The danger of litigating, at least to trial, on the back of criminal conduct giving rise to guilty pleas and convictions both under the FCPA and similar English legislation was illustrated in the recent case of Jalal Bezee Mejel Al-Gaood v Innospec Ltd.
A copy of the High Court decision is here.
Since the restrictions on bringing an unlawful means conspiracy claim were relaxed by the House of Lords in Total Networks SL v HM Revenue, it is increasingly common for a briber’s competitor to bring a claim where bribing parties have knowingly sought to harm its interests.
The Innospec litigation involved a group of Iraqi fuel additive companies claiming its additive would have been used by the Iraqi authorities but for the corrupt conduct of Innospec, its employees and agents in bribing the Iraqi authorities. Innospec denied the claim, despite the admissions made in the criminal proceedings, on causation grounds and by requiring the court to look “carefully and analytically at the evidence there is as to what bribes were paid and promised and when and whether any bribes paid or promised actually led to a decision different from that which would have been made anyway.”
The decision is long and factually complex but essentially, the judge found that although there was criminal wrongdoing and reprehensible conduct, it did not taint the Iraqi authorities’ decision to continue using Innospec’s additive or not to change to the claimant’s lower octane additives; that the Iraqi refineries were not yet able to use the alternative additive; and that Innospec’s disgruntled agent had pocketed all the monies transferred to him for the purpose of bribing the Iraqi officials. Consequently, the claim was dismissed.
The claimant’s litigation exercise was not entirely fruitless. Similar proceedings in the U.S. had resulted in a “black box” and unapportioned settlement of $45 million in respect of claims arising from Indonesia and Iraq.
Alistair Craig, a commercial barrister practicing in London, is a frequent contributor to the FCPA Blog.