Lloyd's Maritime and Commercial Law Quarterly
Bribery—transaction validity and other civil law implications
Alan Berg *
This paper analyses afresh the civil law implications of a contract’s being obtained by a bribe. It is argued that, depending on the circumstances, either there is no contract (unless the party whose agent was bribed elects to ratify) or the
ex turpi causa principle renders the contract unenforceable by the briber. The paper also considers the position of a bank which, being unaware of the bribe, finances the project on the security of an assignment of the receivables due to the briber under the contract. There is an assessment of the judgment in
Fyffes v.
Templeman that the briber can be ordered to account to the other party to the contract for the profit which the briber has made out of the contract. It is also suggested that the briber could be liable in tort (an “unlawful means” conspiracy) to a competing and unsuccessful tenderer; and that, against the organization which awards the contract to the briber, a claim may be made by an unsuccessful tenderer for breach of an implied undertaking to consider all tenders honestly and objectively.
A. INTRODUCTION
1. Preliminary
The economic effects of bribery are considerable. In June 2000 the United States State Department1
estimated that in the previous six years foreign contracts worth approximately $26 billion had been lost by American companies as a result of bribes paid by their competitors; and that related only to foreign contracts in the public sector.
In the United Kingdom, the official response has been exclusively concerned with the criminal law. In 1998 the English Law Commission recommended legislation to create new corruption offences.2
In June 2000 the Home Office published its own proposals in a White Paper entitled Raising Standards and Upholding Integrity: The Prevention of Corruption,
3
which accepted nearly all the Law Commission’s recommendations but took
* Tel Aviv. Consultant to Watson Farley & Williams.
1. Battling International Bribery 2000.
2. See Law Commission, Legislating the Criminal Code: Corruption:
Law Com. No. 248 (1988).
3. Cm 4759 (2000).
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