The requirements for a challenge to a decision on the grounds of bias are the same irrespective of whether the challenge concerns a judge or an arbitrator. However, the approach taken by the courts is different when the challenge is to a judge rather than to an arbitrator. Both are, obviously, relevant to insurers.

Challenge to a judge

To challenge a judge the applicant must prove that the circumstances would "lead a fair minded and informed observer to conclude that there was a real possibility… that the tribunal was biased". In England and Wales there are close links between the judiciary and the Bar. The Bar Council is currently considering the propriety of advocates with conditional fee agreements appearing before a recorder from the same chambers.

If there is a real possibility of bias, the judge is disqualified from hearing the case. In Alexander Morison & Anor v AWG Group & Anor (2006), the Court of Appeal held that the judge should step aside where he was a friend of a potential witness who was associated with one of the litigants. This was not a discretionary matter.

It is open to a judge to declare his interest or connection to a case and ask the parties whether they will agree to his hearing the matter. The courts have emphasised that the party waiving any objection should be aware of all the material facts; of the consequences of the choice; and, given a fair opportunity to reach an un-pressurised decision. In Peter Smith v Kvaerner Cementation Foundations Ltd (2006), the Court of Appeal held that a decision by an appellant to allow a recorder to continue to hear the case was not made freely with knowledge of all the relevant information, and the appellant had therefore not waived his right to complain of bias.

Challenging an arbitrator

A challenge to an arbitrator in England is made under the Arbitration Act 1996. The general principles include "the fair resolution of disputes by an impartial tribunal without unnecessary delay"; s.33 imposes upon the tribunal a duty to "act fairly and impartially as between the parties".

If an arbitrator fails in his duties, a party has the right to apply to the courts to remove the arbitrator on grounds which include the existence of circumstances "that give rise to justifiable doubts as to his impartiality", or where an arbitrator has refused or failed properly to conduct the proceedings or to use all reasonable despatch in conducting the proceedings or making an award, and that "substantial injustice has been or will be caused to the applicant" (s.24). Alternatively, a party may apply to the English court (under s.68) to challenge the award on the grounds of serious irregularity which has caused or will cause substantial injustice to the applicant.

However, s.73 requires the applicant to make any such application promptly, and he may lose the right to do so if he continues to take part in the arbitration proceedings. In other words, an applicant who knows of his right to object or could have discovered it with reasonable diligence, cannot wait until the award is made before deciding whether or not it suits him to apply to challenge it.

Laker Airways Inc v FLS Aerospace Ltd (1999), confirmed that it was not necessary for a party to prove actual bias; the court asked an objective question as to whether there were circumstances which raised justifiable doubts as to the arbitrator's impartiality.

ASM Shipping Ltd of India v TTMI Ltd of England (2005), considered the position of a barrister acting as a third arbitrator. The solicitors for one of the parties had made allegations against the other party's principal witness in respect of disclosure. The barrister had recently been instructed by those solicitors in another matter in which similar allegations had been made against that same witness. The court held that the barrister should have recused himself because "the independent observer would share the same feeling of discomfort expressed by [the applicant] and concluded that there was a real possibility that the tribunal was biased" - the test for apparent bias had been made out. Although the court held that substantial injustice had been caused, by the time of making the application the tribunal had made an interim award and the applicant had taken it up. The court therefore held that the applicant had waived its right to object to the barrister's involvement in that part of the proceedings, although the barrister should not continue to sit as arbitrator going forward. More recently, the Court of Appeal held that it did not have the jurisdiction to review the decision by the judge that the applicant had waived the irregularity in the absence of any realistic argument that the decision had breached article 6 of the European Convention on Human Rights (the right to a fair trial).

In the recent decision Norbrook Laboratories v (1) Tank, (2) Moulson Chemplant Ltd (2006), the court removed an arbitrator for failing properly to conduct arbitration proceedings. The arbitrator had contacted witnesses directly but failed to inform the parties to the arbitration that he had done so and failed to keep or disclose a record of what had been said. The court held that the lack of fairness in the process led to a perception of a real possibility of bias, and so caused substantial injustice to the applicant.

In international arbitration, guidelines have been laid down as to what constitutes a conflict of interest for arbitrators, particularly by the International Bar Association. The English court will refer to them if appropriate, but the court's approach will be led by previous case law.


The courts have shown that the old maxim that justice must not only be done, but be seen to be done holds true today. The increasing number of challenges to judges and arbitrators reflects increasing sensitivity to the need for independence and impartiality.

Brit Syndicates Ltd & Ors v Grant Thornton International & Anor (2006)

This recent decision concerned cover for Grant Thornton International (‘GTI’), the not-forprofit ‘umbrella’ organisation of the international accounting practice. By an extension to the relevant professional indemnity policy, GTI was covered only for claims against it "arising from claims made against a member firm of GTI insured by the terms and conditions of this policy".

Negligence claims were made against the Italian firm of Grant Thornton (‘GT Italy’) arising from its role in Parmalat. The claim was extended to GTI, alleging control over GT Italy, even though GTI itself had no clients nor any practice of its own. Insurers avoided against GT Italy: what effect did that have on GTI’s cover?

The Court of Appeal concluded that GTI was also deprived of cover. The word ‘insured’ in the policy extension did not merely refer descriptively to the list of member firms, but qualified the claims against those firms out of which any covered claim against GTI must in turn arise. If GT Italy had no cover, there could be no ‘insured claim’ against GT Italy, and therefore no claim against GTI arising out of that.

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.