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Cases on Conflict  

Example cases of conflict

Almazeedi v Penner [2018] UKPC 3 a former English Commercial Court judge, had been appointed as an ad hoc judge of jurisdiction A. He was also subsequently appointed as an ad hoc judge of jurisdiction B. In the event, X never sat in jurisdiction B and did not receive any remuneration for his role. In jurisdiction A, X sat on a case involving state bodies from jurisdiction B. Officers of those bodies were Ministers in jurisdiction B and who also had the power of appointment for ad hoc judges. The majority of the Privy Council held that the appointment as an ad hoc judge of jurisdiction B ought to have been disclosed and, having failed to do so, the decisions made by X could not stand.

 Hailburton v Chubb [2018] EWCA Civ 817 - the Court upheld the dismissal of a challenge to an arbitrator who had been appointed in linked arbitrations. All of the references arose out of the Deepwater Horizon incident: M had been appointed as chair by the Court (albeit he was Chubb's preferred candidate) in reference 1; had been appointed by Chubb in reference 2; and had been appointed in a reference concerning another insurer in the same layer as Chubb in reference 3. Although M disclosed on his appointment in reference 1 that he was then sitting in other (unrelated) references involving Chubb (including as its nominee), he did not disclose to Haliburton the appointments in references 2 and 3. The appeal from this decision has been heard in the Supreme Court and judgment is awaited.

Austrian Supreme Court (15 May 2019 Docket 18 ONc 1/19w) - the Supreme Court considered whether the fact that an arbitrator and a party counsel in one arbitration act as co-counsel in another unrelated arbitration (Point 3.3.9 of the Orange List of the IBA Guidelines on Conflicts) cast doubt on the arbitrator's independence and impartiality and thus disqualified him from acting as arbitrator in the arbitration under review. The arbitral tribunal rejected the challenge. The Supreme Court concluded that, in light of preserving arbitration as a method of dispute resolution, if an arbitrator and a counsel act as co-counsel in an unrelated case, such circumstance – in themselves – raise justifiable doubt as to the arbitrator's independence and impartiality. Thus, the court decided that the challenged arbitrator should be removed from the tribunal.

Monster Energy Company v City Beverages LLC (17-55813 9th Cir. 2019) – a JAMS arbitration could not stand when the arbitrator failed to disclose that he was a co-owner of JAMS which benefited, and he therefore benefitted, from repeat business from Monster, 

W v M [2016] EWHC 422 (Comm) The arbitrator was a partner in a law firm. He sat almost exclusively as an international arbitrator and had no involvement in the running of the law firm or the provision of legal advice to its clients. The firm regularly advised a company which had the same corporate parent as the respondent, and earned substantial remuneration from doing so. Before accepting the appointment, the arbitrator had completed the firm's conflict check systems. About a month later, it became public knowledge that the parent company had acquired the respondent.

The conflict check did not alert him to any relationship. The fair-minded observer would therefore conclude that the arbitrator was somebody who did not know the relationship between the two companies, rather than being somebody who "must have known" and whose credibility was therefore to be doubted because of his failure to make a disclosure. The court accepted that the arbitrator would have made a disclosure had he been alerted to the situation. That showed a commitment to transparency that would be relevant in the mind of the informed observer. It also showed that the arbitrator could not have been biased by the firm's work for the parent company, because if it had been in his mind, which it was not, he would have disclosed it.

Schmitz v Zilveti 20 F. 3d 1043 - the Ninth Circuit Court of Appeals vacated an award on evident partiality grounds where an arbitrator's law firm had represented the parent of the respondent in 19 cases over 35-years, albeit the arbitrator knew nothing of it.

New Regency v Nippon Herald 501 F. 3d 1101 - the arbitrator had begun a role with a company days before an award. The new employer was negotiating a contract with New Regency but there was no evidence that the arbitrator knew of the negotiations. The award was vacated.

Ometto v ASA Bioenergy 549 Fed. Appx. 41 - the arbitrator's firm had acted in certain transactions involving an affiliate of one of the parties that were not identified due to deficiencies in the conflict check system. The Court accepted that the arbitrator did not know of the conflicts and confirmed the awards. In seeking to enforce the awards in Brazil, however, the Brazilian Court refused recognition due to the undisclosed conflict, rendering the awards largely useless.


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