Bias in arbitration: duty to disclose appointments

In its long-awaited decision in Halliburton Company v Chubb Bermuda Insurance Ltd, the Supreme Court has affirmed that arbitrators have a legal duty to disclose circumstances that would or might give rise to doubts as to their impartiality, which may include the acceptance of multiple appointments in overlapping arbitrations ([2020] UKSC 48).

Previously, there was uncertainty as to the prospects of successfully challenging an arbitrator in the English courts based on an appearance of bias, as well as the scope of an arbitrator’s duties in these circumstances. The decision offers guidance for arbitrators, parties and arbitration institutions regarding situations where impartiality is brought into question.

In June 2015, Mr Kenneth Rokison QC was appointed as an arbitrator in arbitration proceedings between Halliburton and Chubb Bermuda Insurance Ltd relating to the explosion of an oil rig (reference 1). Before accepting, Mr Rokison disclosed that he had previously acted, and was currently acting, as arbitrator in a number of arbitrations involving Chubb.

Mr Rokison then accepted two further appointments at Chubb’s request in proceedings related to the explosion but with a different claimant (reference 2 and 3), but he did not inform Halliburton. When Halliburton discovered this, Mr Rokison explained that he had not disclosed it because it did not occur to him that he was under any obligation to do so under the International Bar Association Guidelines. In his view, while all three references arose out of the explosion of the oil rig, the two claimants had performed different roles and the issues were different.

Halliburton applied to remove Mr Rokison under section 24(1)(a) of the Arbitration Act 1996 (1996 Act) (section 24(1)(a)). It claimed that Mr Rokison’s acceptance of the later appointments, his initial failure to disclose them, and his response to Halliburton’s challenge to his impartiality, gave rise to an appearance of bias. The High Court refused the application.

In March 2017, the arbitral tribunals in references 2 and 3 issued awards in Chubb’s favour and, in December 2017, the tribunal in reference 1 issued a final partial award on the merits in Chubb’s favour. Halliburton appealed the High Court’s decision on Mr Rokison’s removal to the Court of Appeal, which dismissed the appeal, and then to the Supreme Court.

The court held that, even though Mr Rokison was under a duty to disclose his later appointments, at the time that the application to remove him was heard at first instance, a fair-minded and informed observer would not infer that there was a real possibility of bias. The court gave guidance on arbitrators’ impartiality and disclosure requirements under the 1996 Act:

This decision will be of particular importance to arbitrators, whether party-appointed or acting as tribunal chair, as well as to parties contemplating challenging an arbitrator based on apparent bias.

A common theme throughout the judgment is the importance of understanding the relevant customs and practices of a particular field of arbitration. This can influence the outcome of a challenge in many ways, including to what extent multiple appointments in related references will give rise to an appearance of impartiality and whether consent to disclosure can be inferred. As such, a thorough understanding of the relevant customs and practices is needed from the outset.

In addition, Halliburton demonstrates the importance of acting promptly. Arbitrators who become aware of a need to disclose matters that are indicative of bias should do so either before accepting a related appointment or as soon as the obligation to disclose arises. Similarly, parties concerned about impartiality should bring any challenge as soon as possible.

In clarifying the existence and scope of the legal duty of disclosure, the judgment invites arbitrators to reflect on whether they should disclose matters that may give rise to apparent bias, and suggests the following guidance:

For parties wishing to challenge the impartiality of an arbitrator, a fundamental takeaway from Halliburton is that there are high hurdles to prove a real possibility of bias under English law. Nevertheless, the following points may be helpful:

Finally, the court confirmed that the arbitrator’s legal obligation of disclosure under English law imposes an objective test, which differs from the rules of many arbitral institutions. The decision also invites arbitral institutions to consider codifying into their rulebooks a default position regarding multiple appointments in related references.

This may be particularly important for specific fields, such as maritime, sports and commodities. Given the fact-specific nature of Halliburton, and the importance of custom and practice of the arbitral field in a given arbitration, greater clarity could avoid diverging outcomes in future judgments.