The unanimous judgement of the UK Supreme Court in Halliburton Company -v- Chubb Bermuda Insurance Ltd (2020) UKSC 48 has attracted overwhelming attention in international arbitration circles and far beyond, since its publication on 27th November 2020.
The case clarifies and consolidates the crucial feature of arbitrator fairness and impartiality in English law. It also shows the English courts’ willingness to intervene in cases where apparent arbitral bias has been suggested. It provides invaluable guidance to all those considering choosing London as their preferred forum for dispute resolution. But above all, it will reassure those who seek to rely on the high ethical standing for which London arbitration is known.
Part I of this series assessed the background facts and the actions in the High Court and the Court of Appeal. Part II will now cover the Supreme Court proceedings that gave rise to the 27th November 2020 judgment.
The issues to be decided by the Supreme Court were: (i) 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 (ii) whether and to what extent the arbitrator might accept such appointments without disclosure.
Duty of Impartiality and Fairness
The primary duty of impartiality and fairness is a core principle of arbitration law. It is not only good practice but also a duty in English statute law. Section 33 of the 1996 Arbitration Act provides:
“(1) The tribunal shall –
Act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent, …..”
This duty exists for party-appointed arbitrators, for arbitrators jointly appointed by the parties and for arbitrators either appointed by arbitral institutions or by the court. They owe no allegiance to the parties appointing them.
To assess whether an arbitrator or arbitral tribunal act fairly or impartially, the objective test is whether the ‘fair-minded and informed’ observer would conclude there is a real possibility of bias “having regard to the particular characteristics of international arbitration, including the private nature of most arbitrations”.
Duty of Disclosure
The duty of disclosure of matters which might reasonably give rise to justifiable doubts as to his or her impartiality is not one of good practice only but also one of English law (Section 24 of the Arbitration Act 1996). It derives from the statutory duty of the arbitrator.
The legal duty of disclosure does not in principle override the arbitrator’s duty of confidentiality: “Where the information to be disclosed is subject to the arbitrators’s duty of privacy and confidentiality, disclosure can be made only if the parties to whom the obligations are owed give their consent”. If such consent is witheld by either of the parties to the first or the second arbitration, then the arbitrator will have to decline the second appointment. Referring specifically to the views expressed by the interveners, “such consent may be express or inferred from the arbitration agreement itself in the context of the custom and practice in the relevant fields of arbitration”.
The Supreme Court noted that in assessing whether an arbitrator had failed in this duty to make proper disclosure, the fair-minded and informed observer would have regard to the facts and circumstances as at and from the time the duty arose, “the question is to be considered prospectively”. By contrast, in assessing whether there was a real possibility that he was biased, the fair-minded and informed observer would have regard to the facts and circumstances known at the time of the hearing to remove the arbitrator. This would have been at the time of the High Court hearing in January 2017 when Halliburton’s lawyers had already received Mr. Rokison’s explanation and apology.
After a careful examination of the different practices in the interveners’ respective areas of arbitration and a through review of the preceding caselaw, the Supreme Court concluded that in the context of the Bermuda Form arbitration and examing the different practices the circumstances might reasonably give rise to a conclusion that there was a possibility of bias and that the arbitrator in this case was under a duty to disclose the appointments unless the parties had agreed otherwise. In this set of circumstances, Mr. Rokison had breached his duty of disclosure owed to Halliburton.
Yet, the Court dismissed Halliburton’s appeal. It held that “at the date of the Hearing to remove Mr. Rokison” the fair minded and informed observer would not conclude that circumstances existed that gave rise to justifiable doubts about Mr. Rokison’s impartiality. How did it arrive at this conclusion?
- At the time of the Hearing in First Instance to remove Mr. Rokison, the law as regards the duty of disclosure had not been fully clear and decided, i.e. whether there existed a legal duty of disclosure and whether disclosure was needed.
- There was a considerable time lapse between the Halliburton appointment and the two subsequent appointments.
- Mr. Rokison’s response had been measured and temperate. He had offered to resign if the subsequent references were not settled.
- He had not received any secret financial benefit as Halliburton had hinted at, and there was no basis for any unconscious ill will vis a vis Halliburton on his part.
The unanimous and highly pragmatic judgement was followed by a concurring judgement by Lady Arden, who added by way of practical advice that high-level disclosure about a proposed appointment in a further arbitration can be made without any breach of confidentiality by naming only the common party (who may be taken to have consented to disclosure) but not the other parties to the arbitration.
This case provides a salutary lesson for each prospective arbitrator to inform him or herself of his or her duty of well-timed disclosure prior to accepting an appointment. On the other hand, the certainty afforded by the Supreme Court judgment and the English courts’ evident and vigorous protectiveness of arbitration in the face of any ill-founded objections, should be a comfort to all users of London arbitration as a pre-eminent means of dispute resolution.
About the Author
Reina Maria van Pallandt is a senior disputes resolution lawyer with dual British and Dutch nationality. After obtaining an LLB Honors degree in Dutch Law and Public International Law at the University of Amsterdam (UvA), Reina Maria studied International Law of the Sea at London School of Economics (LSE). She was admitted as a Solicitor of the Senior Courts of England & Wales in 1979 and of the Law Society of Ireland in 2019. Reina Maria originally practised as a solicitor at Holman, Fenwick & Willan in London and Paris and thereafter at Clifford Chance where she specialised in marine and general commercial arbitration and litigation representing shipowners, P&I Clubs, shipbuilders, repair yards and charterers such as oil and gas companies and commodity traders.
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Judgements, Orders, Decisions