UK: Conflict Of Interest – Apparent Bias Of Arbitrators

Last Updated: 20 December 2016
Article by Lyndon Smith

As Lyndon Smith explains, there have been two noteworthy judgments by the Commercial Court this year on the subject of apparent bias of arbitrators. These decisions potentially have a wider application because, whilst they give guidance as to how the English courts will treat conflicts of interest of an arbitrator, the principles discussed, as a third case in the TCC has already demonstrated, apply equally to the appointment of adjudicators.

Both cases considered the apparent bias of a sole arbitrator based on an alleged conflict of interest.

In Cofely Ltd v Bingham & Knowles Ltd,1 the claimant's application was for the removal of the arbitrator during the course of the arbitration under section 24 (power of the court to remove an arbitrator) of the Arbitration Act 1996.

W Ltd v M SDN BHD2 followed soon afterwards in which the claimant challenged two awards by alleging serious irregularity under section 68(2) (challenging the award: serious irregularity) of the Arbitration Act 1996. In this case, the claimant also relied on the new IBA Guidelines to support its position.

In September 2016, the Cofely case was referred to in an adjudication enforcement case, Beumer Group UK Ltd v Vinci Construction UK Ltd.3

Despite all the discussion and developments surrounding these cases, both cases ultimately reconfirmed the well established common law position as to the basic test for establishing bias as set out in Porter v Magill.4 That is, whether:

"a fair minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased."

Cofely Ltd v Bingham & Knowles Ltd


Cofely Ltd (a major construction company) applied to have the arbitrator removed under section 24 of the Arbitration Act 1996 alleging apparent bias. The dispute related to the alleged breach of an agreement by Cofely to pay a success fee to Knowles (claims consultants) of £3.5m.

Knowles had been appointed by Cofely to advise upon and then progress its claims for an extension of time and associated additional costs relating to Cofely's contract with Stratford City Developments Ltd and the Olympic Delivery Authority to design, build, maintain and operate district energy services to the Olympic Park and Westfield Shopping Centre in Stratford, London.

Section 24(1)(a) of the Arbitration Act enables a party to apply to the Court to remove an arbitrator on the grounds that circumstances exist that give rise to justifiable doubts as to his impartiality.

Cofely's concerns surrounded Knowles' request for the appointment of this particular Arbitrator. On his acceptance of nomination form, he had failed to disclose any prior involvement with Knowles and subsequent to the commencement of the arbitration and following the first award, the judgment of Eurocom Ltd v Siemens Plc5 was handed down in the Technology & Construction Court.

The Eurocom case concerned a summary judgment application made by Eurocom against Siemens in respect of an adjudication decision made by this arbitrator. The application failed on the grounds that Siemens had real prospects of successfully defending the claim on the basis that the adjudicator had no jurisdiction because of a fraudulent misrepresentation allegedly made by one of Knowles' employees when applying for the appointment of the adjudicator on Eurocom's behalf. It turned out that the adjudicator appointed (who was also the arbitrator in the Cofely arbitration) had regularly been appointed by Knowles.

This was clearly of great interest to Cofely as they wrote to the arbitrator requesting information on his previous dealings with Knowles in light of the Eurocom judgment. The arbitrator did not answer Cofely's questions in detail but called a hearing at which he ruled that there was no conflict or apparent bias. It was after this hearing that Cofely decided to make its section 24 of the Arbitration Act 1996 application.

Cofely also relied upon Rule 3 of the CIArb Code of Professional and Ethical Conduct for Members (October 2000) which states that:

"Both before and throughout the dispute resolution process, a member shall disclose all interests, relationships and matters likely to affect the member's independence or impartiality or which might reasonably be perceived as likely to do so."

Cofely contended that the disclosure obligation should be followed where there is any doubt as to the relevance of the information and the manner in which an arbitrator discharges this obligation can be relevant to the issue of apparent bias. In this case, no disclosure had been made at the outset of the arbitration, although as the case progressed, it was the attitude of the arbitrator which took on a bigger focus.

The Decision

In coming to his decision, Mr Justice Hamblen concluded that five of the grounds relied upon by Cofely gave rise to a real possibility of apparent bias. These were:

  1. The facts of the Eurocom case, i.e. the adjudicator in that case (i.e. Cofely's arbitrator in their arbitration) was clearly someone that Knowles was keen to see appointed, and they sought to influence appointments by trying to exclude many other potential adjudicators from acting;
  2. The arbitrator's evasive and defensive responses to Cofely's questioning about the nature and extent of the professional relationship between himself and Knowles;
  3. The arbitrator's defensive approach in providing the requested information. His calling of a hearing, which had not been requested, to consider Cofely's questions, the way the hearing was then conducted and the way the "ruling" was handed down purporting to deal with the apparent bias;
  4. The information that eventually became available of the professional relationship between the arbitrator and Knowles showed that over the past three years he had acted as adjudicator or arbitrator 25 times (out of a total of 137) on cases involving Knowles as either a party or the representative of a party. This represented 18% of his appointments and 25% of his income. It was also found that he had held in favour of Knowles, or the party with which Knowles was involved, on 18 of the 25 occasions (i.e. 72%); and
  5. The arbitrator was aggressive and unapologetic in his witness statement. Rather than stay neutral, he saw fit to make positive statements in opposition to Cofely's application. This could not but leave the impression that on any view, he had taken sides in the application.

For these reasons, Mr Justice Hamblen found that Cofely had established the requisite grounds for the removal of the arbitrator under section 24(1)(a) of the Arbitration Act.

The case for apparent bias had been made out.

It is worth noting that the Cofely case was then cited in the adjudication enforcement case of Beumer Group UK Ltd v Vinci Construction UK Ltd – judgment was handed down on 13 September 2016.

Here, Beumer had been successful in an adjudication against Vinci and had applied for summary judgment. However, Vinci opposed enforcement relying on breaches of natural justice. The facts were that on the same day that Beumer commenced an adjudication against Vinci, it had also commenced a second adjudication, before the same adjudicator, against its sub-subcontractor. Beumer also went on to take differing positions on the same issues in the two different adjudications.

This was not disclosed by either Beumer or the adjudicator and it was only some time later that Vinci found out about the second adjudication.

Mr Justice Fraser in the Technology and Construction Court commented that:

"Adjudication is not the Wild West of dispute resolution"

The Judge then went on to say that he took:

"a very dim view of the propriety of behaviour where Party A says in one set of adjudication proceedings with Party B "the works were complete on 16 December 2015" and, in relation to the very same works (or at least a sub-set of the works) on the very same project states in another set of adjudication proceedings with Party C "the works are not yet complete, you are liable to pay liquidated damages". They are wholly inconsistent."

The Judge then held that the adjudicator's failure to disclose his involvement in a simultaneous adjudication involving Beumer was a material breach of the rules of natural justice and, therefore, he did not enforce the adjudicator's decision. He referred to Cofely and Mr Justice Hamblen's reference to the CIArb Code of Professional and Ethical Conduct for Members and the requirement to disclose all interests, relationships and matters likely to affect the member's independence or impartiality.

Mr Justice Fraser stated that:

"Adjudicators are not arbitrators, but in my judgment are governed broadly by the same principles so far as disclosure is concerned."



Following an arbitration between M SDN BHD and W Ltd, relating to a project in Iraq, W Ltd applied to have two awards set aside pursuant to s.68 of the Arbitration Act 1996 on the grounds of apparent bias on the part of the arbitrator. W Ltd's application was based on an alleged conflict of interest.

The sole arbitrator had been appointed in May 2012. He was a partner in a medium-sized Canadian law firm although had worked almost exclusively as an international arbitrator for a number of years with virtually no involvement in the running of the firm. For instance, he had not attended partnership meetings for the previous six or so years.

At the time of his appointment, a company ("Q") was a client of the firm. M SDN BHD was a subsidiary of another company ("P") and, following an announcement in June 2012, P acquired Q, meaning that Q (as with M SDN BHD) became a subsidiary of P. This resulted in Q and M SDN BHD becoming affiliates. Following the acquisition, the law firm continued to provide substantial legal services to Q.

The arbitrator carried out conflict checks at the time of his appointment and made various disclosures to the parties but the conflict checks did not identify that Q was a client of the law firm.

It was not until the arbitrator handed down his final award on costs that the potential conflict was actually raised by W Ltd in correspondence with the arbitrator. The arbitrator then responded promptly stating that he had no knowledge of his firm's work for Q, and further confirming that had he known, he would have disclosed the potential conflict to the parties.

The parties were agreed that the common law test for apparent bias was that set out in the Porter v Magill case: i.e. whether "a fair minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased".

W Ltd argued that, given the facts of the case, the fair minded and informed observer would conclude that there was a real possibility that the tribunal was biased or lacked independence or impartiality.

W Ltd also relied on the fact that the position with the arbitrator's law firm acting for Q meant that this conflict was caught by paragraph 1.4 of the Non-Waivable Red List of the IBA Guidelines which states:

"The Arbitrator or his or her firm regularly advises the party, or an affiliate of the party, and the arbitrator or his or her firm derives significant financial income therefrom."

The Decision

In considering whether there was apparent bias, Mr Justice Knowles concluded that a fair minded and informed observer would not conclude that there was any real possibility of bias and dismissed the application accordingly. He was of the view that the arbitrator, although a partner, operated effectively as a sole practitioner, using the firm for secretarial and administrative assistance.

The arbitrator had made other disclosures where, after checking, he had knowledge of his firm's involvement with the parties. Given this commitment to transparency, the Judge was of the view that the arbitrator would have made a disclosure in this case had he been alerted to the situation. This would be relevant in the mind of the fair minded and informed observer. It also showed that the arbitrator could not have been biased by reason of the firm's work for the client. In fact, that work was not in his mind at all; had it been he would have disclosed it.

Mr Justice Knowles went on to comment that the 2014 IBA Guidelines make a distinguished contribution in the field of international arbitration:

"Their objective, to assist in assessing impartiality and independence, is to be commended."

However, the Judge went on to say that in this case, the Guidelines had perhaps led to some uncertainty which was at the forefront of W Ltd's case. With regard to W Ltd's reliance on the IBA Guidelines, the Judge acknowledged that the conflict fell within the description given in paragraph 1.4 but this did not result in him altering his decision as he identified two weaknesses in the guidelines.

First, it was only in 2014 that paragraph 1.4 of the IBA Guidelines was amended to include scenarios where advice was provided to an affiliate without the arbitrator's involvement or knowledge. The Judge found it hard to understand why this situation should now warrant inclusion in the Non-Waivable Red List.

Secondly, including such a situation in the Non-Waivable Red List meant that there was no consideration of whether the particular facts could realistically have any effect on impartiality or independence (including where the facts were not known to the arbitrator).

W Ltd sought permission to appeal but this was refused on the basis that the proper forum for the determination of the wording of the IBA Guidelines was the International Bar Association and not the Court of Appeal.


Whilst all cases must be Judged on their specific facts, the judgments here all serve to confirm the English law position of the fair observer test when deciding on claims of apparent bias.

The lesson for arbitrators is to be transparent and honest in the conflict process. If in doubt, disclose. Common sense should prevail. In Cofely, the arbitrator's failure to acknowledge the relevance of his relation with Knowles and his refusal to disclose information about that relationship led the Court to conclude a lack of impartiality. This was in contrast to the arbitrator in W Ltd v M SDN BHD who was willing to disclose possible conflicts of interest.

With regard to the IBA Guidelines, paragraph six makes it clear that the guidelines are not legal provisions and do not override any applicable national law or arbitral rules chosen by the parties. W Ltd v M SDN BHD confirms the position that the English Courts will not be bound by the IBA Guidelines.

Even given this judgment, the international arbitration community will, no doubt, continue to use the IBA Guidelines but the point has now been made that a strict approach to the guidelines when determining conflict is not necessarily the right approach to be taken in every case.

1. [2016] EWHC 240

2. [2016] EWHC 422

3. [2016] EWHC 2283 (TCC)

4. [2002] AC 357 at 102

5. [2014] EWHC 3710 (TCC)

This article is taken from Fenwick Elliott's 2016/2017 Annual Review. To read further articles go to

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions