Facts
- Halliburton Co., a U.S. services company, sought indemnity from Chubb Bermuda Insurance Ltd under an excess liability “Bermuda Form” policy after settlements connected to the 2010 Deepwater Horizon disaster.
- The policy required ad hoc arbitration seated in London and governed by New York law.
- Each party appointed an arbitrator; the High Court appointed a chair (“M”) after the parties could not agree.
- After appointment, M accepted further arbitrator appointments in other Deepwater Horizon-related arbitrations involving Transocean, including at least one proceeding where Chubb was also a party.
- M did not disclose these later appointments to Halliburton.
- Halliburton later learned of the appointments and sought M’s removal under s. 24 of the Arbitration Act 1996, alleging apparent bias arising from overlapping references with only one common party and the non-disclosure.
Issues
- Whether, under English law, an arbitrator has a legal duty to disclose matters that might reasonably give rise to justifiable doubts about impartiality, including multiple related appointments with only one common party.
- Whether M breached any such duty by failing to disclose subsequent Deepwater Horizon-related appointments.
- Whether the non-disclosure and overlapping appointments created a real possibility of bias justifying removal of the arbitrator under s. 24 of the Arbitration Act 1996.
Decision
- The Supreme Court dismissed the appeal and refused to remove M.
- The Court held that English law imposes a legal duty on arbitrators to disclose circumstances that might reasonably give rise to justifiable doubts as to impartiality.
- The Court held M should have disclosed the later overlapping appointments and that the failure to disclose was a breach of that duty.
- The Court nevertheless held that, assessed objectively and in context, the non-disclosure did not establish a real possibility of bias and therefore did not justify removal.
Legal Principles
- The test for apparent bias is whether a fair-minded and informed observer, having considered the facts, would conclude there is a real possibility the tribunal is biased.
- An arbitrator’s duty to act fairly and impartially under s. 33 of the Arbitration Act 1996 includes a legal duty to disclose matters that might reasonably give rise to justifiable doubts about impartiality.
- Multiple appointments in references involving overlapping subject matter with only one common party may require disclosure, including because of risks tied to confidential information, unconscious partiality, and procedural advantage.
- Confidentiality does not necessarily prevent disclosure; limited disclosure may be made with necessary consent (express or implied by established practice) to satisfy the duty.
- A failure to disclose is a relevant factor in assessing apparent bias but does not, by itself, establish apparent bias; the assessment is context-specific and considers relevant arbitral practices and the timing of the court’s evaluation.
Conclusion
The Supreme Court confirmed a legal duty for arbitrators in English-seated arbitrations to disclose circumstances that could reasonably raise doubts about impartiality, including certain overlapping appointments, but held that breach of that duty did not warrant removal absent an objective real possibility of bias on the facts and in context.