Guest Post: Is UNCAC Article 35 a “Dead Letter” in the United States?

Today’s Guest Post is by Craig R. Arndt, an international lawyer living in Bangkok. In the course of a long career, he advised multinational clients on a range of corruption-related matters and has represented those injured by corruption in actions to recover damages.

The drafters of the United Nations Convention Against Corruption recognized that corruption was a transnational disease. And that accordingly, no country could fight it on its own. Hence, in its very first article the Convention makes it clear that states ratifying it are obliged to “promote, facilitate, and support international cooperation and technical assistance in the prevention of and fight against corruption.”  

Article 35 of the Convention sets forth one of the ways states are required to work together to curb cooperation. It provides that each party must “ensure that entities or persons who have suffered damage as a result of an act of corruption have the right to initiate legal proceedings against those responsible . . . to obtain compensation.”

Rick has documented the sorry state of civil recoveries by bribery victims in transnational cases (here, here, here, here, here, here, here and here). That state is now even sorrier thanks to two recent decisions by American federal courts of appeal. In the words of one commentator, the two “gut” article 35.

 Both affirmed dismissals of actions a foreign claimant brought for damages arising from corruption in accordance with article 35. Both decisions thus effectively read out of America’s obligations under the Convention article one’s requirement it “promote, facilitate, and support” international cooperation.

The link between articles one and 35 is explained in an early, authoritative commentary on the Convention. Article 35, its authors write:

 “unleash[es] the power of private civil litigation and collateral legal and administrative sanctions on persons that commit corrupt practices. . . . [R]ecognizing the difficulties national law enforcement authorities face in prosecuting bribery offenses, [drafters] see benefits to encouraging possible litigation. Evidence developed in such litigation may be useful in subsequent criminal prosecutions or may alert prosecutors to situations which should be investigated. Civil suits also increase the costs of corruption.”

In recommending the Senate give its consent to the ratification of the Convention, the Committee on Foreign Relations not only stressed the synergism between public and private prosecution created by article 35’s private right of action, but the leading role America could play in sparking such synergies were it to ratify the Convention. In its report, the Committee explained that in ratifying UNCAC:

“the United States will enhance its leadership role in the global anti-corruption effort, help ensure that the Convention is implemented properly by other countries and cooperate with treaty partners in the investigation and prosecution of corruption-related offenses. . . .

“[Ratification] benefits the world community as well as the United States by . . . expanding existing law enforcement and other relationships. As a party, our ability to continue to assert the leadership role we have held since the 1977 enactment of the Foreign Corrupt Practices Act, the FCPA, would be strengthened” (emphasis supplied).

But this past March the drafters’ hopes to “unleash the power of private civil litigation” and the Senate’s endorsement of American leadership in the fight suffered two major setbacks. In Instituto Mexicano Del Seguro Soc. v. Stryker Corp, and Instituto Mexicano Del Seguro Social v. Zimmer Biomet Holdings, the Sixth and Seventh U.S. Courts of Appeals respectively dismissed actions Mexico’s principal social welfare agency had brought for injuries suffered when American companies bribed its employees, violations of the Foreign Corrupt Practices Act.

The trial courts in the two cases dismissed the cases not because they found the defendants had not bribed Institute employees, for both had admitted to the bribery in Department of Justice and Securities and Exchange Commission prosecutions. Rather, both courts dismissed the cases on the grounds that it would be more convenient to bring the suits in Mexico.

This “inconvenience doctrine,” known by its Latin translation forum non conveniens, is, as Cornell Law Professor Maggie Gardner explains, “a judge-made discretionary doctrine” that allows a court to dismiss a case if it thinks the case would be “better heard” in another jurisdiction — even when, as in the two cases here, “the court otherwise has proper jurisdiction over the case.”  In affirming the dismissals, the two appeals courts each considered three factors:

  1. that the Institute had chosen to file the cases in an American court,  
  2. whether there were “adequate and available” courts in Mexico to hear the cases, and
  3. whether the public interest in litigating the cases in Mexico outweighed the Institute’s interest in bringing them in the United States.

In posts on the Transnational Litigation Blog, Professor Gardner (here) and Duke Law Professor Rachel Brewster (here) both offer first-rate critiques of the two courts’  decisions, showing how the crabbed and narrow approach they took in weighing the three factors led to an erroneous dismissal in each.

I depart from their analysis only in suggesting that they might have laid more emphasis on the obligation the United States assumed in article one to work with and cooperate with other nations in the global fight against cooperation. Both appeals courts examined articles 35 in isolation from the broader purpose the Convention is meant to serve and in disregard of the role the Senate foresaw ratification would have in advancing American leadership in the fight against corruption.

While the decisions of the two appeals courts are binding only in the regions or circuits where they hear trial court appeals, there is a risk that courts in the other ten circuits will follow their logic and also dismiss civil suits for corruption damages by foreign claimants. Cases involving foreign plaintiffs are often complex and time-consuming, one might even say “inconvenient” for a busy trial court to hear. Forum non conveniens is an easy way to put the burden elsewhere.

To be sure, as Rick explains in this report for the Open Society’s Justice Initiative, foreign claimants have in some cases recovered damages for FCPA violations through crime victim compensation statutes.  But limitations in these laws make it critical that the option of a private civil suit not be foreclosed

Consistent with its recently announced anticorruption policy, the Biden Administration should ensure that the option remains open in the other ten. In any action a foreign claimant brings in one of them, it should file a friend of the court (amicus) brief stressing that the two decisions ignore America’s responsibility under UNCAC to cooperate with other nations in the fight against corruption and hence should not be followed. It also should work with Congress to enact legislation affirming that foreign claimants have a right to recover damages for corruption damages caused by American defendants — no matter the inconvenience.

3 thoughts on “Guest Post: Is UNCAC Article 35 a “Dead Letter” in the United States?

  1. Thank you for the detailed exposition of this pressing problem! I am wondering about the relationship between article I and the fact that IMSS was a foreign plaintiff. It seems to me that the U.S’ Article I commitment to cooperation and leadership in this sphere would strongly suggest that a foreign plaintiff’s choice of forum should not deserve any less (and indeed perhaps more) deference than a domestic plaintiff in the court’s forum non conveniens analysis, precisely because being a forum for these actions aligns with the U.S’ commitments and expressed interests.

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