Advise as conflict of interest, Business Law and Ethics

A is large property developer who is listed on the Kuala Lumpur Stock Exchange. B is a building contractor. A employed B in 2008 to build a large office complex comprising 3 towers on a piece of land in the heart of Kuala Lumpur. C is a wealthy individual who owns many pieces of property in Kuala Lumpur and Singapore. C is also a shareholder in A but is not involved in its management.

The Building contract between A and B states that, "Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be decided by arbitration in accordance with the Rules for Arbitration of the Regional Centre for Arbitration Kuala Lumpur by three Arbitrators appointed in accordance with the rules.".

The dispute involves the installation of a chilled water system which serves the air-conditioning systems of all 3 buildings. The main material used in this system are pipes which are sourced from one specialist supplier known as D. D is a company based in Singapore. C and her family are majority shareholders in D. The main dispute is in respect of the type and quality of pipes supplied by D.

The payment mechanism between B and D is that D will only be paid for supplying the pipes if B is paid by A for the installation of the pipes. The pipes have been installed by B but A refuses to pay for the pipes because the Architect for the project says that the pipes are not in accordance with specification and are inferior.

B has issued a notice of arbitration to resolve this dispute. D has an interest in the dispute as it will only be paid if an award in given in B's favour.

Advise as to whether there is any Conflict of Interest in respect of the Arbitrators based on the aforesaid facts given the following situations.

1. A has appointed Mr Green as arbitrator. Mr Green is an Architect by profession and has been appointed by Company A as architect for its projects. There are currently no projects for which Mr Green acts as architect for A. The last time Mr Green was appointed as architect for one of A's projects was in 2008 which was fully completed in 2009.

2. Mr Green is also a close friend of Company A's Managing Director and they meet at least once every week for dinner. Their children attend the same school together. However, as a rule, both A's Managing Director and Mr Green do not speak of Company A's business during their weekly dinners.

3. The senior most partner in Mr Green's firm (in which he is a junior partner) has direct shareholding in Company D, the pipe specialist, and is also an executive director. A's Managing Director was aware of this at the time of Mr Green's appointment.

4. Company B has appointed Mr Brown as arbitrator. Mr Brown is an engineer by profession. Mr Brown is a minority shareholder in B but plays no part in its management. He only attends the annual general meetings of Company B and draws a small annual dividend.

5. Mr Brown is currently involved in another project (which is unrelated to this dispute) where his engineering company (in which he is currently the managing director) has been appointed as engineers for B. The project is very lucrative for Mr Brown and he hopes to gain other appointments with B for future projects.

6. Mr Brown has investments in various mutual funds in Singapore which in turn owns shares in both A and D. A and D are two of many other companies in which his funds are invested. These investments are passive investments in that Mr Brown has no control over. However, he does have knowledge of his funds' investments in A and D through annual reports. He draws dividends every quarter from these mutual fund investments.

7. Mr Green and Mr Brown propose to appoint Ms April as the third presiding arbitrator. Ms April is a lawyer by profession and carries on an active litigation practice in a large partnership in Kuala Lumpur. Ms April is C's granddaughter and Ms April regularly represents C in her legal matters. She is also the principal beneficiary named in C's will.

8. Ms April's partners also regularly acts for both A and C and both their subsidiaries in respect of their corporate deals. Ms April does not involve herself in these corporate matters and has no direct knowledge in the deals. However, as a partner of the firm, she derives income from fees earned from these corporate matters.

9. Another partner in Ms April's firm is an arbitrator in another unrelated dispute involving a company which is part owned by Company B.

10. Both A and C have approached Ms April on separate occasions before, seeking to appoint her as sole arbitrator on another dispute which is not related to this dispute. She declined the request on both occasions.

When answering the above, explain the grounds and the process by which an arbitrator may be removed under the Arbitration Act, 2005. Make reference to relevant cases and guidelines. (ie: IBA Guidelines; Green List, Red List, Orange List)

Posted Date: 3/6/2013 1:16:59 AM | Location : United States







Related Discussions:- Advise as conflict of interest, Assignment Help, Ask Question on Advise as conflict of interest, Get Answer, Expert's Help, Advise as conflict of interest Discussions

Write discussion on Advise as conflict of interest
Your posts are moderated
Related Questions
What is the meaning of Policy process planning We shall see a step wise guide applied in actual policy formulation. It will pull you out of the jungle of technical interconnect

Role of the Courts The role of the court system in Canada varies. Due to the numerous jurisdictions and different government levels involved, the courts are often asked to inte

Question: You are the manager of a restaurant and receive a letter from a customer complaining about the quality of service and the rudeness of one member of your staff. You ha

Legal Status:  A promoter is not an agent of the company he promotes.  However, the English courts have held that he stands in a fiduciary relationship to the company he promo

Patriot, Inc (a C corporation) filed for Chapter 11 bankruptcy protection during August, 2011 and has worked out a re-organization plan that was accepted by the Bankruptcy Court an

APPLICATION OF THE UNWRITTEN SOURCES OF ENGLAND LAW: Conversely it is a rule of England Law that unwritten laws are to be applied subject to the provisions' that any applicabl

DISCLAIMER OF ASSETS: The liquidator has a statutory right of disclaimer of assets: s.135.  The rules are: (a)     he must obtain leave of the court; (b)     the right o

Transfer or Passing of Property - Sales of Goods Perhaps assuming like the seller has a right to sell the goods, so it like necessary to determine the precise moment the trans

QUESTION 1 (i) What are the principles applicable regarding the unjustified termination of a contract of employment (ii) What would be your views regarding the legal issues

As a senior HR officer in Catastrophe Concepts HR department, you have been asked by George Chapel to prepare a management briefing regarding the situation. Your report should: