Ethical Issues in Arbitration

Transcription

1 Ethical Issues in Arbitration Ted Frankel August 16, 2016 Cassels Academy of Continuing Professional Development CPD (ON): 30 minutes of Professionalism. Cassels Brock has been approved as an Accredited Provider of Professionalism Content by the Law Society of Upper Canada.

2 Quote Woe to you lawyers also! For you load men with burdens hard to bear, and you yourselves do not touch the burdens with one of your fingers. Jesus to the Pharisees, Luke slide 2

3 Jacob Securities Inc. v Typhoon Capital B.V., 2016 ONSC 604 (CanLII) Applicant Jacob Securities (I-Bank) introduced Respondent Typhoon (Renewable Energy) to a prospective source of financing, Northland Power Inc. and Northland Capital Inc. Northland invested in one of Typhoon's wind-energy projects, Project Gemini Jacob Securities then claimed it was entitled to compensation from Typhoon for making the introduction slide 3

4 Jacob Securities v. Typhoon (cont d) Parties appointed Thomas Heintzman (experienced arbitrator; formerly litigation partner with McCarthy Tetrault) Heintzman advised the parties that he had no previous dealings with the companies or with their individual principals However, he did not undertake a conflict search with McCarthys slide 4

5 Jacob Securities v. Typhoon (cont d) October 2015: Heintzman dismissed Jacob Securities claim, following arbitration J.S. retains new counsel to challenge the arbitration outcome Allege bias or lack of independence/impartiality: McCarthys had previously acted for Northland Power Inc. (once) McCarthys had represented the underwriters on four separate Northland offerings, including Project Gemini slide 5

6 Jacob Securities v. Typhoon (cont d) Arbitration governed by the International Commercial Arbitration Act, R.S.O 1990, c. I.9., which adopts the Model Law Justice Mew: challenges to an arbitral award based on reasonable apprehension of bias amount to claims of unequal treatment (contrary to Article 18 of the Model Law ) Court has jurisdiction to rule on J.S. s application if not accordance with agreement of parties or not in accordance with the Model Law (Articles 34 and 36 of the Model Law) slide 6

7 Jacob Securities v. Typhoon (cont d) Worthy challenge or ticky-tack? Justice Mew: The application is, ultimately, a thinly disguised attempt to avoid the consequences of an adverse decision on the merits. (para. 24) Strong presumption of judicial impartiality, which is equally applicable to arbitrators whose function is in the nature of judicial determination (para. 40) Here, Heintzman did not work on any matters involving Northland and had no knowledge of McCarthys relationship with Northland or Northland s underwriting of various projects, including Project Gemini slide 7

8 Jacob Securities v. Typhoon (cont d) Nothing to suggest that Heintzman could not approach with an open mind Further argument: J.S. deprived of opportunity to make informed decision re. arbitrator Justice Mew: positive duty to investigate any potential conflicts of interest with current law firm But search at former firm of all clients (and potential witnesses!) would be a burdensome exercise and wholly disproportionate response to the duty to disclose slide 8

9 Jacob Securities v. Typhoon (cont d) Applic. dismissed with substantial indemnity costs, to deter losing parties in international commercial arbitrations from launching baseless ex post facto challenges to an arbitrator s impartiality (para. 64) Justice Mew: one of key benefits of commercial arbitration is finality slide 9

10 Selecting an Arbitrator: Tips for In-house Counsel Deal with independence/bias issue head-on, to avoid any taint of impartiality later Communicate in writing Include all counsel on correspondence and at meetings Consider all variables that could lead a reasonable observer to question, one day, whether arbitrator approached with an open mind slide 10

11 Scenario #1 You ask a prospective arbitrator if she has any conflict in arbitrating a dispute between your employer (a private company) and another private company. The arbitrator tells you that neither name rings a bell nor suggests any reason for concern. Should you tell the arbitrator to go further? Should you furnish her with a list of owners, likely witnesses, subsidiary affiliates, etc? slide 11

12 Scenario #2 You meet an arbitrator at a party and mention that you are about to serve a notice of arbitration. You are impressed with the arbitrator and say, Let me buy you lunch. I d like to discuss possibly appointing you. What are the limits and best practices surrounding preappointment interviews and discussions with an arbitrator? slide 12

13 Cassels Brock & Blackwell LLP Suite 2100, Scotia Plaza Suite 2200, HSBC Building Suite 1250, Millennium Tower 40 King Street West 885 West Georgia Street 440 2nd Avenue SW Toronto, ON Canada M5H 3C2 Vancouver, BC Canada V6C 3E8 Calgary, AB Canada T2P 5E9 Tel: Tel: Tel: Fax: Fax: Fax: Ethical Issues in Arbitration 2016 CASSELS BROCK & BLACKWELL LLP. ALL RIGHTS RESERVED. This document and the information in it is for illustration only and does not constitute legal advice. The information is subject to changes in the law and the interpretation thereof. This document is not a substitute for legal or other professional advice. Users should consult legal counsel for advice regarding the matters discussed herein.