Imagine the following situation: at the old coffee shop located at the hallways of the Court, two people are talking, one is an arbitrator in a famous case and the other is representing a big client in that same case. The two have a deep and long-standing acquaintance from their academic days. Among the exchange of words, the arbitrator asks his friend’s advice related to a different case being filed against him.
Assuming that you sat for a moment on the judging bench, would you consider disqualifying the arbitrator from ruling in the aforementioned case, or not? Or maybe disqualifying the attorney who gave the counselling (since maybe he hoped to get something in return for his advice)? And if the relations described were between a judge and an attorney, would your decision remain unchanged?
These questions are frequently asked by lawyers, judges and arbitrators who may often witness or be subject to conflict of interest. Therefore, great discretion must be exercised. In this short article we will map out the relevant laws regarding the disqualification of judges and arbitrators and review an interesting ruling given very recently on this issue by the Supreme Court.
What does the law state?
First and foremost are the cases where the circumstances produce a “real fear of partiality” in conducting the trial. This cause allows for wide discretion by the Courts, while there are specific clauses that “automatically” disqualify a judge from ruling in a certain case (for further details see Art Bay case).
The specific causes that require a judge to disqualify himself almost automatically are: (1) Cases where there is a close relationship between a judge and a party to the proceeding (witness, attorney, family member) (2) A judge or his family member has a real, financial or personal interest in the outcome of the procedure (3) Before the judge was appointed to discuss the case, he was involved in the case as an arbitrator, attorney, professional consultant and so forth.
It is important to note that the rules of ethics and the grounds listed on the Courts Act also have some exceptions, according to which even if a disqualification cause exists, the judge may continue to rule in the case.
Apart from the above, the Arbitration Act also lists specific grounds that give the Court authority to transfer an arbitrator from a case.
Thus, the Rules of Ethics and the Courts Act regulate the framework under which the court operates when it examines a motion to disqualify a judge, while the Arbitration Act regulates the arbitrator disqualification process. However, the question remains, can an arbitrator be disqualified by the disqualification laws applicable to judges?
The Edelcom case
In the Edelcom case, the Supreme Court discussed the grounds for disqualifying an arbitrator from a case. The Edelcom case revolves around a dispute of partners arising from the establishment of “Dorad”, the largest private power plant in Israel.
An arbitrator agreed upon by the parties was selected to rule in the arbitration procedure. According to the disqualification petition filed by Edelcom, the arbitrator, while conducting the arbitration, contacted Edelcom’s attorney and received counselling from him regarding her private affairs.
The main allegations in the disqualification petition revolved around the counselling received by the arbitrator. On the other hand, it was alleged that prior to her appointment as arbitrator in the case, she stated to the parties that she had a long acquaintance with one of the attorneys and the parties nevertheless agreed to the appointment, that is, they legitimized the appointment and the counselling. Nonetheless, it was argued by the parties that they did not legitimize a counselling relationship between the two while the arbitration is taking place, thus said relationship may cause partiality.
The disqualification petition was at first rejected by the arbitrator herself. This decision was appealed to the District Court, which also rejected the petition on the grounds that the parties approved the appointment and acknowledged the close relationship between the arbitrator and the attorney.
A request for further appeal reached the Supreme Court, which heard the case and issued a number of key clarifications and rulings.
And thus, through an instructive analysis of the applicable law, Judge Mintz ruled that the appeal should be accepted and as a result the arbitrator must be disqualified from its role by virtue of Rule 15 (b) (6) of the Rules of Ethics which states that a judge shall not sit in a case in which a lawyer representing a client handles the judge’s or his family member’s affairs. According to the majority opinion, the consultation between the judge and the lawyer were in fact “handling” and therefore the circumstances of the case fall into this cause. Furthermore, several important principles worth recognizing were set:
- It was emphasized that a petition for the disqualification of an arbitrator is examined in accordance with the criteria and grounds for the disqualification of a judge.
- Unlike a legal procedure, the parties to an arbitration agreement may condition upon the arbitration laws and block a party from its option to file a petition for an arbitrator’s disqualification.
- It has been set that the parties’ consent to the existence of social relations between the attorneys and the arbitrator does not allow or legitimize a legal consultation of any kind between the arbitrator and any of the attorneys appearing before it.
- Legal consultation of an arbitrator with a lawyer appearing before it during the arbitration period is improper, be its content and scope as it may.
- It does not matter whether the disqualification is sought by the party with which his lawyer consulted or with the other party, as such consultation constitutes an independent cause of disqualification by law.
It should be remembered that the deliberative behavior and conduct applicable to an arbitrator when performing its quasi-judicial role, including the rules relating to its disqualification, are identical to the rules applicable to a judge. When entering into an arbitration agreement, we must keep in mind that the disqualification laws are cogent (may be conditioned upon) but such conditioning should be done wisely after thoroughly understanding the matter at hand.
 Code of Ethics for Judges, 5767-2007