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On appeal from: [2018] EWCA Civ 817

The Supreme Court has unanimously dismissed this appeal addressing when an arbitrator should make disclosure of circumstances which may give rise to justifiable doubts as to his impartiality.

Halliburton Company, the appellant, provided cementing and well monitoring services to BP in the Gulf of Mexico. Transocean Ltd also provided services to BP, including overlapping services to those provided by the appellant. The appellant entered into a liability policy with Chubb Bermuda Insurance Ltd (Formerly known as Ace Bermuda Insurance Ltd), the respondent. Transocean Ltd was also insured with the respondent.

In 2010, there was an explosion and fire on an oil rig in the Gulf of Mexico, the “Deepwater Horizon” oil spill. As a result, thousands of civil claims were brought against BP, the appellant and Transocean. BP also claimed against the appellant and Transocean.

Following a trial in the US in which judgment was given apportioning blame between the parties, the appellant concluded a settlement to agree the amount of damages. The appellant sought to claim a proportion of this settlement under its insurance policy. The respondent declined to pay the appellant’s claim. Arbitration was commenced. Both parties selected their own arbitrator, but the parties were unable to agree the Chairman of the arbitration. This resulted in an application to the High Court. The result of which was that the respondent’s first-choice candidate Mr Rokison was selected.

The appeal arises out of the discovery by the appellant in 2016 that subsequent to Mr Rokison’s appointment and without the appellant’s knowledge, Mr Rokison had accepted appointment as an arbitrator in two other references both of which arose out of the same Deepwater Horizon incident (i) Transocean’s claim against the respondent; and (ii) a nomination by another insurer to arbitrate another claim by Transocean arising out of the same incident.

In December 2016, the appellant applied to the court to remove Mr Rokison as arbitrator. That application was refused.

The Supreme Court unanimously dismissed the appeal. It held, for reasons which differ in part from courts below, that as 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. Lord Hodge gave the leading judgment with whom Lord Reed, Lady Black and Lord Lloyd-Jones agreed. Lady Arden gave a concurring judgment.

The law

The duty of impartiality is a core principle of arbitration law. In English law, the duty applies equally to party-appointed arbitrators and independently appointed arbitrators. In considering an allegation of apparent bias against an arbitrator, the test is whether the fair-minded and informed observer would conclude there is a real possibility of bias. The courts will apply that objective test, having regard to the particular characteristics of international arbitration, including the private nature of most arbitrations.

The duty of disclosure is not simply good arbitral practice but is a legal duty in English law. It is a component of the arbitrator’s statutory obligations of fairness and impartiality. The legal duty of disclosure does not, however, override the arbitrator’s duty of privacy and confidentiality in English law. Where information which needs to be disclosed is subject to a duty of confidentiality, disclosure can only be made if the parties owed confidentiality obligations give their consent. Such consent may be express but may also be inferred from the arbitration agreement itself in the context of the custom and practice in the relevant field of arbitration. The arbitrator’s duty of disclosure is to disclose matters which might reasonably give rise to justifiable doubts as to his or her impartiality. A failure to disclose relevant matters is a factor for the fair-minded and informed observer to take into account in assessing whether there is a real possibility of bias.

In assessing whether an arbitrator has failed in a duty to make disclosure, the fair-minded and informed observer will have regard to the facts and circumstances as at and from the time the duty arose. In contrast, in assessing whether there is a real possibility that an arbitrator is biased, the fairminded and informed observer will have regard to the facts and circumstances known at the time of the hearing to remove the arbitrator.

The issues in this appeal

There may be circumstances where the acceptance of multiple appointments involving a common party and the same or overlapping subject matter gives rise to an appearance of bias. Whether it does so will depend on the facts of the case and, in particular, the customs and practice in the relevant field of arbitration. Where, as in the context of a Bermuda Form arbitration, the circumstances might reasonably give rise to a conclusion that there was a real possibility of bias, the arbitrator is under a legal duty to disclose such appointments unless the parties to arbitration have agreed otherwise.

Applying those conclusions to the facts, Mr Rokison was under a legal duty to disclose his appointment in the subsequent reference involving the respondent and Transocean. At the time of his appointment, the existence of potentially overlapping arbitrations with only one common party, the respondent, might reasonably have given rise to a real possibility of bias. In failing to make that disclosure Mr Rokison breached his duty of disclosure.

However, having regard to the circumstances known at the date of the hearing at first instance, it could not be said that the fair-minded and informed observer would infer from Mr Rokison’s failure to make disclosure that there was a real possibility of bias. At the time, it had not been clear that there was a legal duty of disclosure. Secondly, the Transocean arbitrations had commenced several months after the Halliburton arbitration. Thirdly, Mr Rokison’s measured response to the appellant’s challenge explained that it was likely the subsequent references would be resolved by a preliminary issue (as they in fact were) and that, if they were not, he would consider resigning from the Transocean arbitrations. There was therefore no likelihood of the respondent gaining any advantage by reason of overlapping references. Fourthly, there was no question of his having received any secret financial benefit, and, fifthly, there was no basis for inferring any unconscious ill will on his part. As a result, the appeal fails.

For judgment, please see: Judgment

For press summary, please see: Press Summary

 

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12 Nov 2019 Morning session Afternoon session
13 Nov 2019 Morning session