Repeat arbitrator appointments in the context of trade credit and political risk insurance arbitration.
The background
The Supreme Court, like the lower courts before it, was required to determine whether the Chairman of a Bermuda Form arbitration (the notable arbitrator, Mr Kenneth Rokison QC) should be removed from his position (upon Halliburton’s application) because of appointments in two other arbitrations; all the three arbitrations were regarding issues arising in the context of insurance claims made in respect of the Deepwater Horizon disaster.
The arbitrator was appointed as Chairman in the Halliburton v Chubb arbitration; he subsequently accepted appointments in two further arbitrations. While Chubb was directly involved in one of the subsequent arbitrations, its legal representatives were also engaged by the insurers in the other.
The arbitrator failed to disclose his subsequent two appointments to Halliburton. Halliburton sought the arbitrators on the basis that circumstances existed that gave rise to justifiable doubts as to his impartiality. Critical to Halliburton’s position were (i) his acceptance of the appointments made by the same law firm in the second and third arbitrations, and (ii) his failure to notify Halliburton or give it the opportunity to object.
Both the High Court and Court of Appeal dismissed Halliburton’s application to remove the arbitrator.
The Judgment
The Supreme Court’s judgment, delivered by Lord Hodge, sets out an explanatory analysis of the issues. The Supreme Court dismissed Halliburton’s application, albeit on different grounds to those set out by the lower Courts. In doing so, the Supreme Court upheld the legal duty of disclosure by an arbitrator but varied it to take account of the circumstances of the case.
In summary:
• The obligation of impartiality is a core principle of arbitration law and in English law the duty of impartiality applies equally regardless of how the arbitrator was appointed:
whether by the parties, by the arbitrators already appointed by the parties, by an arbitral institution, or by the court
• An objective assessment must be undertaken of whether the fair minded and informed observer would consider a real possibility of bias to exist. Such an observer would have regard to both the realities of international arbitration as a form of dispute resolution as distinct from Court-based litigation; and ‘the custom and practice of the relevant field of arbitration’
• Whether such an observer would consider a real possibility of bias to exist in the case of repeat appointments in multiple arbitrations concerning the same or overlapping subject matter with only one common party will depend of the facts on the particular case and ‘especially upon the custom and practice in the relevant field of arbitration’
• In Bermuda Form arbitrations (although possibly not in the context of other specialist fields of arbitration), in the absence of agreement to the contrary, an arbitrator is under a legal duty to disclose repeat appointments in multiple arbitrations concerning the same or overlapping subject matter with only one common party and a failure to do so is a factor to be taken into account in assessing whether there is a real possibility of bias, and
• When considering whether an arbitrator has failed in his legal duty to make disclosure a fair minded and informed observer would have regard to the facts and circumstances as at the date the duty of disclosure arose, although the assessment of whether a real possibility exists that an arbitrator is biased is to be made by reference to the facts and circumstances known at the date of the hearing to remove the arbitrator.
