European Disputes
Blog

After a year-long wait, the UK Supreme Court finally handed down its decision in Halliburton Company v Chubb Bermuda Insurance Company [2020] UKSC 48 in November 2020. Billed as one of the most significant cases relating to arbitration in recent years, the decision provides the arbitration community with much needed clarity on the circumstances in which an arbitrator in an international arbitration may appear to be biased. In particular, the Supreme Court affirmed that arbitrators have a legal duty to disclose circumstances which may give rise to justifiable doubts as to their impartiality, and while a failure to disclose should be taken into account in assessing apparent bias, it is not determinative.

The two-day hearing took place in the Supreme Court in November 2019, following a Court of Appeal decision in April 2018. The facts of the case arose out of the Deepwater Horizon oil spill in the Gulf of Mexico in 2010 and a refusal by Chubb to make payments pursuant to a liability insurance policy. The policy provided for the resolution of disputes by arbitration and Halliburton commenced proceedings against Chubb. Each party appointed an arbitrator and, upon the parties’ appointees being unable to agree, a third arbitrator, Mr. Kenneth Rokison, was appointed by the court as the chairman. Mr. Rokison was Chubb’s preferred candidate. Subsequently, Mr. Rokison accepted appointments as an arbitrator in two other related arbitrations, in one of which he was Chubb’s appointee. Mr. Rokison did not disclose these two subsequent appointments to Halliburton. Upon discovering Mr. Rokison’s subsequent appointments, Halliburton challenged his ability to serve impartially as an arbitrator and brought an application to have him removed and replaced on the ground that his conduct had given rise to justifiable doubts as to his impartiality.

Both the High Court and the Court of Appeal agreed that there was no apparent bias and accordingly no basis for the removal of Mr. Rokison. They accepted that the relevant test to be applied was whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased. However, they reached differing and unclear decisions on the circumstances in which in which an arbitrator should make a disclosure and the separate question of whether an arbitrator should be removed. It is not unusual for arbitrators to be appointed in multiple overlapping references with one common party, particularly in specialist fields with limited pools of arbitrators. As such the arbitration community was concerned by the lack of clear Court guidance on these issues.

Thankfully, the Supreme Court’s decision does provide helpful clarity. The judgment emphasises that arbitrators are under a continuing legal duty to disclose matters that might reasonably give rise to justifiable doubts as to their impartiality. As such, they should expect that taking further appointments involving common parties and overlapping subject matters is likely to require disclosure, unless the parties have agreed otherwise.

The Supreme Court also clarified the test for determining whether an arbitrator should be removed for apparent bias. While it agreed that the ‘fair-minded and informed observer’ test should be applied, it added that this objective test should consider the facts of the particular case and the custom and practice of the relevant field of arbitration. Therefore, failing to disclose multiple appointments in insurance arbitrations, for example, could give rise to justifiable concerns of bias, although the appeal was dismissed in this case. However, in other fields, the non-disclosure of multiple appointments may be part of normal, accepted practice and therefore disclosure is unnecessary.

The judgment has refined the law on apparent bias, providing much needed clarity on the scope of these duties whilst pragmatically retaining flexibility to factor in the circumstances of each case. The Supreme Court adopted a pro-arbitrator stance, emphasising that these challenges seldom succeed, but it will be interesting to see whether this fact-specific approach produces divergent decisions in future cases.