Impartiality v Confidentiality? – the Arbitrator’s dilemma Halliburton v Chubb, (2020) UKSC 48 and Building Law Monthly

Background

Following the serious accident in the Gulf of Mexico on the Deepwater Horizon oil rig in 2010, a number of claims were brought against petrochemical companies, including Halliburton which settled several huge claims and then made an insurance claim of its own against its insurers, Chubb. The insurer rejected liability and the dispute went to arbitration. Mr Rokison was one of the 3 person arbitration panel, and while that dispute was going on, he was also asked by Chubb to be arbitrator on their separate dispute with another oil company, and also appointed as arbitrator in a further arbitration on the same subject matter but different parties.  Halliburton were very concerned that he had not disclosed these appointments or asked for their consent, and asked the Court to remove him from their arbitration.

Decided

The application failed in the High Court, the Court of Appeal and in the Supreme Court which HELD

  1. Impartiality is a cardinal duty of Arbitrators, and includes a duty not to give any appearance of bias;
  2. From this in turn there arises a secondary duty to disclose matters relevant to the possibility of bias or conflict.
  3. Arbitrators also have a duty of confidentiality, which could clash with disclosure, so the disclosure should only be “high-level”, e.g., naming a common party in two arbitrations, but not the other parties 
  4. Athough Mr Rokison had overlooked the possibility of an appearance of bias, the court held on the facts known at the time of this trial he was clearly not biased, and had conducted the arbitrations fairly.  Also, removing him would have been disproportionately expensive and disruptive.  Consequently, the application to have the Arbitrator removed was refused.

Comments

  1. The Arbitrator’s duty is to disclose “facts and circumstances...which would or might give rise to justifiable doubts as to his impartiality.” This means facts or circumstances which would or might lead a fair-minded and informed observer, having considered the facts, to conclude that there was a real possibility that the arbitrator was biased.
  2. Although the consistent decision of each court was to leave this particular (very distinguished) arbitrator in place, the overall effect is to strongly assert a precautionary duty of disclosure by reference to possible appearance of bias (unconscious or otherwise).
  3. This ruling applies to Adjudicators also. Note that in Beumer v Vinci [2016] EWHC 2283 (TCC) an Adjudicator who acted in 2 adjudications, one between Employer and Main Contractor, and the other between Main Contractor and Subcontractor, without disclosing this to either the Employer or the Subcontractor was held to in material breach of natural justice and his Decision was not enforced.

 

 

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