UK Supreme Court restates the duty of impartiality and obligations of arbitrators to make disclosure.

In Halliburton Company (Appellant) v Chubb Bermuda Insurance Ltd (formerly known as Ace Bermuda Insurance Ltd) (Respondent) [2020] UKSC 48 the UK Supreme Court considers the circumstances in which an arbitrator in an international arbitration may appear to be biased. It raises important questions about the duty of impartiality and obligation of arbitrators to make disclosure. 

The Background

(a) The appeal relates to an arbitration under a liability insurance policy which arose out of damage caused by the 2010 explosion and fire on the Deepwater Horizon drilling rig (‘Deepwater’) in the Gulf of Mexico.

(b) Transocean Holdings LLC (“Transocean”) owned the rig and provided crew and drilling teams to BP which operated Deepwater. The appellant, Halliburton Company Ltd (“Halliburton”) provided oil-well services to BP. Halliburton had entered into a liability policy with the respondent, Chubb Bermuda Insurance Ltd (“Chubb"). The Deepwater disaster resulted in numerous claims against BP, Transocean and Halliburton. A US court gave judgment apportioning blame between the various Deepwater parties and Halliburton settled the claims against it. Halliburton then sought to claim against Chubb under the liability policy but Chubb refused to pay.

Arbitration

(c) Halliburton commenced arbitration. Halliburton and Chubb each selected one arbitrator but were unable to agree on the appointment of a third arbitrator as chairman. As a result, after a contested hearing in the High Court, Mr Rokison, proposed by Chubb to the court, was appointed. 

(d) Subsequently and without Halliburton’s knowledge, Rokison accepted appointment as an arbitrator in two separate references also arising from the Deepwater incident. The first appointment was made by Chubb and related to Transocean’s claim against Chubb. The second was a joint nomination by the parties involved in a claim by Transocean against another insurer.

The High Court and Court of Appeal 

(e) On discovering Rokison’s appointment in the later references, Halliburton applied to the court to remove Rokison as an arbitrator. That application was refused. On appeal, the Court of Appeal found that, while Rokison ought to have disclosed his proposed appointment in the subsequent references, an objective observer would not in the circumstances conclude there was a real possibility Rokison was biased. The appeal was therefore dismissed. 

The Supreme Court 

(f) The UKSC rejected the appeal determining that the fair-minded and informed observer would not conclude that circumstances existed that gave rise to justifiable doubts about Rokison’s impartiality. 

The Reasons

(g) The duty of impartiality is a core principle of arbitration law. 

(h) In considering an allegation of apparent bias against an arbitrator, the test is whether the fair-minded and informed observer would conclude there is a real possibility of bias. The courts will apply that objective test, having regard to the particular characteristics of international arbitration, including the private nature of most arbitrations. 

(i) The duty of disclosure is not simply good arbitral practice but is a legal duty and a component of the arbitrator’s statutory obligations of fairness and impartiality. It is a secondary obligation arising from the arbitrator’s primary duty to act fairly and impartially. The legal duty of disclosure does not, however, override the arbitrator’s duty of privacy and confidentiality. 

(j) Where information which needs to be disclosed is subject to a duty of confidentiality, disclosure can only be made if the parties owed confidentiality obligations give their consent. Such consent may be express but may also be inferred from the arbitration agreement itself in the context of the custom and practice in the relevant field of arbitration. The arbitrator’s duty of disclosure is to disclose matters which might reasonably give rise to justifiable doubts as to his or her impartiality. A failure to disclose relevant matters is a factor for the fair-minded and informed observer to take into account in assessing whether there is a real possibility of bias. 

(k) In assessing whether an arbitrator has failed in a duty to make disclosure, the fair-minded and informed observer will have regard to the facts and circumstances as at and from the time the duty arose. 

(l) In assessing whether there is a real possibility that an arbitrator is biased, the fairminded and informed observer will have regard to the facts and circumstances known at the time of the hearing to remove the arbitrator. 

(m) There may be circumstances where the acceptance of multiple appointments involving a common party and the same or overlapping subject matter gives rise to an appearance of bias. Whether it does so will depend on the facts of the case and, in particular, the customs and practice in the relevant field of arbitration. 

(n) Where the circumstances might reasonably give rise to a conclusion that there was a real possibility of bias, the arbitrator is under a legal duty to disclose such appointments unless the parties to arbitration have agreed otherwise. 

(o) Applying those conclusions to the facts, Rokison was under a legal duty to disclose his appointment in the subsequent reference involving Chubb and Transocean. At the time of his appointment, the existence of potentially overlapping arbitrations with only one common party, Chubb, might reasonably have given rise to a real possibility of bias. In failing to make that disclosure Rokison breached his duty of disclosure. However, having regard to the circumstances known at the date of the hearing at first instance, it could not be said that the fair-minded and informed observer would infer from Rokison’s failure to make disclosure that there was a real possibility of bias.