## Facts

- A shipowner (Veritas) and a charterer (Anglo-Canadian Cement) entered a May 1964 charter party containing a London arbitration clause requiring each party to appoint one arbitrator, with an umpire if needed.
- A dispute arose and arbitration commenced under the clause.
- Veritas appointed Mr. Clyde as its arbitrator and demanded that Anglo-Canadian Cement appoint its arbitrator.
- Anglo-Canadian Cement nominated Dr. Wallersteiner, its managing director, by a nomination letter authored and signed by Dr. Wallersteiner on the company’s behalf, effectively a self-appointment.
- Veritas objected that Dr. Wallersteiner’s managerial role created an unacceptable lack of independence and that the method of appointment was improper.
- Anglo-Canadian Cement refused to appoint another arbitrator, and Dr. Wallersteiner refused to withdraw.
- Veritas applied to the High Court under the Arbitration Act 1950 seeking removal of Dr. Wallersteiner and appointment of a replacement.

## Issues

1. Whether a party may validly appoint its managing director as arbitrator under a standard two-party arbitration clause, given concerns about impartiality.
2. Whether an appointment is invalid or removable where the proposed arbitrator effectively appoints himself by issuing the nomination letter on the party’s behalf.
3. Whether, and on what basis, the court may remove an arbitrator and appoint a substitute under the Arbitration Act 1950 §§ 23 and 25(1).

## Decision

- The Queen’s Bench Division (McNair J) granted relief to Veritas.
- The court removed (or treated as not to stand) Dr. Wallersteiner’s appointment as arbitrator.
- The court exercised its statutory authority to appoint another arbitrator in his place so the arbitration could proceed before a properly constituted tribunal.

## Legal Principles

- Arbitrators perform a quasi-judicial role and must meet minimum standards of impartiality; a close managerial connection to a party may create a disqualifying appearance of bias.
- Party autonomy in selecting arbitrators is constrained by the requirement that the tribunal be capable of acting as a neutral decision-maker under the parties’ agreement.
- An appointment process that blurs the distinction between a party’s nomination and the arbitrator’s acceptance (including effective self-appointment) may support judicial intervention to protect the regularity of the arbitral process.
- Under Arbitration Act 1950 § 23, the court may remove an arbitrator where fairness or proper conduct of the arbitration is compromised.
- Under Arbitration Act 1950 § 25(1), once removal (or failure of appointment) occurs, the court may appoint a substitute arbitrator to carry out the parties’ agreement to arbitrate.

## Conclusion

The court held that appointing a party’s managing director as its arbitrator—particularly through an effective self-appointment—was incompatible with the impartial character required of an arbitral tribunal, and it used its statutory powers to remove the appointee and appoint a replacement.


Veritas Shipping Ltd. v. Anglo-Canadian Cement, Ltd., [1966] 1 Lloyd’s Rep. 76 (Q.B. 1966)