27 Nov 2020
The Supreme Court has handed down its judgment in the case of Halliburton v Chubb, which dealt with the issue of when an arbitrator must disclose circumstances which may give rise to justifiable doubts about their impartiality. The appeal was brought by Halliburton Company and centred on their objection to the appointment of an arbitrator in their dispute with Chubb Bermuda Insurance Limited linked to the Deepwater Horizon oil spill. Their appeal rested on the grounds that the arbitrator in question had accepted other arbitration appointments related to the Deepwater Horizon incident and had failed to disclose this to them. Whilst the appeal was dismissed, the Supreme Court has reiterated the primacy of impartiality in English arbitration law and has confirmed that arbitrators have a legal duty to disclose any circumstances that might give rise to doubt regarding their impartiality.
The Chartered Institute of Arbitrators (CIArb) sought permission to intervene in this case due to the importance of the issues which arose concerning the impartiality of arbitrators and the practice of arbitrators disclosing matters which might give rise to doubts as to their impartiality, and the tension which might arise in cases of multiple appointments, given the confidentiality which applies to most arbitrations. Permission was granted because CIArb plays a leading role in the worldwide arbitration community by offering training and guidance to arbitrators on good practice and acting in a supervisory and disciplinary role for its members.
Through its instructed legal team (acting pro bono) of Louis Flannery QC and Sophia Louw, of Mishcon de Reya, and Duncan Bagshaw of Howard Kennedy, CIArb provided the Court with submissions offering the Court insight into the practice of CIArb's members, and the standards to which its members are expected to conform.
CIArb welcomes, and respectfully agrees with, the Supreme Court's re-iteration that the obligation of impartiality is a core principle of arbitration law and, in English law, the duty of impartiality applies equally to all arbitrators, whomsoever may have appointed them. We also note that the Supreme Court has confirmed that there is a legal duty upon arbitrators to make disclosure of matters which would or might reasonably give rise to justifiable doubts as to their impartiality.
We also welcome the Court's acknowledgment that, in some cases, the acceptance of appointments in multiple references with overlapping subject matter and one common party might – in itself – cause the objective observer to conclude that there is a real possibility of bias. We note the further emphasis of Lady Arden who expressed the view that "[s]uch an appointment is likely to give rise to a potential inequality of arms and material asymmetry of information" and therefore disclosure of such a situation should, in principle, be made to the parties to both the current and proposed arbitration.
Jonathan Wood FCIArb (Chair, CIArb Board of Trustees) commented:
"The Supreme Court has handed down a judgment today which upholds the Court of Appeal's decision that in English law there is a legal duty to disclose facts and circumstances known to an arbitrator which would or might give rise to justifiable doubts regarding their impartiality. Lord Hodge says at paragraph 81 of his judgment: “In summary, I would hold 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 [Arbitration Act] 1996 and which underpins the integrity of English-seated arbitration”. CIArb was one of the parties which made an intervention in the proceedings, represented by Louis Flannery QC FCIArb of Mishcon de Reya and Duncan Bagshaw FCIArb of Howard Kennedy. Their submissions were acknowledged by his Lordship who says at paragraph 80 “It is striking that ICC, LCIA and CIArb, which have no financial interest in the outcome of this litigation but have an interest in the integrity and reputation of English-seated arbitration, argue in favour of the recognition of such a legal duty. The existence of a legal duty promotes transparency in arbitration." Overall a fine day in support of the integrity of English-seated arbitration (and indeed Scottish arbitration as well).”
Catherine Dixon (Director-General, CIArb) commented:
“This case involved issues that are absolutely central to arbitration: the primacy of impartiality and the duty to disclose any matters that might give rise to doubts about that impartiality. As the leading professional body for arbitration and ADR, CIArb intervened in this case to emphasise the importance of the duty to disclose and the highest standards in this area that we expect of our members. We welcome the Supreme Court’s confirmation of the duty to disclose, and would like to thank Louis Flannery QC, Duncan Bagshaw, and their respective teams for acting for us in this case.”
Louis Flannery QC FCIArb (Partner, Mishcon de Reya) commented:
“The judgment of Lord Hodge has confirmed that there is a duty of disclosure under English law that falls upon arbitrators and prospective candidates – the duty being to disclose anything that "might reasonably give rise to justifiable doubts" as to impartiality. This is the test suggested in Merkin and Flannery on the Arbitration Act 1996 (6th ed., 2019), pp286-287 (cited with approval by Lord Hodge at para 110). Although on the facts M (who has been named as Ken Rokison QC) had breached his duty in not disclosing the later appointments, judged at the time of bringing the application, the court at first instance was right to conclude that the failure to disclose did not in and of itself give rise to justifiable doubts as to impartiality.”
Duncan Bagshaw FCIArb (Partner, Howard Kennedy) commented:
"The Supreme Court's decision represents a welcome reinforcement of the importance of the duty of impartiality, and of the high standards expected of arbitrators in providing information to parties to support the parties' right to raise their concerns in that regard, if they so choose. Whilst much of the decision turned on the facts of the case at hand, parties to arbitration in England can feel reassured that the integrity of the process remains at the heart of the English court's approach."
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