Should an arbitrator have to disclose that he or she attended the same law school decades before with counsel now representing an opposing party involved in a dispute?

Yes  according to the Ukrainian government, which raised that very challenge before the International Centre for Settlement of Investment Disputes (ICSID) in a request to disqualify an arbitrator earlier this year.

In Alpha Projecktholding GmbH v. Ukraine, the respondent challenged Israeli arbitrator Yoram Turbowicz because he and the claimant's counsel had attended Harvard Law School together about 20 years earlier  a fact that Turbowicz did not disclose.

Ukraine also alleged that counsel for the claimant Austrian company, Leopold Specht, had a brief phone call with Turbowicz regarding his availability to serve on the three-person tribunal, and argued that Turbowicz's lack of arbitration experience suggested his selection was motivated by an absence of independence and impartiality.

However, in March, the panel's other two arbitrators dismissed the complaint and found that the shared educational experience of a counsel member and an arbitrator did not constitute either a relationship, under the ICSID's Rules of Procedure for Arbitration Proceedings, or a contravention of the principles of independence and impartiality capable of influencing the arbitrator's freedom of decision-making, as reflected in the International Bar Association's (IBA's) Guidelines on Conflicts of Interest in International Arbitration.
Furthermore, in their decision, the two panelists stated they were unaware of any rule that either forbids or discourages an inquiry via a phone call, and that prior arbitral experience in an ICSID case is not a sine qua non to appointment as an ICSID arbitrator because, if it were, there would never be a first time for anyone, obviously an impossibility.

Had the panel ruled in favour of Ukraine's request, it could have set a difficult precedent for arbitrators in the future, according to Rachel Bendayan, who practises in the area of litigation and international arbitration with Ogilvy Renault LLP in Montreal and who has studied the Alpha v. Ukraine case regarding a 1996 agreement on the promotion and reciprocal protection of investments between Austria and Ukraine.

If we increase the amount of information an arbitrator has to disclose, there's a possibility that we will open the door to more challenges.

She says the world of international arbitration consists of such a small pool that arbitrators know of each other.
 
For many of them, their integrity is more important and don't let who they know impact their decision-making.

More onerous obligations on arbitrators to disclose information is an unfortunate development, says Joel Richler, a senior member and past co-chair of the litigation group at Blake, Cassels & amp; Graydon LLP in Toronto.

Potential conflicts are being used by parties for tactical advantage. The reason that's happening is because anytime you get to arbitration, it's more likely one party doesn't want to co-operate, as they should be in getting the thing dealt with efficiently  and that's usually the party with the weaker case, says Richler, who is certified by the Law Society of Upper Canada as a specialist in civil litigation.

Just like litigation, it's still an adversarial system. And while it's nice to think that people arbitrate in a friendly way  that just doesn't happen.

Bendayan explains that the IBA Guidelines set out colour-coded (red, orange and green) general standards regarding situations that might constitute conflicts of interest or that should be disclosed.

For instance, an arbitrator who is also a legal representative of an entity that is a party in the arbitration falls under the non-waivable red list, or an unacceptable situation, according to the IBA Guidelines. An arbitrator who has either given legal advice or provided an expert opinion on the dispute to a party or an affiliate of one of the parties, or who has previous involvement in the case is cited on the waivable red list, and is admissible if both parties agree.

The orange list consists of situations (such as the arbitrator has within the past three years served as counsel for one of the parties but both have no ongoing relationship) that may give rise to justifiable doubts as to the arbitrator's impartiality or independence.
Meanwhile, membership in the same professional association or social organization and service together as arbitrators or as co-counsel are acceptable situations on the green list and require no disclosure.

As the decision on the respondent's proposal to disqualify Turbowicz in Alpha v. Ukraine stated, long-ago acquaintanceship at school has neither the currency of co-membership in some professional or social group nor the professional intimacy of prior service as co-arbitrator or as co-counsel and was not perceived by the drafters of the IBA Guidelines as the kind of relationship that was deemed worthy of any mention even in the 'green list' of fact patterns, much less the 'orange list' or 'red list.'

The two panel members also noted that a requirement to disclose trivial or superficial facts will prove burdensome to parties and arbitrators; will unnecessarily circumscribe the freedom of choice in the selection of party-appointed arbitrators; and will encourage frivolous challenges.

But such challenges are becoming more frequent, says Bendayan.

Some practitioners are worried that they're seeing too much of it and that it's taking away from the interesting and beneficial aspects of arbitration, which was always meant to be an easier, less-expensive and quicker way to get a dispute resolved without going to court.

Now proceedings could get much longer  and if a dispute gets argued before an arbitrator who gets replaced, it will also mean starting over and going through the process twice.

Currently in three-person panels, both parties each appoint an arbitrator, and the third  who serves as president or chairman of the tribunal  is chosen either by the arbitrating body or by the other two arbitrators.

One of the reasons why arbitration became so popular is that the parties appoint somebody who is an expert in their area or business and understands the issues, Bendayan explains.

So while eyebrows may be raised if an arbitrator has been appointed by one of the parties on three or more occasions [an IBA orange-list item], it's probably because that arbitrator calls it as he sees it or is very good at what he does, rather than being in cahoots with the party.

Richler, who has been involved in both domestic and international arbitrations, says the main reason why parties choose this process is to get out of the courts and pick their judge.

Because that's such an important feature it becomes the focal point of an argument. If I'm arbitrating a case against you and know that you've got a preference for a particular individual as an arbitrator, it might suit my interest to put you through the hoops to find somebody else.

And those hoops could become ridiculous and involve an arbitrator being potentially challenged for having dinner with a lawyer for the opposing party years before.

So far, Richler hasn't seen it reach that level in Canada.

I'm a fellow of the Canadian College of Construction Lawyers, and any time I want to propose an arbitrator of any quality in Canada on a construction case, it is likely  not certain  that person is going to be a member of the college. And when I nominate Joe Blow, he has to write a letter to all counsel involved in the case saying he's a member of the college, as is Mr. Richler, and that we meet occasionally at social functions.

I've never seen that turn into a problem in Canada  and it shouldn't be.

But if disclosing information becomes too burdensome, it could find potential arbitrators reluctant to serve on tribunals in the future, says Richler, who five years ago led the successful prosecution in MPI Technologies v. Xerox, an international arbitration claim for royalty payments and copyright infringement arising from a software licensing agreement that resulted in an award of more than US$100 million for MPI.

If I'm picked as an arbitrator and have got to tell you who my friends are, that type of disclosure is a bit of an overreaction  and I think it will sort itself out. The rules are always being looked at. If it ends up in the courts, they will give some guidance as to what's relevant and what's not.

I think that ultimately, sanity will prevail.

It is all part of the growing pains of arbitration, says Bendayan.

It has become so popular as a means of dispute resolution and people involved have developed into a community that all know each other that it was bound to happen.

I'm a huge proponent of arbitration and believe the system strikes the right balance in making sure that decision-makers are impartial, and that disputes get heard and don't get bogged down by side issues.

Every trial is a battle for the sympathies of the adjudicator. If the trier-of-fact sees the opposite party as the victim, anything can happen. This is particularly true in the employment context, where the courts often see an imbalance in the relationship  in favour of the employer  ​in the first place. And one of the fastest ways for an employer to lose the sympathy of the judge is to be perceived as  insensitive or heavy-handed in dealing with an employee who claims to have a medical problem.

Recent Ontario history provides a stark reminder. In Honda Canada Inc. v. Keays, [2008] S.C.J. No. 40, Keays was essentially a data-entry operator when he became unwell and was diagnosed with chronic fatigue syndrome. He received disability benefits for a number of months, until the insurer decided he was well enough to return to work, and terminated benefits. In spite of this conclusion by the insurer's doctors, Honda allowed Keays to take time off work under its own disability program, which simply requires doctor's notes to confirm the basis for each period of absence.

When the absences became more frequent and the medical notes less instructive, Honda attempted, ultimately under threat of termination, to have Keays see its own occupational medicine specialist, in the hope that the specialist could work with Keays' doctor to better understand Keays' problem, and ultimately come up with an effective solution.

The judge of first instance described Honda as a leviathan who had engaged in a protracted corporate conspiracy to harass and intimidate Keays, and awarded him $500,000 in punitive damages, plus another $610,000 in premiumed costs. Fortunately for Honda, two appeal levels later, and far removed from the emotion of the trial, the Supreme Court of Canada eliminated the punitive damages altogether, and reduced the costs award to the standard level.

A similar scenario played itself out in Piresferreira v. Ayotte, [2010] O.J. No. 2224. Piresferreira was very much what might be termed a thin-skulled plaintiff, described by colleagues as nervous and sensitive, and already seeing a psychiatrist when her demanding and aggressive supervisor lost control one day and gave Piresferreira a shove. Piresferreira did not feel that the employer did enough to reprimand the supervisor (although in fact it had), and never worked again.

The trial judge held Bell vicariously liable and awarded the employee in excess of $500,000 for both negligent and intentional infliction of mental harm. Once again, fortunately for the employer, the appeal court intervened and found that the presumed negligence tort does not exist in the employment relationship and the tort of intentional infliction of mental harm had not been made out.

No such appeal, however, exists for the employer in Greater Toronto Airports Authority v. PSAC, 100 C.L.A.S. 371, an arbitration award under a collective agreement, where the only remedy is by way of the reasonableness standard on judicial review (application pending).

In PSAC, the grievor was a respected and well-liked employee of 23 years who injured her knee at work. She attempted to continue working, but ultimately had to have surgery. The doctor prescribed six weeks of rest, but the grievor asked him to change the note to four weeks, so that she could return to work earlier.

In the course of the four weeks the employer happened to catch the grievor on videotape, while conducting surveillance of her common-law partner. Continued surveillance showed the grievor engaging for short periods in various physical activities, without a discernible limp.

The employer called the grievor in and demanded a note from her doctor as to whether she could return to work immediately, with or without restrictions. Her surgeon reluctantly agreed to having her return early, with restrictions. On her return to work, the grievor was observed limping noticeably. The employer then confronted her with the inconsistent movements captured in the earlier surveillance, and, not accepting her explanations, fired her for fraud.

The grievor, who, as the employer was aware, had suffered a nervous breakdown previously, was devastated, and, the arbitrator found, suffered severe psychological damage as a result. Arbitrator Owen Shime found the employer's treatment of the grievor to have been egregious and devoid of foundation, and awarded the grievor $500,000 under assorted heads of damages.

While the bulk of those damages were attributable to lost earnings for both the past and future, the case highlights some of the difficulties employers face in managing absenteeism and disabilities. First, videotape or other surveillance evidence will be examined carefully to ensure that it does definitively disclose activities inconsistent with the putative disability; being able to do certain tasks on a controlled and limited basis does not necessarily translate into an ability to be back in the workplace. Second, (absent a pattern) the shorter the time off, the more difficult it is to prove malingering; in PSAC, the employee was still in her initial four weeks (of a recommended six weeks) following surgery.

Beyond PSAC, however, in dealing with cases of disability, the onus is always on the employer to demonstrate that, prior to terminating, the employer has attempted to accommodate the employee to the point of undue hardship. Under some provinces' legislation (Ontario's, for example) the factors an employer is entitled to rely on in meeting that onus are limited essentially to cost and health and safety.

Recent decisions have emphasized that there is a process side to the duty to accommodate as well as a substantive side; that is, whatever its conclusion, the employer must demonstrate that it fairly evaluated the medical evidence submitted, and that it seriously turned its mind to the question of what accommodation might be available.

The medical evidence is the key. If there is no recent update from the employee's doctor at the point when the employer is considering termination, the employer needs to ask for one. The Supreme Court of Canada in both McGill University Health Centre v. Syndicat des employés de l'Hôpital général de Montréal,  [2007] S.C.J. No. 4, and now Hydro-Québec v. Syndicat des employé-e-s de techniques professionnelles et de bureau d'Hydro-Québec, section locale 2000, [2008] S.C.J. No. 44, have told us that a claim of disability need not forestall termination forever  but it all depends on the medical prognosis.

Mort Mitchnick is national counsel at Borden Ladner Gervais LLP in Toronto and Ottawa and is a specialist in human rights and wrongful dismissal law.

The Ontario government has finally corrected a miscarriage of justice caused by the application of a harsh and inappropriate $15,000 statutory deductible that commonly applied to claims by family members following the death of a loved one in a motor vehicle accident in Ontario.

As of Sept. 1, the controversial deductible has been eliminated in all cases of death caused directly or indirectly by a motor vehicle accident in Ontario. The logic behind a statutory deductible is generally considered to be to deter modest claims by those with modest injuries  but since cases of death are by necessity serious cases, that logic never applied. In fatality cases, family members are rightfully angry and want justice both in the criminal and civil context for the premature death of their loved ones.

Even though the pre-Sept. 1 legislation provided a vanishing deductible where no deductible applied to claims under the Family Law Act of Ontario for compensation for loss of care, guidance and companionship in excess of $50,000, many valid claims by loved ones were often substantially or entirely wiped out by the $15,000 deductible that otherwise applied.

While the elimination of the fatality deductible is most welcome, the interpretation and implementation of the new subsection of the Ontario Insurance Act eliminating the deductible may lead to some confusion and uncertainty.

As part of Bill 16, Creating the Foundation for Jobs and Growth Act, 2010, the Ontario government amended s. 267.5 of the Insurance Act by adding subs. 267.5 (8.1.1). This new subsection eliminates the statutory deductible, as of Sept. 1, for claims in respect of a person who dies as a direct or indirect result of an incident that occurs after August 31, 2010.

Removing the deductible in situations where the death is an indirect result of a motor vehicle accident may revive long-standing disputes on the relationship between a motor vehicle accident and an injury. Those disputes addressed the fundamental issue of whether someone was in an accident, as defined by the Statutory Accident Benefit Schedule (SABS), so as to be entitled to no-fault benefits. Older versions of the SABS defined accident to include injuries directly or indirectly resulting from a motor vehicle accident, while the newer and current definition of accident narrows the definition to injuries directly related to a motor vehicle accident.

As a result of the inclusion of the word indirect in new subs. 267.5 (8.1.1), any time a claimant dies with an outstanding tort claim, his family members will want to argue that the death was a direct or indirect cause of the accident and that no deductible ought to apply to their claims.

Also of interest is the fact that new subs. 267.5 (8.1.1) does not include a deadline for what might be considered a direct or indirect accident-related death. By comparison, under the SABS, a death benefit is payable if an insured person dies within either six months (180 days) of the incident, or three years (156 weeks) if the person was continuously disabled as a result of the accident.
Recognizing that the deducible already does not apply in cases where the amount of the Ontario Family Law Act claim exceeds $50,000, there nevertheless are some interesting scenarios that can arise from this new provision.

For example, imagine a grandparent injured in an accident. Typically, claims under the Family Law Act of Ontario by grandchildren would be largely or entirely wiped out by the $15,000 deductible. Now, however, if injured grandparents happen to die indirectly from their injuries, these claims will be viable, as no deductible will apply. Alternatively, plaintiff's counsel may now, in cases where eventual death from injuries is expected, rightfully suggest at mediation that no deductible should apply to the Family Law Act claims.

There is also the question of how limitation periods would be applied where a claim that is not otherwise financially viable becomes viable following the death of a loved one.

In addition to eliminating the fatality deductible, Bill 16 amends sections of the Insurance Act dealing with past income loss claims in tort. The amendments serve to synchronize past income loss claims in tort with the new 70 per cent gross income calculations used for income replacement benefits as of Sept. 1 under the new SABS.

The elimination of the statutory deductible in fatality motor vehicle claims is an overdue and appropriate change that hopefully will be implemented in a way that recognizes the severe emotional impact caused by the premature death of a loved one.

Darcy Merkur is a partner at Thomson, Rogers in Toronto, practising plaintiff's personal injury litigation, including plaintiff's motor vehicle litigation. He has been certified as a specialist in civil litigation by the Law Society of Upper Canada and is the creator of the Personal Injury Damages Calculator.

For most law firms across Canada, workplace diversity is not a new concept. In fact, on many levels it is a coveted goal. Fostering an environment that attracts the best and brightest regardless of background, creed, gender, race or religion can be a competitive advantage for your firm.

Yet, despite its benefits, many firms struggle with how to implement diversity initiatives effectively. For those who have traced the various iterations of this movement from equal opportunity to affirmative action to employment equity diversity can seem like just another buzzword. As a result, it is often approached merely as a policy or regulatory mandate, rather than as a competitive differentiator. This mindset can do more than scuttle your diversity efforts. It can also prevent you from achieving your long-term business goals.

The diversity imperative
In most circles, and within most organizations, people generally agree that it makes good business sense to place all employees on a level, non-discriminatory playing field. But beyond the gratification of occupying the moral high ground and avoiding the risk of penalty under the Employment Equity Act, there are other factors at play.

The makeup of the changing talent pool will place practical parameters on a firm's talent acquisition activities. According to Statistics Canada, population projections show that net immigration may become the only source of population growth by about 2030 and could account for virtually all net labour growth by 2011.

With this trend in employee demographics, firms will find themselves operating in an increasingly ethnically diverse marketplace, not only culturally but in terms of shifting gender roles/identities and a rising number of employees with disabilities. A growing number of available new hires will fall into these categories, and firms that do not keep up by adopting a responsive, adaptive diversity policy may find themselves facing the possibility of a talent shortage.

Making the business case
These moral, legal and demographic imperatives alone support the move towards greater workplace diversity. At the same time, there is also a clear business case to be made. Both individuals and businesses expect the companies with whom they work to embrace and leverage diversity because they do so themselves. They want to work with organizations that are representative of the population and they want evidence of diversity and inclusion initiatives. Establishing such a reputation maintaining and promoting it is fast becoming a necessity for professional services firms, including law firms.

Moreover, the fact that the future workforce may be largely drawn from a steadily shifting demographic base is much more than a new hiring parameter or concession to public opinion; it also provides a real strategic opportunity. For example, diverse employee networks can attract a larger client base and can create access to new, untapped client markets. By drawing different perspectives and ideas from your workforce, companies may be able to generate better work outcomes.

The capacity to appreciate and understand cultural differences while using the widest possible range of individual skills and experiences is foundational in building an effective workforce, and will be a key differentiator for successful firms in the future.

Implementation:
Put diversity to work for you
Making diversity a priority in Canadian organizations is imperative  not just because it is the right thing to do, but because it is critical to the future success of our business and our economy.
Jane Allen, partner and chief diversity officer, Deloitte

Law firms can significantly bolster growth and success by designing policies and strategies that embrace diversity as an opportunity rather than an obligation. Key factors involved in building an effective diversity strategy include:

- A clear vision of how your ideal work environment would incorporate equity and inclusion.
- A compelling business case for diversity.
- Leaders who understand, support and regularly communicate the business case.
- Clearly defined goals and timetables for achieving an equitable and inclusive work environment.
- Qualitative and quantitative organizational data to help you understand your current work environment.
- A well-defined roadmap for goal accomplishment.
- An integrated measurement process that uses human resources and organizational review practices to prove the business case.
- An infrastructure to support your equity and inclusion strategies.

It's understandable that not all law firms are resourced to immediately initiate every aspect of such a broad process. But to get things under way, firms can take some simple steps  establish a Diversity Council focused on understanding key issues; establish programs on a timely, reasonable schedule; and assign accountability.

Necessity, meet opportunity
Diversity is an ongoing strategic process that has end-to-end organizational implications. It is not something that can be accomplished overnight and requires support and oversight from partners and stakeholders to be effective. If this upper tier commitment is in place along with firm-wide education programs and strong communications channels diversity can become not only a point of organizational credibility and ethical distinction, but a potent driver of external business and internal creativity and collaboration.

Richard Lee is a partner and Sara Arnstein is a manager in Deloitte's Human Capital practice, based in Toronto. Deloitte's Human Capital practice helps organizations develop and implement effective talent management strategies.