Interesting, and probably not irrelevant question, Faysal.
There're probably a lot of possibilites what might occur. Important questions to ask yourself (or whoever the author is) could be:
1: How transparent are the review criteria, and how detailed will the review result be communicated? Furthermore, are there chances to formally object and get a second, independent review?
2: Is there an option to communicate conflicts with possible review persons in advance in order to get a alternative reviewer?
3: Is it an editorial / review board or only one reviewer, the "conflict" editor? If it is a board - how is their decision process? How much power does the editor have?
Well, it is not the editor who might review your paper - the editor might check the reviewers comments (blind-review)... and decide based on these reviews... but humans are humans and favours might continue to be there... so, careful.
Yes - the editor is not usually involved with direct reviewing - and is obliged to go with the general consensus of the reviewers. If the process is 'blind' - as it should be (although a number of open access journals seem to be dropping this convention) - then there should be no conflict of interest. If anything, if the editor recognises your name (even if it's not for the right reasons) - then that might actually improve your chances. it shouldn't be that way - but subjectivity always plays a part in any reviewing process.