"It is axiomatic that a judge or an arbitrator must be impartial; he or she must not be biased in favour of or against any party in a litigation or reference. A judge or arbitrator, who is not in fact subject to any bias, must also not give the appearance of bias: justice must be seen to be done."
The UK Supreme Court ["SC"], on 27th November 2020, handed down its ruling in Halliburton Company v Chubb Bermuda Insurance Ltd, unanimously dismissing Halliburton's appeal. Amongst many things, one thing that is noteworthy is that this case saw participation from the international arbitral community, as many arbitral institutions and organisations were allowed to intervene and submissions were presented by the LCIA, ICC, CIArb, LMAA and GAFTA.
In its unanimous decision, the SC has carefully analysed the key issues in the English law of arbitration and this judgment is being considered as a leading precedent on arbitrator conflicts, arbitrator's duty to disclose vis-à-vis duty to confidentiality. Moreover, this decision has provided a much-needed clarification on the assessment of apparent bias by the English courts, and has further enhanced the test in the context of arbitration. Even though, the challenge against the arbitrator was not successful in Halliburton v. Chubb, the decision of the SC has gone to lengths to highlight the importance of impartiality of arbitrators in English-seated arbitrations.
II. Brief background of the arbitrations
The appeal before the SC was regarding an arbitration under a Bermuda Form Liability Policy ["Policy"] which arose out of the damage caused by the explosion and fire on the Deepwater Horizon drilling rig in the Gulf of Mexico in 2010. That disaster led to several arbitrations between insured parties and insurers.
A. Reference 1
Halliburton initiated arbitration under the arbitration clause of the Policy and nominated Professor William W. Park, as its party-appointed arbitrator. Chubb nominated Mr. John D Cole, as its party-appointed arbitrator. However, the nominated arbitrators were not able to agree on the appointment of the third arbitrator as chairman and after a contested hearing in the High Court, in June 2015, Mr. Rokison was appointed as the third arbitrator.
Prior to accepting his appointment, Mr. Rokison made a disclosure wherein he stated that he had previously acted as an arbitrator in several arbitrations in which Chubb was a party. He further disclosed that these arbitrations included the arbitrations wherein he acted as a party-appointed arbitrator nominated by Chubb, and also that he was then appointed as an arbitrator in two pending references involving Chubb. However, the High Court did not treat these appointments as an impediment to his appointment.
B. Reference 2
In December 2015, Mr. Rokison accepted appointment as an arbitrator by Chubb in relation to an excess liability claim by Transocean arising out of the same incident. Before accepting the appointment by Chubb, Mr. Rokison disclosed to Transocean his the appointment in Reference 1, and in the other Chubb arbitrations which he had disclosed to Halliburton and Transocean did not object to the same. But, in an omission which was central to the disclosure issue in the appeal before the SC, Mr. Rokison failed to disclose to Halliburton about his proposed appointment by Chubb in Reference 2.
C. Reference 3
In August 2016, Mr. Rokison was pleased to accept the appointment in yet another arbitration arising out of the Deepwater Horizon incident. He was appointed as a substitute arbitrator and in pursuance of joint nomination of the parties. The arbitration concerned a claim made by Transocean against a different insurer on the same layer of insurance as the claim in Reference 2. However, this proposed appointment was not disclosed to Halliburton.
III. Earlier Proceedings regarding challenge
To Mr. Rokison's appointment
A. Proceedings before the High Court
In his judgment,2 Popplewell concluded his consideration on the issue of apparent bias in the following terms:
"The informed and fair-minded observer would not therefore regard [Mr Rokison] as unable to act impartially in the reference between [Halliburton] and [Chubb] merely by virtue of the fact that he might be an arbitrator in other references arising out of the incident, and might hear different evidence or argument advanced in another such reference. The objective and fair-minded assessment would be that his experience and reputation for integrity would fully enable him to act in accordance with the usual practice of London arbitrators in fulfilling his duties under section 33 by approaching the evidence and argument in the [Halliburton] reference with an open mind.."
In relation to the issue of alleged omission to disclose the appointments to Halliburton, the judge held that because of the above-mentioned conclusion that there were no circumstances that gave rise to any justifiable concerns about the arbitrator's impartiality, there was nothing which had to be disclosed.
B. Proceedings before the Court of Appeal
Halliburton, after obtaining permission to appeal, sought to present the challenge to the Court of Appeal. The Court of Appeal noted that in international commercial arbitration, it was always an encouraged practice to make disclosures where a party had such concerns. As such, these disclosures alongwith other factors, such as the degree of overlap and the nature of other connections, might give a basis for a reasonable apprehension concerning lack of impartiality of the arbitrator.
On that basis, the Court of Appeal disagreed with the lower court and held that Mr. Rokison ought to, as a matter of law, have made a disclosure to Halliburton at the time of his appointments in References 2 and 3. Nonetheless, the Court of Appeal agreed with the lower court's overall conclusion that a fair-minded and informed observer, having considered the facts, would not conclude that there was a real possibility that Mr. Rokison was biased.
IV. Appeal before the Supreme Court
A. Submissions by Halliburton
Halliburton renewed its challenge before the SC and further on the basis of the concerns expressed by LCIA, ICC, and CIArb, stated that the Court of Appeal's judgment was out of step with the internationally accepted standards and practices. Halliburton on the basis of the following stated that it is was not suggesting that Mr. Rokison was liable for any intentional wrongdoing or actual bias. Halliburton's case was based on apparent unconscious bias, some of the grounds are mentioned hereinbelow:
- Mr. Rokison accepted a paid appointment on Chubb's behalf when he was already a member of the arbitral tribunal in Reference 1;
- In so doing, he gave Chubb an unfair advantage of being a common party to two related arbitrations with a joint arbitrator while Halliburton was ignorant of the proceedings in Reference 2;
- Chubb would be able to communicate with Mr. Rokison in Reference 2, by its submissions and the evidence led, on matters which might be relevant to Reference 1 and would be able to gauge Mr. Rokison's responses. However, on the other hand, Halliburton would not even know that they had occurred;
- Mr. Rokison failed to disclose his appointment to Halliburton and thereby prevented it from forming its own view as to whether it might lead to unfairness or otherwise taking steps to mitigate the unfairness; and
- Mr. Rokison did not offer adequate consideration to Halliburton's interest in the fairness of the procedure.
B.Submissions by Chubb
Primarily, Chubb presented its defence to the judgments of the lower courts. However, while doing so, Chubb also argued that the Court of Appeal was wrong in concluding that Mr. Rokison had a legal duty to make a disclosure of his appointments in References 2 and 3. The reasoning advanced by Chubb was that an arbitrator is only obliged to disclose circumstances which an informed and a fair-minded observer would regard as giving rise to a real possibility of bias. It further emphasised that although the disclosure of circumstances which were likely to give rise to the apprehension of bias was a good practice but it was not an obligation under law.
Submissions by Interveners
- LCIA expressed concern that the tests set by the Court of Appeal were not sufficiently strict if compared to the international standards. Depending on the facts, appointments in multiple references concerning the same or overlapping subject matter with only one common party can give rise to the appearance of bias and a failure to disclose can give rise to that appearance even if the fact or circumstance which should have been disclosed would not necessarily give rise to apparent bias.
- ICC also questioned the approach of the Court of Appeal and submitted that the fact of multiple overlapping appointments with only one or some common parties concerning the same or inter-related subject matter can, in certain circumstances, raise concerns and reasonable doubts regarding the arbitrator's impartiality.
- CIArb also submitted that the acceptance by an arbitrator of multiple appointments in related references without full disclosure to all parties may, without more, give rise to justifiable doubts as to impartiality.
V. Issues considered in the appeal
The appeal before the SC was concerned with circumstances in which an arbitrator in an international arbitration may appear to be biased and not with any deliberate wrongdoing or actual bias. What is noteworthy is that the challenge to Mr. Rokison was not based on any assertion of actual bias but was raised purely on the objective appearance of bias. The principal issues which were raised in the appeal are:
- whether and to what extent an arbitrator may accept appointments in multiple references concerning the same or overlapping subject matter with only one common party without thereby giving rise to an appearance of bias, and
- whether and to what extent the arbitrator may do so without disclosure.
VI. Analysis of the judgment
A. The duty of impartiality in the context of arbitration
i. Party-nominated arbitrator
The SC while examining the role of a party-appointed arbitrator, observed that in arbitrations where the parties have an expectation that the party nominated arbitrator will be pre-disposed towards it, the perception is such that the chairman of the arbitral tribunal, has a crucial role in ensuring that the arbitral tribunal acts fairly and remains impartial.
However, the Court observed that under English law, a party-appointed arbitrator is expected to precisely meet the same standards of fairness and impartiality as are imposed upon the person chairing the tribunal.
ii. The objective observer test
The Supreme Court, while summarising the position of English courts, stated that in addressing an allegation of apparent bias in an English-seated arbitration, the following will come into play:
- application of the objective test of the fair-minded and informed observer,
- sufficient regard to the particular characteristics of international arbitration and those characteristics highlight the importance of proper disclosure as a means of maintaining the integrity of international arbitration,
- The professional reputation and experience of an individual arbitrator are relevant considerations for the objective observer when assessing whether there is apparent bias as an established reputation for integrity and significant experience may make it harder to justify the doubts,
- The Weight which the fair-minded and informed observer should give to that consideration will depend upon the circumstances of the arbitration and whether, objectively and as a generality, it could be expected that the people who enter into references are to be informed about the experience and past performance of arbitrators.
B.Legal duty of arbitrators to disclose particular matters
A question, on which the two lower courts reached contradictory conclusions and which was material to the appeal before SC, was whether disclosure is a legal duty in English law or is it merely a facet of good arbitral practice unless such disclosure is mandated by the arbitral rules for that arbitration proceeding.
The Court of Appeal held that this was a legal duty. The SC, on this issue, held that there is a legal duty of disclosure in English law which is encompassed within the statutory duties of an arbitrator under section 33 of the 1996 Act. The relevant excerpt of the judgment is reproduced hereinbelow:
"An arbitrator is under the statutory duties, in section 33 of the 1996 Act, to act fairly and impartially in conducting arbitral proceedings, in decisions on matters of procedure and evidence and in the exercise of all powers conferred on him or her. Those statutory duties give rise to an implied term in the contract between the arbitrator and the parties that the arbitrator will so act...Unless there is disclosure, the parties may often be unaware of matters which could give rise to justifiable doubts about an arbitrator's impartiality and entitle them to a remedy from the court under section 24 of the 1996 Act. A legal obligation to disclose such matters is encompassed within the statutory obligation of fairness. It is also an essential corollary of the statutory obligation of impartiality: an arbitrator who knowingly fails to act in a way which fairness requires to the potential detriment of a party is guilty of partiality. Unless the parties have expressly or implicitly waived their right to disclosure, such disclosure is not just a question of best practice but is a matter of legal obligation."
C. Duty to disclose Vs. obligation to respect the privacy and confidentiality
In the appeal, which concerned the allegation that an arbitrator should have disclosed the existence of a related arbitration involving a common party, it was necessary to consider the obligation in English law on an arbitrator to uphold the privacy and confidentiality of an English-seated arbitration and the boundaries of that obligation. It should be noted that the common law does not limit the obligation of privacy and confidentiality to information, such as a trade secret, which is inherently confidential but also extends it evidence and any other information or document disclosed in the proceedings as such documents are confidential and can only be used for the specific purpose of that arbitration.
The Supreme Court, while examining the arbitrator's duty of confidentiality stated that where the information which must be disclosed is subject to an arbitrator's duty of privacy and confidentiality, disclosure can be made only if the parties to whom the obligations are owed give their consent and such consent may be express or may also be inferred from the arbitration agreement. The relevant excerpt of the judgment is produced below:
"Whether and to what extent an arbitrator may disclose the existence of a related arbitration without obtaining the express consent of the parties to that arbitration depends upon whether the information to be disclosed is within the arbitrator's obligation of privacy and confidentiality and, if it is, whether the consent of the relevant party or parties can be inferred from their contract having regard to the customs and practices of arbitration in their field."
D. Decision of the SC
The Supreme Court in this case came to a conclusion that a fair-minded and informed observer would not be willing to determine that there was a real possibility of bias. The factors considered by the SC for the same are as follows:
- At the time the disclosure fell to be made there had been uncertainty under English law about the existence and scope of an arbitrator's duty of disclosure;
- The time sequence of the arbitrations may have been an explanation for the non-disclosure to Halliburton;
- Mr. Rokison had explained that both the subsequent overlapping arbitrations would be resolved by way of a preliminary issue, which meant there would in fact be no overlapping evidence or submissions. Furthermore, Mr Rokison had offered his resignation from the subsequent arbitrations and in that scenario, it was unlikely that Chubb would gain any benefit because of the overlapping arbitrations;
- Mr. Rokison had not received any secret financial benefit; and
- Mr. Rokison's response to the challenge had been "courteous, temperate and fair...and there is no evidence that he bore any animus towards Halliburton as a result".
The Supreme Court, while upholding the decisions of both the Court of Appeal and the High Court, held that, on the facts of the case, there was no apparent bias, and hence no grounds for the removal of Mr. Rokison. It's interesting that the SC reached that view despite making a finding that Mr. Rokison had caused a breach of his legal duty of disclosure. Moreover, the Supreme Court expressly recognised that impartiality was a cardinal duty of an arbitrator and the legal duty of disclosure does not override the arbitrator's duty of privacy and confidentiality in English law.
The Supreme Court's decision might cause some unrest amongst those who expect a failure to make a material disclosure to have more stringent consequences such as disqualification of the concerned arbitrator. Further, as a possible consequence of the Court rejecting the challenge, it can lead to some arbitrators showing less concern for their duty to make disclosures of relevant information in English-seated arbitrations. However, it is important to note that while the Supreme Court upheld the earlier court's decision to not remove Mr. Rokison, a relevant factor considered by the SC was the uncertainty of English law in relation to an arbitrator's disclosure obligations. And since this uncertainty now stands resolved, it is possible that an English court might come to a different conclusion in subsequent cases.
Undoubtedly, due credit goes to the Supreme Court for clearly stating that party-appointed arbitrators are subject to the same obligations, and same standards, as tribunal chairs when it comes to impartiality and considerations of fairness, and for clarifying that "it is not a distinction which English law would recognise as a basis for a party-appointee avoiding the obligation of disclosure."
This judgment has emphasised the importance of arbitrator impartiality and has consequently developed the law on apparent bias in the context of arbitration. The decision evidences the welcoming approach of the English courts to arbitrator challenges, keeping in line with the courts' non-interventionist and pro-arbitration stance. The case seems to be of real significance for the wider international arbitration community as well, and would likely have an impact of London's status as a leading seat of arbitration.
1  UKSC 48
2  EWHC 137 (Comm);  1 WLR 2280
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