Bariven SA v Wells Ultimate Service LLC - Gerechtshof Den Haag Zaak No 200-244-714-01 - Annulment of Arbitration Award - Dutch - 22 oktober 2019
Cited in the judgement:
"(...) a foreign official and to a person (...) for purposes of (i) influencing acts and decisions of a foreign official in his official capacity; (ii) inducing such foreign official to do and omit to do acts in violation of the lawful duty of such official; (iii) securing an improper advantage; and (iv) inducing such foreign official to use his influence with a foreign government and agencies and instrumentalities thereof to affect and influence acts and decisions of such government and agencies and instrumentalities, in order to assist [X] , [Y] and their U.S. companies in obtaining and retaining business for and with, and directing business to, [X] , [Y] , their companies, and others, in violation of the Foreign Corrupt Practices Act.
to devise and intend to devise a scheme or artifice to defraud PDVSA and energy companies that could have performed services for PDVSA, and for obtaining money and property from PDVSA and energy companies that could have performed services for PDVSA by means of materially false and fraudulent pretenses, representations, and promises (...)"
"Purpose of the Conspiracy
25. The purpose of the conspiracy was for [X] , [Y] and their co-conspirators, to enrich themselves by obtaining and retaining lucrative energy contracts with PDVSA through corrupt and fraudulent means, including by paying bribes to PDVSA officials.
Manner and Means of the Conspiracy
[X] and [Y] , together with others, paid bribes to PDVSA officials through the use of interstate and foreign wires in order to influence acts and decisions of the PDVSA officials in their official capacities and to induce the PDVSA officials to do and omit to do certain acts, including, but not limited to: a. assisting [X]'s and [Y]'s companies in winning PDVSA contracts;
b. providing [X] and [Y] with inside information concerning the PDVSA bidding process;
c. placing one or more of [X]'s and [Y]'s companies on certain bidding panels for PDVSA projects;
d. helping to conceal the fact that [X] and [Y] controlled more than one of the companies on certain bidding panels for PDVSA projects;
e. supporting [X]'s and [Y]'s companies before an internal PDVSA purchasing committee;
f. preventing interference with the selection of [X]'s and [Y]'s companies for PDVSA contracts;
g. updating and modifying contract documents, including change orders to PDVSA contracts awarded to [X]'s and [Y]'s companies;
h. assisting [X]'s and [Y]'s companies in receiving payment for previously awarded PDVSA contracts, including by requesting payment priority for projects involving
[X]'s and [Y]'s companies.
35. [X] and [Y] , together with others, attempted to conceal the fact that they controlled multiple companies contained on the proposed bidding panel lists provided to certain PDVSA officials who were receiving bribes, including by appointing nominal owners or managers for those companies".
"In or about 2011, [F] entered into a conspiracy with a group of then-current and former high-level officials of PDVSA and PDVSA subsidiaries which was referred to as the "management team". The management team solicited several PDVSA vendors, including vendors who were residents of the United States, and who owned and controlled businesses incorporated and based in the United States, for bribes and kickbacks in exchange for providing assistance to those vendors in connection with their PDVSA business. Among those vendors were [X] and [Y] (who have previously been charged by the United States government and have pleaded guilty to crimes related to their roles in the conspiracy) who paid bribes to the management team for assistance related to their companies in the United States, including assisting those companies in obtaining contracts with PDVSA and assisting [X] and [Y] in receiving payment priority over other vendors for outstanding PDVSA invoices".
"1) Wells is one of the [X] companies described in the Houston charging documents.
2) Wells has provided Bariven with incorrect information at the time of its registration as a registered vendor.
3) The circumstances in which the procurement procedure took place indicate that Wells obtained the Purchase Order in a corrupt manner.
4) Other circumstances which have mainly occurred after the date of the Purchase Order, also demonstrate the corrupt character of Wells' conduct.
5) The top drives are largely overpriced."
"The Arbitral Tribunal notes that, as is clear from the hearing and the contents of Procedural Order No. 4, the order to produce documents only pertains to the issue of the market value and (alleged) overpricing of the top drives and has been issued in a very late stage of the proceedings when the discussion about other issues - including the other circumstances Bariven has relied on in order to support its position that the Purchase Order is obtained through corruption - was materially finalised. In addition, it is the Arbitral Tribunal's view with regard to the arguments formulated in connection with the submission of these documents on Bariven side, that it was up to Bariven to have raised these arguments in an earlier stage of this arbitration. (...) For all these reasons, it would in the Arbitral Tribunal's opinion be contrary to the principles of due process to take into consideration (new) arguments put forward by Bariven on the basis of these documents as far as they do not directly relate to the issue of the overpricing and the market value of the top drives."
"(...) In none of the documents pertaining to the criminal proceedings, Wells is mentioned - explicitly nor implicitly - as one of the corrupt companies. Bariven has not specifically referred to any part of the charging documents from which it could be deduced that Wells is part of the conspiracy and obtained the Purchase Order in question - or other Purchase Orders - through the payment of bribes or through corrupt acts by Bariven's personnel. The circumstances (i) that the Houston defendants, including three employees, have all plead guilty of receiving bribes and other things of value; and (ii) that those ex-employees - one of which (Mr. [D] ) was personally involved as the creator and level 1 approver in the bidding process at issue in this arbitration - have admitted that they committed their acts by circumventing Bariven's internal controls; and (iii), in Mr. [D]' case, that he among other things assisted in placing the companies on the bidding panels and assisted in selecting the companies as the winning vendors, do in the Arbitral Tribunal's view not justify the conclusion that Wells is one of the companies described in the Houston charging documents. These pleas do not imply that in each bidding panel, involving a company which was (to a certain extent) related to Mr. [X] , Mr. [D] has acted in an illegal and corrupt manner (...).
The conclusion is that the Houston charging documents do not prove that Wells is a corrupt part of a conspiracy of Mr. [X] , nor that the Purchase Order at issue is obtained by Wells through corrupt practices."
"However, these circumstances - considered in isolation and in conjunction with each other - do in the Arbitral Tribunal's view not prove Bariven's assertion that the Purchase Order is obtained in a corrupt way, that is by paying bribes or other things of value and/or by corrupt practices on the side of Bariven's personnel. The information in question relates to Wells' admission as a vendor and does not provide sufficient insight into the way the Purchase Order has been obtained. (...) The only conclusion that can be drawn from the above is that Wells has been admitted as a registered vendor on the basis of false information. (...)" 3.10 Ten aanzien van categorie 3 (het verloop van de biedprocedure voor de aandrijfmotoren, zie hiervoor, 2.11 tot en met 2.14) overweegt het scheidsgerecht in 13.18 en 13.21 van het arbitrale vonnis:
"(...) If Bariven intends to rely in this context on the allegations it deduced from the purchase invoice and the offers of the other vendors in the bidding panel at issue, which were filed by the Parties following the hearing, the Arbitral Tribunal does not take these allegations into consideration for the reasons set out above (...)."
"Although these allegations, who are as such not contested by Wells, raise questions with regard to the manner in which the Purchase Order was obtained by Wells - especially since in most of the bidding processes one of the companies mentioned in the charging documents was admitted as a vendor - the Arbitral Tribunal is also in this respect of the opinion that these facts, absent more detailed information about the (course of the) bidding processes, do not sufficiently convincingly demonstrate that the bidding process at issue was conducted in a corrupt way, that is by paying bribes and by illegal practices on the side of Bariven's personnel".
"It follows from the above that the circumstances on which Bariven relied in support of its argument (...) undoubtedly raise questions as to the (legitimate) nature of Well's conduct. Wells has not submitted clear arguments to explain the purpose of the transactions with the other companies. Those transactions (...) in conjunction with the appointment of Mr. [registered agent] as an Agent for several other companies which are at least to a certain extent related to Mr. [X] , indicates that there is some connection between Wells and several of the companies mentioned in the Houston charging documents. Wells has also failed to give a convincing explanation for the 5% margin and the fees specified in the financials. The same applies for Wells' letter of 8 April 2016. Nevertheless, these circumstances - either in isolation or in conjunction with each other and with the other arguments, put forward by Bariven and discussed above - are in the Arbitral Tribunal's view not sufficiently concrete to constitute clear and convincing evidence that Wells has acted in a similar manner as the companies mentioned in the criminal proceedings, and, more specifically, do not prove that Wells has obtained the Purchase Order at issue in this arbitration by paying bribes to Bariven's personnel or with the (otherwise) illegal cooperation of this personnel. Although these circumstances do provide indications that Wells may have acted in a corrupt manner to win the contract, such indications are - bearing in mind the standard of proof as described above - not sufficient to support Bariven's defence."
"Although the circumstances discussed above do not provide sufficient substantiation for the alleged corruption, a substantial overpricing of the purchase price - the burden of proof of which lies with Bariven - could, in combination with these circumstances, possibly prove that the Purchase Order has been obtained by corruption."
"With regard to the alleged overpricing of the top drives, the Arbitral Tribunal agrees with Bariven that it must be assumed that the quotes of the vendors have been coordinated with one another. The mere fact that Wells has submitted the lowest bid with the shortest delivery time, does not - in the absence of other bids - allow for the conclusion that the Purchase Order is not overpriced".
"In view of the foregoing, the Arbitral Tribunal arrives at the conclusion that Bariven has not sufficiently proven its allegation that the top drives were (largely) overpriced."
"From the above it cannot be concluded that the Purchase Order has been obtained by Wells through the payment of bribes or other things of value to Bariven's employees and/or through their illegal activities. Therefore, the Arbitral Tribunal rejects Bariven's claims in so far as they are based on Article 3:40 (1) DCC."
"Only for the sake of completeness and as an obiter dictum the Arbitral Tribunal will discuss in a concise consideration the relevance it would have attributed to the transnational public policy had the Arbitral Tribunal deemed the Purchase Order to have been obtained through corruption. In that event - assuming that there is an inextricable link between the agreement to pay bribes and to act in a corrupt way on the one hand and the contract for the sale of goods on the other hand - pursuant to Article 3:40 (1) DCC the Purchase Order would have been null and void ab initio. The fact that the Purchase Order has been concluded for the sale of goods, does not alter this conclusion. In other words, the applicable Dutch law and the transnational public policy would lead to the same result. However, regarding the consequences of the nullity of the contract, the Arbitral Tribunal follows Wells in its opinion that these consequences must be determined in accordance with Dutch law. These consequences are set out in the sections 13.68 through 13.74 below (...)."