Conflicts of Interest A Surveyor Arbitrator’s Tale CIArb London Branch 19th June 2018 By

1. Conflicts of Interest A Surveyor Arbitrator’s Tale CIArb London Branch 19th June 2018 By Professor Graham F Chase FRICS FCIArb C.Arb FRSA Chairman Chase & Partners LLP 

2. RICS Ethical Code • There are five standards for RICS Members • Act with integrity • Always provide a high standard of service • Act in a way that promotes trust in the profession • Treat others with respect • Take responsibility

3. RICS ProfessionalStandard & Statements • RICS Members must comply & keep up to date which adds to defense • Professional Statement – a document that provides members with mandatory requirements or a rule that a member or firm is expected to adhere to. • Code of Practice – Document approved by RICS and endorsed by other stake holders with recommendation for accepted good practice – can be mandatory. • Guidance Note – documents that provide users with recommendations or approach for accepted good practice. • Information Paper – Provides users with latest technical information, knowledge or common findings from regulatory reviews.

4. RICS Practice Standards ‘Conflicts of Interest’ Guidance Note First Edition January 2012 • Recommended best practice England Wales & NI. • Not mandatory but reflects competence. • Members decide how to adopt on the merits of each case. • Provides up to date thinking and reflects RICS dispute resolvers status. • Incorporates “Traffic Light System” as an information paper.

5. Introduction to RICS GN Conflicts • Identifies the difference between the involvement of a dispute resolver because of their market exposure and the point at which a conflict may arise. • Each case to be judged on its merits. • Requires both rigour and flexibility. • The dispute resolver must act fairly but firmly. • Demands integrity and speed of execution. • Identifies the potential for manipulation of the ADR process and remedies to avoid the process being brought into disrepute.

6. RICS GN Definitions • Appointing party – the parties themselves. • Appointing body – a designated independent Appointer • Dispute resolver – the appointed surveyor: - Arbitrator - Independent Expert - Mediator - Adjudicator • Involvement – a connection of the dispute resolver with the parties or case. • Conflict of interests – the point at which justifiable doubts are raised on impartiality from an involvement. • Parties – the parties to the dispute.

7. Dealing with Possible Conflicts of Interest The Appointments Process • Appointing body has expertise on who to appoint. • Submission of relevant and full information is crucial. • Identity of the parties including related parties • Enabling contract details including Special requirements compliance • Unsupported statements, blankets lists or unsubstantiated objections • Parties attempting to manipulate the process will be noted • Ensure qualifications and expertise are relevant and sufficient. • Undertaking appropriate internal and external checks to establish extent of any involvement in the relevant past with the parties, property or subject matter (relevant past may be 5 years but can be shorter or longer periods).

8. Dealing with Possible Conflicts of Interest • The Actions of the Prospective Appointee • Examples of investigations to establish involvement/conflicts of interest: • - The subject matter • - The parties • - The property • - Comparable properties • - Existing appointments • - The representatives • - Business, family and friends connections • Investment / financial connections • Appropriate and full disclosure is critical. • The appointing body will decide an appointment based on the disclosures made by both the prospective appointee and the parties.

9. The Appointment • The appointing body will not appoint: - Where there is a pecuniary or other interest in the outcome of the dispute - Such appointment will raise a real possibility of bias in the eyes of a reasonably minded person • The appointing body will err on the side of caution • Where the involvement is remote the President will appoint. • Where there is uncertainty the appointing body may seek the views of the parties on the specific potential appointee before making a final decision. • Once the appointing body has made the appointment their involvement is at an end.

10. The dispute resolver must be impartial. • Each party is treated equally and fairly. • Two types of bias. • Direct interest or actual bias • Presumed or unconscious or apparent bias giving rise to the perception of bias. • Arbitration Act 1996 – S24 (1) (a) the court has the power to remove arbitrator where there are doubts to impartiality. • Test must be objective, not subjective. • Any judge who allows decisions to be influenced by partiality or prejudice deprives the litigant of their fundamental rights, (Locobail). • Equally the courts should hesitate before creating any special category of automatic disqualification – must be real danger than real likelihood (RvGoff). The Overriding Principle of Impartiality

11. Interface of Special Requirements and Conflicts • AA 96 S19 – the court shall have due regard to any agreement of the parties of the qualifications of the arbitrators. • Special requirements in rent review resolutions dispute clauses almost invite a conflict of interest to be a prerequisite to qualification. • Commonly used experience and qualifications requirements are as follows - Lettings (may specify a period of time) - Valuation - Active in the market - Minimum of 10 years experience - Director or partner of at least 5 years - Qualified chartered surveyor - Similar to the subject property - Similar to the permitted user - In the region - In the locality • Rarely does the requirement call for a specialist rent review surveyor or experience in the acquisition of property.

12. Better a dispute resolver who is acquainted with the subject matter of the dispute but impartial rather than an independent dispute resolver with no relevant knowledge or experience. • Once appointed the dispute resolver must be alert to deliberate attempts to manipulate and/or undermine the dispute resolver and/or the process of resolving the dispute. • Such expertise is likely to shape their approach. • Consequently the independence of the dispute resolver may be affected because of their involvement in markets but not their impartiality. Independence v Impartiality

13. Dealing with Possible Conflicts After Appointment • Duty of disclosure by a dispute resolver is continuous throughout the duration of the appointment. • Any involvements arising must be disclosed immediately to assess the potential for conflict. • The parties are also under a duty to raise new issues that arise relating to involvement as soon as such information comes to light. • Failure to raise potential conflicts in good time by a party may result in the ability being lost to object to the dispute resolver continuing.

14. Dealing with Possible Conflicts After Appointment • If a potential conflict is raised the dispute resolver should: • - Obtain full details in writing • - Notify the other party and invite their comments • Apply the overriding principles to the information secured. • Any doubts are to be resolved in favour of disclosure. • If it is agreed a conflict exists the dispute resolver should resign in an orderly fashion and allow for the reappointment of another. • If no agreement, legal advice may be necessary. • Deliberate attempts to manipulate the appointment or the process must not be tolerated.

15. The “Traffic Light System” developed from the IBA guidelines (but not the same) is designed to assist the assessment of involvement v conflict • It is not meant to be prescriptive. • Provides practical examples. • Provides assistance in deciding when an involvement should be disclosed or may become an actual or perceived conflict of interest. • The traffic light examples are not exhaustive and cannot expect to cover every situation but it is hoped they will assist the parties and the dispute resolver in assessing the merits of conflicts of interest within their own cases. Traffic Light System

16. Traffic Light System • The traffic light information paper is in three parts as follows: • The red list, is in two parts and consists of a non-waivable list (which excludes appointment) and a waivable list (where the parties can agree to appoint). • The orange list sets out some specific involvements where a dispute resolver has a duty to disclose but which may not preclude an appointment • The green list contains some specific involvements where no appearance of, and no actual, conflict of interest exists.

17. The dispute resolver is a representative of a party in the dispute or there is some other direct relationship. • The dispute resolver has a controlling influence over one of the parties. • A close family member of the dispute resolver has a notable financial interest in the outcome of the dispute. • A close family member of the dispute resolver has a significant financial or controlling interest in one of the parties or an associate of one of the parties Non-waivable red list- examples

18. The dispute resolver regularly acts for one of the parties to the dispute. • The dispute resolver is a member of the same firm as the representative of one of the parties. • The dispute concerns a rental valuation and the dispute resolver, or his or her firm, is acting on a comparable property that may be taken up as evidence on the subject property. • Where a dispute resolver is already appointed as an independent expert and is then invited to become an arbitrator on a case that is linked to or is subject to the arbitrator’s decision on the other case when he or she is acting as the independent expert. • The dispute resolver or his or her firm represents a party or an associate to the arbitration on a regular basis but is not involved in the current dispute Waivable red list- examples

19. The dispute resolver has within the recent past served as an adviser for one of the parties or an associate of one of the parties, or has previously advised or been consulted by the party or an associate of the party making the appointed in an unrelated matter, but the dispute resolver and the party or the associate of the party have no ongoing relationship. • The dispute resolver’s firm has within the relevant past acted for one of the parties or an associate of one of the parties in an unrelated matter without the involvement of the dispute resolver • A close family member of the dispute resolver is a partner or employee of the firm representing one of the parties but is not assisting with the dispute. • The dispute resolver is asked to act as arbitrator where he or she has acted as independent expert in the relevant past on a related dispute Orange list - examples

20. The dispute resolver has previously published a general opinion (such as in a law review article or public lecture), concerning an issue which also arises in the dispute (but this opinion is not focused on the case that is being determined). • A firm in association or in alliance with the dispute resolvers firm, but which does not share fees or other revenues with the dispute resolver’s firm, renders services to one of the parties in an unrelated matter. • The dispute resolver has been considered for private appointment on the subject dispute, but this was not taken up. • The dispute resolver has in the past served as adviser against one of the parties or an associate of one of the parties in an unrelated matter. • The dispute resolver’s firm is currently against one of the parties or an associate of one of the parties on other areas. Green list - examples

21. Appointment & Conflicts flow Chart