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flict was not identified. The arbitrator stated that conflict walls could be put
in place, and alternatively he was prepared to withdraw as arbitrator should
one or both of the parties request that he do so. AIL and SNC responded that
they wished to proceed with the individual acting as arbitrator, provided
appropriate conflict-avoidance measures (such as conflict walls) were put
in place. Neither requested further disclosure about the potential conflict.
The arbitrator issued his decision on July 15, 2016. He ruled in favour of
SNC, dismissing AIL’s claim and allowing SNC’s counterclaim.
The same day, and on reviewing the arbitrator’s decision, AIL wrote that
it had reason to further consider the First Disclosure Letter and requested
that the arbitrator provide additional details of the firm’s retainer with SNC,
including the members of the firm acting for SNC, the nature and duration
of the retainer and an estimate of the fees the firm earned for work performed
on that file.
The arbitrator’s response letter (the “Second Disclosure Letter”) stated
that during the time he acted as arbitrator in the dispute between AIL and
SNC, his firm acted on behalf of SNC in one matter beginning in March 2015
and in a second matter on behalf of a joint venture in which SNC was a joint
venturer beginning in July 2015. Both disputes were resolved by February
2016, and between the two matters, four lawyers from the firm billed
approximately $365,000 in legal fees. The arbitrator reiterated that he had
no involvement with, and was not privy to, any aspect of these two matters.
AIL then filed a petition seeking orders removing the arbitrator, vacating
the rulings and staying the arbitration. The legal basis for AIL’s petition was
that its consent was not properly informed, and was thus vitiated, because
the arbitrator had not disclosed material facts relating to the conflict.
AIL argued that four key differences between the First Disclosure Letter
and the Second Disclosure Letter showed inadequate disclosure by the arbitrator
for the purposes of AIL’s consent:
1. there were two separate retainers as opposed to the one indicated
in the First Disclosure Letter;
2. four lawyers of the arbitrator’s firm provided services to SNC as
opposed to one lawyer “engaged to act” as indicated in the First Disclosure
3. the Second Disclosure Letter disclosed very substantial legal fees
whereas the First Disclosure Letter did not; and
4. while the arbitrator may not have had any involvement with the
work on behalf of SNC, he clearly had an interest given the sizeable
fees to be paid to his firm.