UK & Europe
Global law firm Clyde & Co has successfully represented Chubb Bermuda in a Supreme Court dispute with Halliburton Company in relation to alleged apparent bias of an arbitrator in multiple appointments.
The UK Supreme Court ruled in favour of Chubb in Halliburton Company v Chubb Bermuda Insurance Ltd  UKSC 48, in which Chubb opposed a challenge brought by Halliburton seeking to remove a third arbitrator, Kenneth Rokison QC, on the basis of an alleged appearance of impartiality, by reason of his having accepted appointments in multiple related references. It was common ground between the parties that the failure to disclose was innocent and inadvertent.
The arbitration between Halliburton and Chubb commenced in January 2015 and concerned a claim under a liability insurance policy arising from the explosion and fire on the Deepwater Horizon oil rig in the Gulf of Mexico on 20 April 2010.
The Supreme Court has, through this ruling, clarified the issue of whether the conduct of an arbitrator who accepts appointments in multiple references concerning the same or overlapping subject matter gives rise to the appearance of bias and, further, whether disclosure to the parties is required in those circumstances. Halliburton appealed the judgment of Mr Justice Popplewell at First Instance in H v L & Ors  EWHC 137 (Comm) and the Court of Appeal judgment in Halliburton Company v Chubb Bermuda Insurance Ltd & Others  EWCA Civ 817.
The Supreme Court unanimously dismissed Halliburton's appeal. The Court found that the fair-minded and informed observer would not infer from Mr Rokison's failure to disclose his appointments in subsequent related references that there was a real possibility of apparent unconscious bias, particularly given the circumstances of the case and the fact that the extent of the overlap between the references was limited. In doing so, the Court restated that the test under s.24 of the Arbitration Act 1996 ("the Arbitration Act") is the common law test of apparent bias, which falls to be determined on the specific facts of an individual case.
However, the Court did establish that arbitrators have a legal duty to disclose facts or circumstances that might reasonably give rise to the appearance of bias, unless otherwise agreed between the parties. The Court was keen to emphasise that the analysis is fact-specific and that the agreement between the parties can be either express or implied.
The decision reinforces the recent trend in the English courts that it is difficult to argue bias in the absence of cogent evidence. The Supreme Court also maintains the court's flexibility in terms of identifying the sorts of circumstances that may satisfy the appearance of bias.
Clyde & Co notes that having regard to the custom and practices of arbitration in the insurance industry, it is common for both insurers and, in particular, insureds alike to appoint the same arbitrator across the insurance tower. This was highlighted in the particular facts of this case where Professor Park, Halliburton's party-appointed arbitrator, was appointed by Halliburton in multiple arbitrations with its insurers.
The Clyde & Co Bermuda Form team was led by Chairman Michael Payton QC (Hon), Partner Emma Ager and Senior Associate Rosehana Amin.
Commenting on the decision, Emma Ager says: “In an eagerly awaited decision today, the Supreme Court has restated the position that the test under s.24 of the Arbitration Act is the common law test of bias which is inevitably fact specific.
"The Court has preserved the integrity of English arbitration and the twin pillars of confidentiality and fairness with a thoughtful analysis of the issues that maintains the central importance of impartiality in English arbitrations, whilst remaining alive to the practical issues arising in particular circumstances and on particular facts.
"The Court has also helpfully clarified that any such analysis must take place at the date of the relevant hearing and should not be analysed from the perspective of an overly sensitive litigant. They have taken a common sense approach to the issue that rejects any idea of a bright line rule and confirmed that the question of bias depends on the facts of the specific case.
"The Court also makes clear that the complaint made in this particular case, regarding multiple appointments, does not, of itself, give rise to a need to disclose in certain markets, with the Court making specific reference to GAFTA, LMAA and reinsurance arbitrations in this regard. The Supreme Court has acted to ensure that England is not out of step with international norms in this area.”
Michael Payton QC adds: “The Supreme Court’s decision is a great victory for common sense.”
The full judgment is available here.