When corporate counsel and their outside lawyers think of conflicts of interest in the context of litigation or arbitration, what normally comes to mind is the typical situation. A lawyer is conflicted because her firm represents the opposing party in another matter, be it another litigation, another arbitration or a transaction. These types of conflicts are common and their resolution fairly routine. But what happens if it is the arbitrator’s law firm that represents one of the parties to the arbitration in another matter? Arbitrators, particularly in the field of international arbitration, are often partners in large firms. To complicate the situation, what happens if this conflicting representation is discovered after the arbitrator has already issued his ruling on the merits? As was made clear in a recent decision by Court of Cassation, the highest court of France, the consequences can be dire.
The facts of the French case are straightforward. Columbus Acquisitions, Columbus Holdings and Caribbean Fiber Holdings brought breach of contract claims against Auto-Guadeloupe Investissement (AGI) before the International Centre for Dispute Resolution (ICRD). At the time of his appointment, the sole arbitrator, Henri Alvarez, a partner with the Canadian firm Fasken Martineau, disclosed that his firm “has represented Leucadia National Corporation” but that “at present there are no matters” in which Fasken represented Leucadia. The reason this was critical is that Leucadia is the parent of Caribbean Fiber Holdings.
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