Ioannis Alexopoulos, Duncan Grieve, Pietro Grassi, and Ariane Fuller discuss how major corruption scandals often extend beyond criminal convictions, in Thomson Reuters Regulatory Intelligence

Major corruption scandals often have lasting effects beyond criminal trials. For example, years after the height of Brazil’s Operation Car Wash, related disputes continue to surface. A recent example is the ongoing litigation between Seatrium and Keppel, where a later signed leniency agreement with the Brazilian authorities recently prompted a USD 53 million SIAC arbitration—illustrating how corruption’s tentacles extend deep into commercial relationships and generate a complex web of secondary liabilities that keep arbitrators occupied long after the original scandal has faded.

The Anatomy of Post-Corruption Commercial Disputes

Operation Car Wash’s impact on international arbitration can be categorised into several distinct waves of claims.

Contract termination disputes formed the initial wave. As corruption allegations emerged, counterparties moved swiftly to terminate major contracts with implicated businesses. As these included Latin America’s largest construction and infrastructure firms, many projects were impacted across a range of sectors. A clear example is the dispute between Vantage Deepwater and Petrobras—Brazil’s largest state-owned company and a central figure in the investigations. In 2012, Vantage leased an oil drilling rig to Petrobras for eight years. Petrobras terminated the contract in 2015, following the exposure of the corruption scheme during the Car Wash investigations, alleging the contract had been procured through corruption. This prompted Vantage to file a USD 700 million ICDR-AAA claim. Despite Petrobras’s corruption-based justification, Vantage ultimately prevailed, with the award paid in 2019—demonstrating that corruption allegations alone do not always justify contract termination under commercial law principles.[1]

Investment treaty claims represent perhaps the most significant category by value. Odebrecht Latinvest’s ongoing ICSID claim against Peru seeks over USD 1.2 billion for the cancellation of the South Peruvian Pipeline concession in 2017 following the uncover of Odebrecht’s corruption action throughout Latin America. Similarly, Enagás’s related USD 1.98 billion ICSID claim over the same pipeline project demonstrates how multiple investors in a single project can generate parallel proceedings when corruption investigations trigger government action.[2]

Indemnification disputes have emerged as another category, often surfacing years after initial investigations conclude. The recent Keppel v. Seatrium case, discussed further in the next section, illustrates this trend. After Seatrium’s USD 134 million settlement with Brazilian authorities in 2024, Keppel sought USD 53 million under merger-related indemnity provisions, arguing that Car Wash-related losses were covered by their transaction agreements. Seatrium countered that the indemnity had expired before any binding settlements were reached—highlighting the temporal complexities of corruption cases that unfold over many years.[3]

Shareholder claims have also arisen, as the share value of implicated entities fell precipitously due to commercial and reputational damage. Petrobras faced several shareholder claims submitted through the Market Arbitration Chamber (CAM) of the B3 stock exchange. Shareholders argued that Petrobras’s directors and managers were aware of the company’s criminal conduct and failed to act transparently toward shareholders. Although the proceedings are fully confidential, Petros Fundação reportedly claimed USD 2.11 billion in losses, while the California Public Employees’ Retirement System, a U.S. pension agency, reportedly claimed USD 210 million. Two other minor Petrobras investors reportedly filed claims totalling USD 34 billion.[4]

Offshore construction disputes formed another major cluster. As will be discussed further, the collapse of Brazilian shipbuilder Sete Brasil amid the Car Wash investigations triggered over USD 5 billion in claims from Asian shipyards over cancelled drillship and rig construction contracts, with most disputes settling between 2019 and 2020.[5]

The Ripple Effect: How Corruption Creates Commercial Uncertainty

What makes Car Wash particularly instructive is how corruption investigations create cascading commercial uncertainty that extends far beyond the immediately implicated parties. Consider the timeline: initial investigations began in 2014, but related arbitration claims continue emerging in 2025—over a decade later.

This creates particular challenges for commercial parties. Unlike discrete business disputes, corruption scandals evolve unpredictably as investigations unfold, prosecutors negotiate leniency agreements, and regulatory settlements are reached. Parties may find themselves defending contract terminations based on preliminary allegations that later prove unfounded, or conversely, discovering that counterparties face massive settlements that impair their commercial viability.

The several disputes arising between Singaporean companies illustrates this complexity. The disputes began with MHWirth signing seven contracts to supply drilling equipment to Jurong, which was building drill ships for Sete Brasil—a company created by Petrobras. Jurong, was owned by Singapore’s state-run Sembcorp Marine, a company that later merged with Keppel in 2023 to form Seatrium.[6]

Following the Car Wash investigations, Jurong suspended and eventually terminated the contracts signed with MHWirth. MHWirth responded by initiating arbitration in late 2021, seeking around USD 76 million in unpaid invoices, costs, and interest under four of the contracts. That was only the first dispute arising out of Operation Car Wash.

Sete Brasil—the company at the end of the chain in all those commercial relationships—began facing severe financial difficulties. The company was blocked from accessing previously approved bank loans intended to fund its contracts with Singaporean companies.[7] Eventually, Sete Brasil filed for bankruptcy, prompting Sembcorp to initiate arbitration to protect its interests in 2016. That dispute was eventually settled in 2020.[8] However, the ripple effects of Operation Car Wash continued.

In February 2024, Seatrium announced an “in-principle” leniency agreement with Brazilian authorities, agreeing to pay USD 182.4 million. Under the merger terms, Sembcorp Marine had agreed to indemnify Keppel for claims arising within 24 months. When Seatrium finalized leniency agreements in 2025, questions arose about whether these settlements triggered indemnity obligations. Keppel later filed a USD 53 million SIAC claim against Seatrium.[9]

These disputes underscore how long-running corruption investigations can create uncertainty in commercial risk allocation and disputes that continue to arise almost one decade after the outbreak of the operation.

Practical Implications for International Arbitration Users

The Car Wash experience offers several practical lessons for international arbitration users navigating corruption-adjacent disputes.

Evidence preservation becomes critical when corruption investigations commence. Parties must secure business communications, financial records, and decision-making documentation early. These materials may become relevant to both criminal proceedings and commercial disputes that emerge years later.

Contractual risk allocation requires careful consideration of corruption-related scenarios. Standard contract clauses often prove insufficient for corruption scenarios. Parties should include specific provisions addressing government corruption investigations, cooperation requirements, and settlement cost allocation rather than relying on general force majeure or termination clauses.

 Interim relief strategies become particularly important given the extended timelines typical in corruption-adjacent commercial disputes. Parties may need to secure assets or maintain business relationships pending resolution of both criminal and regulatory investigations and related commercial claims. Tribunals’ willingness to grant interim relief may depend partly on the strength of underlying corruption allegations and their impact on commercial relationships.

Settlement timing and structure require careful coordination with ongoing criminal and regulatory proceedings. Parties must balance commercial resolution needs against potential prejudice to criminal defence strategies or regulatory cooperation agreements. The complexity illustrated by the Seatrium indemnity dispute demonstrates how settlement timing can determine liability allocation under commercial agreements.

Consistent narrative has also proven to be key. Corruption allegations alone are insufficient to void agreements. Parties must present evidence and demonstrate consistency between their claims and their post-discovery conduct—actions taken after alleged corruption came to light carry significant weight.

Conclusion: Preparing for Corruption’s Commercial Aftermath

Operation Car Wash shows that major corruption scandals do not end with criminal convictions. They ignite years of complex commercial and arbitration disputes. For practitioners and businesses alike, the lesson is clear: corruption reshapes contracts, relationships, and risks long after the investigations close. Those who anticipate the fallout (by preserving evidence, allocating risks smartly, and coordinating across legal fronts) will be best positioned to navigate and even leverage the turbulent landscape that follows.

[1] Vantage Deepwater Company, Vantage Deepwater Drilling, Inc. v. Petrobras America Inc., Petrobras Venezuela Investments & Services, BV, Petróleo Brasileiro S.A. (Petrobras Brazil), ICDR Case No. 01-15-0004-8503, Final Award, 29 June 2018.

[2] Global Arbitration Review, Spanish investor wins claim against Peru over Odebrecht project, 2 January 2025. Available at: https://globalarbitrationreview.com/article/spanish-investor-wins-claim-against-peru-over-odebrecht-project, last accessed on 9 September 2025.

[3] Singapore Law Watch, Keppel to start arbitration against Seatrium for SUSD 68.4 million related to Brazil corruption probe, 27 August 2025. Available at: https://www.singaporelawwatch.sg/Headlines/keppel-to-start-arbitration-against-seatrium-for-s684-million-related-to-brazil-corruption-probe, last accessed on 9 September 2025. See also in CNA, Keppel files for SUSD 68.4 million claim against Seatrium over Brazil corruption case, 25 August 2025. Available at: https://www.channelnewsasia.com/business/keppel-files-claim-against-seatrium-brazil-corruption-5315111, last accessed on 9 September 2025.

[4] Global Arbitration Review, Petrobras defeats shareholder claim over Lava Jato, 17 September 2024. Available at: https://globalarbitrationreview.com/article/petrobras-defeats-shareholder-claim-over-lava-jato, last accessed on 9 September 2025.

Global Arbitration Review, Petrobras wins another dispute with investors over Lava Jato, 13 January 2025. Available at: https://globalarbitrationreview.com/article/petrobras-wins-another-dispute-investors-over-lava-jato, last accessed on 9 September 2025.

[5] Global Arbitration Review, Singaporean state-owned entity liable in oil drilling dispute, 18 April 2024. Available at: https://globalarbitrationreview.com/article/singaporean-state-owned-entity-liable-in-oil-drilling-dispute, last accessed on 9 September 2025.

[6] Global Arbitration Review, Singaporean state-owned entity liable in oil drilling dispute, 18 April 2024. Available at: https://globalarbitrationreview.com/article/singaporean-state-owned-entity-liable-in-oil-drilling-dispute, last accessed on 9 September 2025.

[7] Offshore Energy, Sete Brasil reaches settlement with Singapore’s rig builders, 7 October 2019. Available at: https://www.offshore-energy.biz/sete-brasil-reaches-settlement-with-singapores-rig-builders/, last accessed on 16 September 2025.

[8] Keppel, Keppel reaches a settlement with Sete Brasil, 7 October 2019. Available at: https://www.keppel.com/media/keppel-reaches-settlement-with-sete-brasil-6853/, last accessed on 16 September 2025.

[9] Global Arbitration Review, Singapore rig builder faces SIAC claim after settling corruption probe. Available at: https://globalarbitrationreview.com/article/singapore-rig-builder-faces-siac-claim-after-settling-corruption-probe, last accessed on 16 September 2025.