The Lagarde Prosecution: A Blow To Finality In Investor-State Arbitration?

On December 19, 2016, International Monetary Fund Managing Director Christine Lagarde was convicted of criminal negligence for failing, as French finance minister, to appeal an adverse arbitration award against a French government-owned company.  This criminal conviction suggests increasing peril for arbitral tribunals and government officials involved in international arbitration.  It remains to be seen whether this conviction impacts future decisions of state respondents who might otherwise be inclined to settle, recognize, or agree to pay for future commercial or investor-state awards issued against them.

Ms. Lagarde's conviction stems from her involvement in a decades-old case regarding controversial French businessman Bernard Tapie.  When Mr. Tapie was appointed as a French government minister in 1992, he was forced to divest his business interests, including his ownership of German apparel brand Adidas.  The deal was handled by a subsidiary of French state-owned