient for an arbitrator to act. It needs something more. The arbitrator needs to take steps to sure up the suspicion before acting on it. In practice, the arbitrator will need to identify further red flags.
I suggest that this, too, should apply in mediations. Mediators need to gain a higher level of suspicion than a simple hunch, including by identifying and connecting several red flags. As we have seen in the previous post, mediators certainly have the relevant tools to do so.
But how many red flags are needed? To my mind, there is simply no abstract measure. Rather, this will depend on the individual mediation. Therefore, this is a matter best left to the discretion of the mediators.
However, I suggest that mediators should know and be guided by the law applicable to mediation. Some anti-corruption laws set thresholds that can be relevant for mediators. For example, some jurisdictions require that anyone with a “reasonable suspicion” of corruption must report this suspicion to competent authorities.[2] This threshold can also apply to mediators. If the mediator gains a “reasonable suspicion”, he or she must report that suspicion and that despite the strict confidentiality of mediations. In any case, mediators should know the applicable national anti-corruption laws and how national courts have interpreted these. This is essential to understand whether there is a threshold and if there is one, what it is.
[1] ICC France Report on Criminal Law and Arbitration, Doc 420 / 492 at p. 12; see generally M. Wirth, C. Rouvinez, J. Knoll, Search for Truth in Arbitration: Is Finding the Truth What Dispute Resolution Is About – ASA Special Series No. 35, Juris Publishing, 2011 pp. 120 ff.
[2] For example, Singapore’s s39(1) of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act requires disclosure of corrupt conduct when there are “reasonable grounds to suspect [such] conduct”.