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Conflicts of interest

RICS Practice Standards, UK

1st edition, guidance note

Conflicts of interest1st edition, guidance note

A guidance note concerning the appointment of surveyors asarbitrators, independent experts, mediators, adjudicators and otherdispute resolvers.

Based upon the law and practice in England, Wales and NorthernIreland, this guidance note provides advice to surveyors who areappointed to resolve disputes, either by the President of RICS ordirectly by the parties to a dispute, on dealing with conflicts of interestand involvements. It also seeks to inform the disputing parties andothers involved in the dispute resolution process as to the relevantconsiderations and the procedures likely to be followed.

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GN 87/2012

Conflicts of interestRICS guidance note

1st edition (GN 87/2012)

Acknowledgment

Cover image © iStockphoto.com/Different Thinking (image no. 4559561)

Published by the Royal Institution of Chartered Surveyors (RICS)

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No responsibility for loss or damage caused to any person acting or refraining from action as a result of the material included in this publication canbe accepted by the authors or RICS.

Produced by the Dispute Resolution Services Professional Group of the Royal Institution of Chartered Surveyors.

ISBN 978 1 84219 707 3

© Royal Institution of Chartered Surveyors (RICS) January 2012. Copyright in all or part of this publication rests with RICS. No part of this work maybe reproduced or used in any form or by any means including graphic, electronic, or mechanical, including photocopying, recording, taping or Webdistribution, without the written permission of the Royal Institution of Chartered Surveyors or in line with the rules of an existing licence.

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Contents

RICS guidance notes 11 Introduction 2

2 Scope and application 3

3 Glossary of terms 4

4 The overriding principle 5

5 Independence and impartiality 6

6 Routes to appointment 7

7 RICS appointment procedure 8

8 Dealing with possible conflicts after the appointment has been made 9

9 Practical application of the guidance 10

Appendix 1 RICS appointment procedure 11

Appendix 2 Hierarchy of conflicts with examples under each category 14

Appendix 3 IBA Guidelines on conflicts of interest in international arbitration 17

Bibliography 18

CONFLICTS OF INTEREST | iii

AcknowledgmentsIn the preparation of this guidance note the workingparty has done its best to secure the views andinvolvement of all the stakeholders relevant toproperty dispute resolution on the subject mattersof involvement and conflict of interest. The workingparty is most grateful to all those who havecontributed and to the efforts of those who havesought greater clarity in this difficult area.

In preparing this guidance note, the working partyhas been heavily influenced by the traffic lightsystem from the International Bar Association (IBA)Guidelines on Conflicts of Interest in InternationalArbitration (IBA 2004) and adopted many of theprinciples set out in this publication. However, thissystem has been adapted and upgraded to ensurethat it is appropriate for property and construction-based disputes where the parties’ representativesand the dispute resolver are often not lawyers.

This guidance note uses a traffic light system as areadily understandable approach to guide usersthrough an analysis of when an involvement shouldbe disclosed, and when it may be such as toamount to a conflict of interest. Some workingexamples of this approach are set out in theinformation paper which has been provided for thesake of convenience in Appendix 2 to this guidancenote. This paper, which will be updated from timeto time, is intended to provide assistance ratherthan actual guidance, and is not at this stage aformal part of the guidance note.

Special thanks are given to the working group:

John Anderson MRICS

Graham Chase FRICS FCIArb FRSA FInstCPD,Chase and Partners (Chairman)

Tim Cooper FRICS FCIArb

Guy Fetherstonhaugh QC HonRICS, FalconChambers

Peter Horne FRICS FAAV, MerryweathersAgriculture Ltd

Matt Molloy MSc FRICS FCIArb FCIOB MAEBarrister, MCMS Limited

Judith Way, lay member

And to the RICS Dispute Resolution ProfessionalGroup Board, notably,

Jonathan Cope BSc (Hons) FRICS FCIArb FCIOBMAE Barrister, MCMS Limited

Richard Honey MRICS FCIArb Barrister, FrancisTaylor Building, Temple

Brian J Reeves FRICS FCIArb, Brian Reeves & Co.

iv | CONFLICTS OF INTEREST

RICS guidance notes

This is a guidance note. Where recommendationsare made for specific professional tasks, these areintended to represent ‘best practice’, i.e.recommendations which in the opinion of RICSmeet a high standard of professional competence.

Although members are not required to follow therecommendations contained in the note, theyshould note the following points.

When an allegation of professional negligence ismade against a surveyor, a court or tribunal maytake account of the contents of any relevantguidance notes published by RICS in decidingwhether or not the member had acted withreasonable competence.

In the opinion of RICS, a member conforming tothe practices recommended in this note shouldhave at least a partial defence to an allegation ofnegligence if they have followed those practices.However, members have the responsibility ofdeciding when it is inappropriate to follow theguidance.

It is for each surveyor to decide on the appropriateprocedure to follow in any professional task.However, where members do not comply with thepractice recommended in this note, they should doso only for a good reason. In the event of a legaldispute, a court or tribunal may require them toexplain why they decided not to adopt therecommended practice. Also, if members have notfollowed this guidance, and their actions arequestioned in an RICS disciplinary case, they willbe asked to explain the actions they did take andthis may be taken into account by the Panel.

In addition, guidance notes are relevant toprofessional competence in that each membershould be up to date and should have knowledgeof guidance notes within a reasonable time of theircoming into effect.

Document status defined

RICS produces a range of standards products.These have been defined in the table below. Thisdocument is a guidance note.

Type of document Definition StatusRICS practice statement Document that provides members with

mandatory requirements under Rule 4 of theRules of Conduct for members

Mandatory

RICS code of practice Standard approved by RICS, and endorsed byanother professional body that provides userswith recommendations for accepted goodpractice as followed by conscientiouspractitioners

Mandatory orrecommended goodpractice (will be confirmedin the document itself)

RICS guidance note Document that provides users withrecommendations for accepted good practiceas followed by competent and conscientiouspractitioners

Recommended goodpractice

RICS information paper Practice based information that provides userswith the latest information and/or research

Information and/orexplanatory commentary

CONFLICTS OF INTEREST | 1

1 Introduction

1.1 This guidance note seeks not merely to provideadvice to surveyors who are appointed to resolvedisputes on dealing with conflicts of interest andinvolvements; it also seeks to inform the disputingparties and others involved in the wider process asto the relevant considerations.

1.2 Although over the years there have beenrelatively few appointments where it has beendemonstrated that the appointee had a conflict ofinterest, there have been some high profile caseswhere a conflict of interest was found to exist.Either way, conflict of interest can become an areaof tension and consequently the object of thisguidance note is to assist all those parties involvedin a dispute to understand the main principles andconsiderations and be aware of when aninvolvement may become a conflict of interest.

1.3 A surveyor will typically be chosen to resolve adispute because of the particular expertise that heor she will be able to provide in considering theissues that have arisen. Parties to a dispute areentitled to expect that this expertise will befounded upon such experience as will enable thesurveyor properly to evaluate the subject matter ofthe dispute. This experience will have taken theform of numerous involvements and connectionswith other parties, properties and markets. Suchinvolvements are, of course, to be welcomed,because of the role they play in broadening anddeepening the surveyor’s expertise, and hence hisor her ability satisfactorily to resolve the dispute.

1.4 Even where the involvement in question is withone of the parties to the dispute or with the subjectmatter of the dispute, it may continue to have abeneficial role to play. In some circumstances,however, the surveyor may be so intimatelyconnected with one of the parties to the dispute orthe subject matter of the dispute as to call intoquestion his or her ability to be impartial as disputeresolver. In such circumstances, the surveyor issaid to have a conflict of interest, which will preventhim or her acting as dispute resolver, unless theparties expressly agree that he or she should doso.

1.5 This tension between the need for relevantexperience, which is clearly beneficial, and theoverriding obligation to avoid conflicts of interest,together with a clear transparent process, is thefocus of this guidance note. While each caseshould be judged on its merits, this guidance noteincludes an information paper that introduces atraffic light approach, providing examples to assistin the assessment of whether or not an involvementmight constitute a conflict of interest. As thisguidance note seeks to emphasise, thisassessment calls for rigour as well as flexibility,particularly where the pool of possible appointeesis small, or where a party objects to anappointment on insufficient grounds in order to gaintactical advantage.

2 | CONFLICTS OF INTEREST

2 Scope and application

2.1 This guidance note is designed primarily toassist those who are appointed, either by thePresident of RICS or directly by the parties to adispute, to act in any dispute resolution capacity. Itis also intended to assist the parties themselvesand those acting for them by making them aware ofthe procedures likely to be followed

2.2 These notes are based upon the law andpractice in England, Wales and Northern Ireland.Scottish law and practice are somewhat different,and those involved in disputes to which Scottishlaw applies should refer to the appropriate Scottishlaw. Similarly, the law and practice outside theUnited Kingdom will differ and local precedent mustbe followed as appropriate.

2.3 It is, however, hoped that the approachadopted in this guidance note will provide a firmfoundation for the understanding of the broadersubject of involvements and conflicts of interest ona worldwide basis.


3 Glossary of terms3.1 In this guidance note the following expressions bear these meanings:

Appointing party The party responsible for appointing the dispute resolver. This may be theparties to the dispute themselves or, if they cannot agree, any otherappointing party/body identified by their contract or statute (which mayinclude the President of RICS or his or her appointed agents).

Dispute resolver A surveyor appointed, privately or by RICS, to resolve a dispute, whetheras arbitrator, independent expert, mediator, adjudicator or in any othercapacity.

Involvement A connection between the dispute resolver and one of the parties or thesubject matter of the dispute.

Conflict of interest An involvement between the dispute resolver and one of the parties or thesubject matter of the dispute that raises justifiable doubts concerning theimpartiality of the dispute resolver.

DRS RICS Dispute Resolution ServicesParties Individuals or organisations engaged in a dispute. In the context of this

guidance note, this may include the landlord, tenant, developer, owneroccupier, or other entity directly involved/named in the context of thedispute.


4 The overriding principle

4.1 The overriding principle of this guidance note isthat every dispute resolver should be, and be seento be, impartial at the time of accepting anappointment and remain so during the entireproceedings until the final decision has been givenor the dispute has otherwise finally terminated.

4.2 It is a fundamental principle of justice that eachof the parties is treated equally and fairly and thatthe parties perceive this to be the case.

4.3 The authorities on the subject show that thecourts regard two types of partiality (or bias) asobstructive to justice, because they create apossible conflict between the interest of the disputeresolver and the interest of the parties to thedispute.

4.4 The first is where the dispute resolver wouldhave a direct (usually pecuniary) interest in thecase, which would realistically be affected by itsoutcome. In such a case, the existence of bias ispresumed (with the result that this category isusually called ‘actual bias’), and gives rise toautomatic disqualification. A very minor pecuniaryinterest (for example, a negligible shareholding), willnot usually count.

4.5 The second is usually referred to as presumedor unconscious or apparent bias arising from aninvolvement, and is found where the fair-mindedand informed observer, having considered the facts,would conclude that there was a real possibilitythat the dispute resolver was biased.


5 Independence and impartiality

5.1 The fact that dispute resolvers should beimpartial does not necessarily mean that they mustalso be independent of the parties or the subjectmatter of the dispute (typically, a property). This isin contrast to litigation, where the independence ofthe dispute resolver is taken for granted. Arbitrationand most other forms of dispute resolution areconsensual, and lack of independence, unless itgives rise to justifiable doubts about the impartialityof the dispute resolver, is not of critical significance.

5.2 Although independence is often groupedtogether with impartiality, with the two conceptssometimes being used interchangeably, there is acritical difference between them, which underpinsthe approach in the red, orange and green lists inappendix 2. As explained in section 9, under thatsystem, parties are guided through situations whereit would be inappropriate for the dispute resolver toaccept an appointment because of a clear conflictof interest (red); situations where it would beappropriate to accept, because there can be nopossible conflict (green); and other situations wherethere is an involvement that might amount to aconflict, where the decision whether to accept theappointment should be taken with caution (orange).

5.3 The parties rightly expect a dispute resolver tounderstand the subject matter of the dispute.Parties often choose to have a dispute resolved bya surveyor rather than a court because they arelooking for technical knowledge and experience toassist in the proper evaluation of their dispute.Surveyor dispute resolvers take evidence from theparties and will be in a better position to assess theweight to be given to that evidence if they areexperienced in the type of property (or type ofdispute), in question. For the independent expert,

who does have an investigatory role, the need forknowledge of the subject matter of the dispute and,where relevant, the market is essential. Thisexperience with the market will take the form of anumber of involvements that may in some cases besaid to amount to a lack of independence.Provided, however, that the dispute resolver doesnot allow his or her judgment to become affectedby the lack of independence (i.e. they remainimpartial), there is no need for the dispute resolverto be disqualified. Better a dispute resolver who isacquainted with the subject matter of the dispute,even if dependent in some way, than anindependent dispute resolver who has no relevantknowledge or experience.

5.4 Accordingly, while parties are usually keen toensure that their dispute resolver is independent,they are not entitled to insist upon this. Suchconcerns over independence may sometimes leadto attempts to exclude from consideration a largenumber of prospective appointees on the groundsthat they have, or have in the past had someconnection, no matter how remote, with one of theparties or the subject matter of the dispute. Insome specialist fields, the appointing party couldfind that it was being asked to disregard everyspecialist. The appointing party cannot be placed inthat position if it is to perform its intended functionunder the terms of the contract.

5.5 DRS or (once appointed), the dispute resolver,will be astute to detect any deliberate attempt tomanipulate the appointment process or seek toundermine the appointment of a dispute resolver atany stage of the process for tactical advantage thatdoes not reflect a genuine reason for objection.


6 Routes to appointment

6.1 The President of RICS or an appointed agent isfrequently called upon to appoint dispute resolversto settle disputes between parties where the natureof the dispute falls within the province of theprofession. The greatest number of applications forsuch appointments relate to the periodic review ofrents paid under leases of commercial property.Other important areas are the nomination ofadjudicators for disputes under constructioncontracts, and the appointment of rural practicearbitrators under statute.

6.2 Surveyors may also be appointed as disputeresolvers either by private agreement between theparties in dispute, or via other formal appointingparties (such as the Law Society or the CharteredInstitute of Arbitrators). In these cases, there maybe other systems in place to detect whether thereis any conflict of interest, which should obviouslybe followed. Where there is no such system, thesurveyor dispute resolver is advised to follow theguidance set out in Appendix 1, which deals withthe procedure applicable to an appointment by thePresident of RICS.

6.3 Under a private appointment, the non-waivableissues under the traffic light system may be relaxedby agreement, although parties who are publiccompanies or in the public sector, or who operatewithin the confines of the public interest, may wishto exercise caution in relaxing the provisions of thisguidance note.


7 RICS appointment procedure

7.1 The main stages of the RICS appointmentprocedure can be summarised as:

1 application

2 approach to the prospective appointee

3 checks by the prospective appointee

4 disclosure by the prospective appointee

5 review by DRS; and

6 appointment.

Appendix 1 sets out the processes andconsiderations required at each stage.


8 Dealing with possible conflicts after theappointment has been made

8.1 Once the appointing party has made anappointment, its jurisdiction in the matter is at anend unless the contract (or, in a relatively fewcases, statute), itself provides to the contrary.

8.2 The duty upon the dispute resolver to disclosea matter that might be relevant to the question ofconflict of interest continues after appointment.Accordingly, if the dispute resolver becomes awareof such a matter, it should be disclosed to thedisputing parties immediately. The disclosureshould be in writing, and should be copied to bothparties, with an invitation for the parties tocomment.

8.3 Throughout the process, either or both of theparties may raise a matter that they believeconstitutes a conflict of interest. This should bedone as soon as the party in question becomesaware of the matters said to constitute the conflict.

8.4 A possible cause of a conflict of interest arisingafter the appointment of a dispute resolver is wherea property or interest in property has been sold toanother party. In such circumstances, the parties tothe dispute and their advisers should ensure thatno conflict of interest arises at that point, and thatthe dispute resolver is informed as soon as thesituation arises or is identified as a possible issue.

8.5 In the event of a potential conflict of interestbeing raised by either of the disputing parties, thedispute resolver should:

+ obtain full details of the objection in writing; and

+ notify the other party in writing and invite theircomments.

8.6 Once the dispute resolver has received theparties’ comments concerning the matter disclosedor raised under sections 8.2 or 8.3, furtherenquiries might be necessary in order for thedispute resolver to establish, for example, how longthe party raising the matter has known about thealleged conflict (which may be relevant to thequestion of whether the right to object has beenwaived).

8.7 Assuming that the party maintaining theobjection is entitled to do so, the dispute resolvershould then apply the overriding principle (seesection 4), to decide whether the matters disclosedor raised constitute a conflict of interest that wouldrequire the appointment to be terminated.

8.8 Any doubt as to whether a dispute resolvershould disclose certain facts or circumstancesshould be resolved in favour of disclosure.

8.9 When considering whether or not facts orcircumstances exist that should be disclosed, thedispute resolver should not take into accountwhether the dispute is at the beginning or at a laterstage.

8.10 It is to be emphasised that the mere fact ofdisclosure should not indicate to the parties thatthe dispute resolver considers either that a conflictof interest exists, or conversely that the disputeresolver believes that there is no such conflict.Those are matters that the dispute resolver canonly finally decide having weighed up the parties’reactions to the disclosure.

8.11 If the dispute resolver decides that a conflictof interest exists, unless both parties agree inwriting that the appointment should continue, thedispute resolver should, as appropriate, seek theagreement of the parties to an orderly resignationand a reappointment through DRS or some otherappointing party.

8.12 If the parties do not agree that the disputeresolver should resign, then the dispute resolvershould consider taking legal advice as to the bestway forward, having regard to costs and time.

8.13 The parties should heed the warning given atthe end of section 5 of this guidance note regardingdeliberate attempts to manipulate the appointmentprocess or to undermine the appointment of adispute resolver at any stage of the process.


9 Practical application of the guidance

9.1 The information paper in appendix 2 to thisguidance note lists a number of practical examplesbased upon situations taken from the commercial,construction and rural sectors as to what situationsmay or may not constitute conflicts of interest.These lists are not exhaustive and cannot coverevery situation, but are intended to provideassistance in assessing whether or not a conflict ofinterest may or may not exist as opposed to anacceptable involvement.

9.2 The examples given have been categorised inorder of severity, adopting, but with appropriateamendments, the traffic light system used by theInternational Bar Association Guidelines onConflicts of Interest in International Arbitration.

9.3 The red list is in two parts and consists of a‘non-waivable’ list and a ‘waivable’ list. In bothcases, situations are listed that, depending uponthe facts of a given case, give rise to justifiabledoubts as to the dispute resolver’s impartiality; i.e.in these circumstances, conflict of interest existsfrom the point of view of a reasonable third personhaving knowledge of the relevant facts. The non-waivable red list includes situations deriving fromthe overriding principle that no person can be ajudge in his or her own cause. In theory, partiesmay agree even to waive non-waivable conflicts,but extreme caution should be exercised by allconcerned in such circumstances for obviousreasons.

9.4 The waivable red list encompasses situationsthat are serious but not as severe. Because of theirseriousness, unlike circumstances described in theorange list, these situations should be consideredwaivable only if and when the parties, being awareof the conflict of interest situation, neverthelessexpressly state their willingness to have such aperson act as the dispute resolver in that particularcase.

9.5 The orange list sets out some specificinvolvements, which, depending on the facts of agiven case, in the eyes of the parties may give riseto justifiable doubts as to the dispute resolver’simpartiality, but where this is not the only overridingfactor for consideration. The dispute resolvershould disclose such situations and the parties aredeemed to have accepted if, after disclosure, notimely objection is made.

9.6 The green list contains some specificinvolvements where no appearance of, and noactual, conflict of interest exists from the relevantobjective point of view. The dispute resolver is notnormally required to disclose such involvements.

9.7 The borderline between these categories isoften narrow and will depend on the individualcircumstances of the case and the particularmarket sector in which they fall, and/or the specificrequirements of the dispute resolution clause.


Appendix 1 RICS appointment procedureA1.1 ApplicationA party applying to the President for theappointment of a dispute resolver is required tocomplete a form obtainable on application to theDRS. The details to be inserted on the forminclude:

+ the name and address of the property

+ the identities of the parties

+ relevant information on the enabling contract;and

+ any special requirements concerning thedispute resolver that the dispute resolutionagreement specifies.

It is the responsibility and duty of both sides to thedispute to provide as much information as isrelevant and necessary in assessing the potentialfor a conflict of interest, such as the identity ofrelated parties and other relationships, which maynot be capable of identification by a simplereference to the names of the parties to the disputeand the address of the property. It should bestressed that where a party deliberately orinadvertently makes misleading or inaccuraterepresentations to support its case on appointment,RICS may exclude that material altogether.

The RICS President’s role in appointing a disputeresolver is, on the face of it, a straightforward one.He or she is concerned to select a member withthe appropriate expertise who is not precludedfrom taking the appointment due to a lack ofimpartiality. If, in a dispute, the parties cannot agreea settlement, it is not uncommon for a disputeresolution clause to identify a period during whichthey attempt to agree upon the identity of such aperson, but if this fails, they delegate the task tothe President. Ideally, therefore, the Presidentshould be entirely free to exercise his or herdiscretion as regards both the requirement ofexpertise and that of impartiality. (Other appointingparties may have different procedures.)

In recent years, there has been an increasingtendency for the parties to attempt to influence thePresident’s decisions by stating that specifiedsurveyors or all surveyors from specified firmswould not be acceptable, sometimes without

stating reasons for the objection. Delays anddifficulties are being caused because the system isbeing misused in some cases, whether throughignorance of the proper principles to be applied,failure to complete the application form fully andaccurately, or for tactical reasons. None of theseoutcomes are acceptable and, therefore, applicantsand respondents are required to make detailed andcarefully considered representations with all therelevant information included.

Any unsupported statements or representations areunlikely to be considered or have much weightattached to them. Blanket objections or lists ofdispute resolvers to be excluded without suitableand sufficient information and reasoning are unlikelyto be considered, or may not be brought to theattention of the President.

A1.2 Approach to the prospectiveappointee

Once the application form has been received andthe appointment fee paid, the DRS will select asuitably qualified surveyor, based upon theinformation provided, and write to inform theprospective appointee accordingly.

The DRS has little information available to decidefor itself whether a conflict of interest might exist,and relies upon appointees to carry out their owninvestigations.

The prospective dispute resolver is supplied by theDRS with details of the dispute, including thenames and addresses of the parties and theirrepresentatives, and is requested to disclose to thePresident matters that may be relevant in decidingwhether the appointment should be made. Morespecifically, the prospective appointee is asked todisclose any involvement, in particular aninvolvement they or their firm has (or has had in therelevant past), with the property, a nearby propertyor a party to the dispute. If such an involvementexists, the prospective appointee is asked to statewhether this involvement is believed to constitute aconflict of interest.

The ‘relevant past’ will vary depending upon thecircumstances of the case. In the first instance five


years may be considered appropriate but a longeror shorter period may be relevant.

The process of disclosure of involvements andpossible conflicts is therefore a critically importantpart of the application process. This is dealt with inA1.4, disclosure by the prospective appointee, andA1.5, conclusion.

A1.3 Checks by the prospectiveappointee

A dispute resolver should make reasonableenquiries to investigate any potential conflict ofinterest, as well as any facts or circumstances thatmay cause his or her impartiality to be questioned.That is not because a dispute resolver is liable for aconflict about which he or she knows nothing – forof course he or she is not. Rather, if and when thefacts amounting to a conflict emerge, the disputeresolver will rightly be criticised for the failure tohave made the enquiries that would have allowedthe parties to make alternative arrangements at anearlier, less costly, stage. This also demonstrateswhy the applicant and respondent to a disputeshould carefully consider the extent and nature ofthe information that should be provided to ensurethe prospective appointee can complete theirinvestigations as fully as possible.

The investigations should include:

+ current and historic relationships between theprospective appointee, the subject matter of thedispute and/or the property

+ where the dispute concerns value, whether thedispute resolver has instructions regarding acomparable property, which would conflict withthe proposed appointment

+ whether the capacity in which the disputeresolver is invited to act conflicts with anexisting appointment; e.g. where a disputeresolver is invited to act as arbitrator on a rentreview and the dispute resolver already holdsan existing appointment as independent expert.This may lead to a situation where theindependent expert’s determination isconsidered in detail in the arbitration dispute

+ current and historic relationships between theprospective appointee and the parties to thedispute

+ current and historic relationships between theprospective appointee and the namedrepresentatives; and

+ more remote relationships, such as thoseinvolving the prospective appointee’s employeror partners, or organisations associated withthe parties.

The mere fact that such relationships (or‘involvements’) may exist is not reason enough fortheir existence to be disclosed: the prospectiveappointee should then apply the overriding principle(see section 4), and consider whether theinvolvement is such as to give rise to justifiabledoubts as to the dispute resolver’s impartiality.

A1.4 Disclosure by the prospectiveappointee

The authorities show that most of the allegedconflict problems that arise (particularly inarbitration), do so because of a failure to disclosesomething that may have appeared to theprospective appointee to be trivial. Once anundisclosed involvement is discovered, however,the failure to disclose may itself be regarded asfurther evidence of the bias arising from theinvolvement of which the complaint is made, thuscompounding and worsening what might originallyhave been regarded as insignificant had it beendisclosed in the first place.

The prospective appointee should thereforedisclose involvements to the President after makingthe checks described in A1.3. The definition ofinvolvement is wide ranging and is not restricted tomatters that might give rise to conflict of interest.Many involvements are not conflicts of interest. Thedecision as to whether an involvement may, or maynot, give rise to the possibility or appearance ofbias, or will in any way affect the potentialappointment, is a matter for the President. Underno circumstances should the prospective appointeemake any contact with the parties or theirrepresentatives at this stage.

It is important to note that for these purposes aninvolvement of a partner or member of staff shouldbe regarded as just as important as involvements ofthe potential appointee him or herself. A potentialappointee should, therefore, have an appropriatesystem for undertaking involvement checks withinhis or her organisation that is reliable and efficient.


The nature of this system will depend on the sizeand type of the practice. It is also important tohave a system to prevent conflicts arisingsubsequently by partners or other members of staffaccepting instructions from parties, or inconnection with nearby properties that might givethe appearance of creating bias.

Disclosure of an involvement to the President doesnot mean the surveyor will not be appointed, butconsideration will be given to the likelihood of suchan involvement giving rise to a perceived conflict ofinterest. Where a surveyor wilfully fails to disclosean involvement, or accepts an appointment andsubsequently purports to resign on the basis thatinstructions accepted after appointment give rise toa conflict, the President may conclude that thesurveyor is not suitable for future appointments.

A1.5 Review by the PresidentUpon receipt of the details from the prospectiveappointee, the President will have regard to theoverriding principle set out in section 4. ThePresident will not knowingly appoint a person witha pecuniary or other interest in the outcome of thedispute. A remote or indirect pecuniary interest willnot, however, disqualify an appointee. ThePresident will not appoint someone whoseappointment would raise a real possibility of bias inthe eyes of a reasonably minded person. The test isnot what the party to the dispute or itsrepresentative believes, or what in fact wouldhappen or has happened. Once he or she hasmade him or herself aware of all the relevant facts,the President should consider whether a reasonablyminded person could perceive a real possibility ofbias if the member in question were to beappointed. If the factors are evenly balanced, it islikely that the President will err on the side ofcaution in deciding whether to appoint.

The President may take the view based upon theinformation supplied by the prospective appointeethat the member concerned could not be seen tobe impartial. In such circumstances, the Presidentwill seek another prospective appointee.

Alternatively, the President may take the view thatthe matters disclosed are remote and should notraise a real possibility of bias in the eyes of areasonably minded person. In this situation theappointment is made without disclosure to theparties.

In the further alternative, the President may pass onthe prospective appointee’s disclosure to theparties or their representatives, inviting commentswithin a reasonable period of time. At that stagethe President will consider and give due weight toany objections but he or she will not be bound bythem, and the final decision as to the appointmentwill be his or hers alone.

A1.6 AppointmentOnce appointed, in the interest of best practice, theappointee may consider it appropriate again todisclose all involvements to the parties. This isparticularly so with any involvements with theparties themselves. However, the appointee shouldnot allow a party to use this information in anattempt to persuade him or her to resign. By thisstage, assuming he or she had been furnished withall the facts, the President will have been satisfiedthat the appointee is suitable. Only the parties, byagreement, the appointee, or the courts can decideotherwise. Nevertheless, such a procedure can beuseful as a final check to ensure that nothing hasbeen overlooked that could be put right at thisearly stage thereby avoiding a more unsatisfactoryand expensive problem arising later on in thetimetable of the dispute resolution process.


Appendix 2 Hierarchy of conflicts withexamples under each categoryThis is an information paper, and not a formal partof the RICS guidance note ‘Conflicts of interest’. Itis therefore intended to provide assistance todispute resolvers and parties and theirrepresentatives on the questions of when aninvolvement may need to be disclosed, and whenan involvement may be an actual or perceivedconflict of interest. It is to be stressed that theexamples set out below are neither exhaustive norprescriptive.

This is the first edition of this information paper.Further editions will be issued as and when theneed arises. RICS members should ensure thatthey consult the latest edition.

A2.1 Non-waivable red listA2.1.1 The dispute resolver is a representative of

a party in the dispute or there is someother direct relationship.

A2.1.2 The dispute resolver has a controllinginfluence over one of the parties.

A2.1.3 The dispute resolver has a significantfinancial interest in one of the parties orthe outcome of the case.

A2.1.4 The dispute resolver has given advice orprovided an expert opinion on the disputeto a party or an associate of one of theparties.

A2.1.5 A close family member of the disputeresolver has a notable financial interest inthe outcome of the dispute.

A2.1.6 The dispute resolver or a close familymember of the dispute resolver has aclose relationship with a third party whomay be liable to recourse on the part ofthe unsuccessful party in the dispute.

A2.1.7 The dispute resolver has a close familyrelationship with one of the parties, or witha member or any person having a similarcontrolling influence over one of theparties, or an associate of one of theparties or with an advisor representing aparty.

A2.1.8 The dispute resolver has a controllinginfluence over an associate of one the

parties, if the associate is directly involvedin the matters in dispute.

A2.1.9 A close family member of the disputeresolver has a significant financial orcontrolling interest in one of the parties oran associate of one of the parties.

A2.2 Waivable red list

A2.2.1 The dispute resolver regularly acts for oneof the parties to the dispute.

A2.2.2 The dispute resolver is a member of thesame firm as the representative of one ofthe parties.

A2.2.3 The dispute resolver’s firm currently has, orhas had, a significant commercialrelationship with one of the parties or anassociate of one of the parties.

A2.2.4 The dispute concerns a rental valuation,and the dispute resolver, or his or her firm,is acting on a comparable property thatmay be taken up as evidence on thesubject property.

A2.2.5 The dispute concerns a rental valuation,and the dispute resolver, or his or her firm,has an interest in a comparable propertythat may be taken up as evidence on thesubject property or stands to benefit fromthe outcome of the dispute.

A2.2.6 The dispute concerns a rental valuation,and the dispute resolver is invited to act ina capacity that would conflict with anexisting appointment, such as where anarbitrator or independent expert isappointed elsewhere as an adviser to oneof the parties and where the resolution ofthe subject dispute would be perceived asmaterially affecting those otherappointments.

A2.2.7 Where a dispute resolver is alreadyappointed as an independent expert and isthen invited to become an arbitrator on acase that is linked to or is subject to thearbitrator’s decision on the other casewhen he or she is acting as theindependent expert.


A2.2.8 The dispute resolver advises theappointing party or an associate of theappointing party.

A2.2.9 The dispute resolver has a close familyrelationship with one of the parties or witha member or any person having a similarcontrolling influence in one of the parties,or an associate of one of the parties, orwith an advisor representing a party.

A2.2.10 The dispute resolver or his or her firmrepresents a party or an associate to thearbitration on a regular basis but is notinvolved in the current dispute.

A2.2.11 The dispute resolver holds significantshares, directly or indirectly, in one of theparties or an associate of one of theparties that is privately held.

A2.2.12 A close personal friendship exists betweena dispute resolver and an adviser of oneparty, as demonstrated by the fact that thedispute resolver and the adviser regularlyspend considerable time togetherunrelated to professional workcommitments or the activities ofprofessional associations or socialorganisations.

A2.3. Orange listA2.3.1 The dispute resolver has within the

relevant past served as an adviser for oneof the parties or an associate of one of theparties, or has previously advised or beenconsulted by the party or an associate ofthe party making the appointment in anunrelated matter, but the dispute resolverand the party or the associate of the partyhave no ongoing relationship.

A2.3.2 The dispute resolver’s firm has within therelevant past acted for one of the partiesor an associate of one of the parties in anunrelated matter without the involvementof the dispute resolver.

A2.3.3 The dispute resolver’s firm is currentlyrendering services to one of the parties orto an associate of one of the partieswithout creating a significant commercialrelationship and without the involvement ofthe dispute resolver. As an example, wherethe dispute resolver’s firm manages theproperty where one of the parties is atenant, this should not give rise to a

blanket objection as it would not normallybe regarded as a conflict of interest unlessit can be shown that such a position doesor could be perceived to exist.

A2.3.4 A firm that shares revenues or fees withthe dispute resolver’s firm renders servicesto one of the parties or an associate ofone of the parties before the disputeresolver.

A2.3.5 The dispute resolver was within therelevant past a partner of, or otherwiseassociated with, another adviser on thesame dispute or property.

A2.3.6 A close family member of the disputeresolver is a partner or employee of thefirm representing one of the parties, but isnot assisting with the dispute.

A2.3.7 The dispute resolver had been associatedwithin the relevant past with a party or anassociate of one of the parties in aprofessional capacity, such as a formeremployee or partner.

A2.3.8 A close personal friendship exists betweena dispute resolver and an adviser having acontrolling influence over one of theparties, or an associate of one of theparties, or a witness or expert.

A2.3.9 The dispute resolver has publiclyadvocated a specific position regarding thespecific case that is being determined,whether in a published paper or speech orotherwise. This does not apply to generalprofessional papers or speechesconsidering aspects of a market place ortechnical issues associated with it. (SeeGreen list at A2.4.1)

A2.3.10 The dispute resolver has a controllinginfluence over an associate of one of theparties where the associate is not directlyinvolved in the matters in dispute in thereference.

A2.3.11 The dispute resolver, and any personhaving a controlling influence over one ofthe parties, or an associate of one of theparties, who have worked together asadvisers or in another professionalcapacity, including as dispute resolvers inthe same case.

A2.3.12 The dispute resolver currently serves, orhas served within the relevant past, asdispute resolver in another dispute on a


related issue involving one of the parties oran associate of one of the parties.

A2.3.13 The dispute resolver is asked to act asarbitrator where he or she has acted asindependent expert in the relevant past ona related dispute.

A2.4 Green listA2.4.1 The dispute resolver has previously

published a general opinion (such as in alaw review article or public lecture),concerning an issue which also arises inthe dispute (but this opinion is not focusedon the case that is being determined).

A2.4.2 The dispute resolver’s firm has actedagainst one of the parties or an associateof one of the parties in an unrelated matterwithout the involvement of the disputeresolver.

A2.4.3 A firm in association or in alliance with thedispute resolver’s firm, but which does notshare fees or other revenues with thedispute resolver’s firm, renders services toone of the parties or an associate of oneof the parties in an unrelated matter.

A2.4.4 The dispute resolver has a relationship withanother dispute resolver, or with theadviser or one of the parties, throughmembership of the same professionalassociation or social organisation.

A2.4.5 The dispute resolver has been consideredfor private appointment on the subjectdispute, but this was not taken up.

A2.4.6 The dispute resolver holds an insignificantamount of shares in one of the parties oran associate of one of the parties, which ispublicly listed.

A2.4.7 The dispute resolver has in the past servedas adviser against one of the parties or anassociate of one of the parties in anunrelated matter.

A2.4.8 An adviser in the dispute resolver’s firm isa dispute resolver in another disputeinvolving the same party or parties or anassociate of one of the parties.

A2.4.9 The dispute resolver’s firm is currentlyacting against one of the parties or anassociate of one of the parties in otherareas.

A flow chart is attached to these guidelines foreasy reference to the application of the lists.However, it should be stressed that this is only aschematic reflection of the very complex reality. Thespecific circumstances of the case must alwaysprevail.


Appendix 3 IBA Guidelines on conflicts ofinterest in international arbitration


BibliographyCouncil of the International Bar Association (2004)IBA Guidelines on Conflicts of Interest inInternational Arbitration. London: IBA


Conflicts of interest

RICS Practice Standards, UK

1st edition, guidance note

Conflicts of interest1st edition, guidance note

A guidance note concerning the appointment of surveyors asarbitrators, independent experts, mediators, adjudicators and otherdispute resolvers.

Based upon the law and practice in England, Wales and NorthernIreland, this guidance note provides advice to surveyors who areappointed to resolve disputes, either by the President of RICS ordirectly by the parties to a dispute, on dealing with conflicts of interestand involvements. It also seeks to inform the disputing parties andothers involved in the dispute resolution process as to the relevantconsiderations and the procedures likely to be followed.

rics.org/standards rics.org/standards

GN 87/2012