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England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> ASM Shipping Ltd of India v TTMI Ltd of England  EWHC 2238 (Comm) (19 October 2005)
Cite as:  EWHC 2238 (Comm),  1 CLC 656,  2 All ER (Comm) 122,  1 Lloyd's Rep 375
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| A.S.M Shipping Ltd of India
|- and -
|T.T.M.I Ltd of England
Simon Croall (instructed by Messrs Waterson Hicks) for the Defendant
Hearing dates: 27 September 2005
Crown Copyright ©
Morison J :
"2. The background to this application is as follows. On 11th December 2002 TTMI Ltd. chartered from ASM Shipping Ltd. of India the AMER ENERGY to carry a cargo of gas oil from one or two safe ports in the Arab Gulf to one or two safe ports in the Red Sea or Egyptian Mediterranean. The vessel was described in the fixture recap as "expected ready around 20th December all going well" and the laycan dates were 25th December to 27th December. The vessel was at this time anchored at Fujairah undergoing repairs. Whilst there, she was arrested by Shell on 7th November for bunkers and on 26th November by Inchcape for services, those arrests being in respect of very modest sums.
3. The arrests were not lifted until 2nd January 2001 and she departed from Fujairah the next day. She arrived at the nominated load port of Mina al-Ahmadi only on 6th January 2001. The charterers claimed that by reason of the vessel's late arrival they suffered substantial losses because of an increase in the price of the cargo and because they lost their intended purchase contract. The dispute was referred to arbitration in March 2001. The owners counterclaimed that they were entitled to substantial unpaid freight and demurrage. The cargo was in the end carried to Indonesia.
4. During the course of the still unconcluded arbitration, the arbitrators have made a number of awards. On 26th April 2001 the Tribunal made an award in owner's favour in respect of freight in the sum of US$640,100 together with interest at 7.5 per cent to be compounded at three monthly rests and costs. By an agreement between the parties a sum of $707,500 was paid into a joint interest-bearing escrow account at the Royal Bank of Scotland on 28th June 2002. On 23rd October 2002 owners applied to the Tribunal for an immediate award in their favour in respect of the demurrage claimed of $202,390. On 18th November 2002 the Tribunal dismissed that application and ordered the owners to pay to the charterers their costs of the application for such an award.
5. There has been a substantial dispute as to whether the owners had properly complied with their obligation to give disclosure. The Tribunal made serious criticism of the owners' behaviour in this respect and on 16th July 2004 ordered them to pay all the charterers' costs relating to the charterers' application for disclosure of owners' files within 14 days of the amount of those costs being fixed.
6. On 24th September the Tribunal made another award in which they declined to review or withdraw their July award and in which they determined that the charterers' costs covered by that July award were £14,825.09. They ordered the owners to pay those costs plus interest together with £9,085.00, the costs of the September award, making £23,910.59 in all. They also ordered owners to pay the charterers' costs of the application to review the earlier award.
7. On 23rd December 2004 the Tribunal determined a number of preliminary issues largely in the charterers' favour holding, amongst other things, that owners had been obliged to ensure that the vessel embarked upon her approach voyage within such time that it was reasonably certain that she could arrive at the load port so as to comply with the laycan of 20th to 27th December and holding that an exceptions clause in the charter did not avail the owners for their failure so to do. The owners took up this award in January 2005 paying the cost of the same, that is to say, £43,600."
"We have now spoken with Mr Moustakas and he tells us that all his papers have been sent by him to his Greek Lawyer and, therefore, he is not in a position to immediately provide us with documents concerning the nature of the allegations which Waterson Hicks had made against him in the case of the vessel B. However, we understand from Mr Moustakas that in that case, like in this case, Waterson Hicks had mounted an attack on their opponent alleging impropriety in giving discovery and in the correspondence had personally accused Mr Moustakas of producing fraudulent and fabricated documents and had threatened forensic investigation to verify the authenticity of those documents in Mr Moustakas' file. In other words in that case Waterson Hicks had alleged a criminal act on part of Mr Moustakas. In the end Mr Moustakas' file was disclosed and we are told nothing of interest was found and the allegations were totally unfounded.
As you had acted for Waterson Hicks' clients in the B case, it is most likely that Waterson Hicks would have mentioned those unfounded allegations against Mr Moustakas to you in the course of your instructions. This in Owner's view would have made you unsuitable to accept a judicial office in a case where you knew that Mr Moustakas was going to be one of the two key witnesses for one of the parties.
In the circumstances, we would request you to please provide full documents concerning the B and provide details of each and every allegation which were made by your then instructing solicitors Waterson Hicks against Mr Moustakas. In the event that you do not have the documents then would you be so good to request your instructing solicitors Waterson Hicks in the B case to make available the documents. Perhaps, Waterson Hicks could check with the partner concerned and confirm that what is said above is indeed correct about the nature of the allegation they have made against Mr Moustakas in the B case."
1. I have now had the opportunity to refresh my memory by reviewing my own papers in the B overnight and consider further the position in relation to Mr. Moustakas. For reasons which will become apparent I do not have public documents in relation to the case or indeed any of the papers sent to me in connection with it, but for reasons which will also become apparent I do not consider that a matter of concern.
2. The B involved a dispute in arbitration between Owners and Charterers under a charter in which Mr. Moustakas was the broker. The dispute appears to have concerned, among other things, an issue as to the terms of the charter in circumstances where there was no signed charter document, not an uncommon factor.
3. I became involved in the case shortly before the hearing of an application to the High Court under section 43 of the Arbitration Act 1996 for Mr. Moustakas to produce his fixture file. I was not originally instructed in the matter and indeed did not prepare the application; other Counsel were previously (and for that matter subsequently) involved who were unavailable for the hearing.
4. The application was a perfectly standard application for production of documents.
5. As I indicated yesterday, production was being resisted on the grounds of confidentiality and privilege. The application raised no allegations of impropriety, let alone criminal conduct, on the part of Mr. Moustakas that I am aware of. As is perfectly normal in such cases, the production of the whole file was considered important so that the chronological sequence of documents be retained.
6. The application came on before Cresswell J who promptly indicated in argument that he felt matters of privilege and confidentiality were properly to be addressed by the Tribunal before whom the substantive hearing was to take place. He accordingly urged the parties to reach accommodation with each other. Discussions were held between the respective lawyers so far as I am aware, Mr. Moustakas was not present and I have never met him before this hearing or had any contact with him as far as I am aware. This makes somewhat surprising the suggestion in Mr. Zaiwalla's fax of 6 October 2004 that Mr. Moustakas reacted to having seen me in the corridor, since I am not aware of his having set eyes on me before. In any event, a consent order was agreed between the lawyers whereby the file would be produced to the Tribunal on certain terms.
7. I made no further application. I am aware of the fact that there was a complaint that the consent order was not complied with. I did not make the application or applications, if there was more than one, relating to that as the Counsel previously involved resumed conduct of the case and I was in any event taken up with other matters and unable to assist. I have absolutely no idea whether the complaint of non-compliance with the consent order was good or bad or as to what happened on any subsequent application or applications as I have not since been involved in the case and as I indicated earlier I have not retained the papers I was sent.
8. Mr. Zaiwalla yesterday raised the suggestion of criminal allegations. I cannot hazard what they might be, save I suppose criminal contempt for non-compliance with the consent order. As I have indicated, I do not know what happened in relation to the allegation of non-compliance with the order. I note however from Mr. Zaiwalla's fax to me, copied to the other members of the Tribunal and to Waterson Hicks, of 6 October 2004 that the file was subsequently disclosed and nothing of interest was found. I have no reason to doubt that. I do not recall making or Waterson Hicks or their clients making any allegation of producing fraudulent and fabricated documents and threatening forensic investigation and there is no reference to this in the preparatory note of oral submissions which I prepared for the hearing, but again I have no basis for thinking that any such allegation, even if made, was ever substantiated. There does appear to have been an argument raised by the other side in that case and contested by Waterson Hicks's clients that 2 documents were shams drawn up at a later date. I have no idea what happened, if anything, to that allegation but it was certainly not one being made by or on behalf of Waterson Hicks's clients.
9. As far as I am concerned nothing relating to that case gives rise to any doubt in my mind as to the propriety of Mr. Moustaka's conduct.
10. The question has been raised as to why I did not raise the matter earlier. The simple answer is that I did not have my short involvement in the B case in mind and had simply not made any connection with a Mr. Moustakas who was to be a witness in this case until shortly before I raised the matter with the parties. My involvement in the B related to an utterly innocuous hearing applying for a 3rd party to produce documents in respect of which he expresses perfectly proper and common place reservations about confidentiality and privilege and the facts had made no profound impression on me. The first occasion on which I made the connection was when Mr. Moustakas towards the very end of the second day of his evidence referred, it seemed to me somewhat pointedly, to another case to do with the production of a file which for the first time rang bells with me.
11. Mr. Moustakas's evidence finished a few minutes later and I immediately raised the matter with my co-arbitrators and made a declaration to the parties to address the matter.
12. I considered then and I still consider now that there is no basis for recusing myself as I do not believe that any circumstances exist which give rise to justifiable doubts as to my impartiality. Indeed, I believe that it would be thoroughly inappropriate to recuse myself in the absence of any such circumstances and in the light of the extent of my involvement at the stage reached in the proceedings so far.
13. I observe from Mr. Zaiwalla's fax of 6 October 2004 that Mr. Moustakas had raised my involvement in the B before he began to give evidence. I do not consider that anything that has emerged since has altered the position. If there was an objection to be made it could and should have been made then and could have been addressed then. Owners were clearly at the very least put on inquiry simply on the basis of what Mr. Zaiwalla says in his fax.
14. I also observe that Mr. Zaiwalla's fax of 6 October 2004 suggests some similarity of tactics on the part of Waterson Hicks in making allegations about impropriety in connection with disclosure. It is a feature of a very large number of cases these days that such allegations are made, they are not the trademark of any one firm.
15. I have already addressed the question of the extent of my connections with Waterson Hicks and produced the necessary and relevant figures which frankly speak for themselves: since February 1994 I have been instructed as counsel by Waterson Hicks on 10 cases and as mediator in one case; over the same period I have been instructed to act in over 400 cases. Mr. Zaiwalla asks for written disclosure of the number of cases in which I have acted for Waterson Hicks's clients in the last two years. Other than the B, my only other work for Waterson Hicks in the last two years was appointment as mediator on 27 November 2003 for a mediation which took place on 3 December 2003.
16. Without wishing to cause any offence to Waterson Hicks, my professional contact with them (as the figures show) is very small in the context of my practices as a whole, representatives of their firm are amongst the approximately 500 people who attend my Chambers' summer party and I have no personal contact with any person at Waterson Hicks. I have also met them at public professional functions such as the LMAA dinner; I have also in fact sat with Mr. Zaiwalla at an LMAA dinner and enjoyed a perfectly pleasant evening, though he seems to have no recollection of the occasion, a matter which I certainly do not hold against him.
17. I have read Mr. Zaiwalla's account of a matter concerning the clerks' room at 20 Essex Street. I had no previous knowledge of this prior to Mr. Zaiwalla's letter. I am grateful to be made aware of it and will, with the consent of both parties, pass Mr. Zaiwalla's letter to my Head of Chambers for further investigation, though it appears rightly that the Owners do not make any complaint of my position in relation to that.
18. I consider that we should now get on with this case; this unfortunate distraction has absorbed a lot of time and energy. I am satisfied that there is no basis for any objection to my continuing and considerable basis for objecting to my ceasing to do so. I consider it would be wrong in principle for me to recuse myself and the Owners dealing fairly with the situation should now acknowledge the same."
The parties' submissions
"obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense."
To this end, section 33 imposes on the arbitral tribunal a duty to
"act fairly and impartially as between the parties ... "
"The question is whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the Tribunal was biased."
"What the public was content to accept many years ago is not necessarily acceptable in the world of today. The indispensable requirement of public confidence in the administration of justice requires higher standards today than was the case even a decade or two ago. The informed observer of today can perhaps be expected to be aware of the legal traditions and culture of this jurisdiction as was said in Taylor v Lawrence  EWCA Civ 90 at  –  ... per Lord Woolf CJ. But he may not be wholly uncritical of this culture. It is more likely that in the words of Kirby J in Johnson v Johnson  201 CLR 488 at 509  he would be "neither complacent nor unduly sensitive or suspicious"."
(1) the lay members of the EAT were of "very high calibre and standing" ;
(2) they could "differentiate between the neutral judicial function and the partisan advocacy function";
(3) "legal traditions and culture" vouched for the practice.
"fairly be assumed that one of the reasons why the parties have agreed to trade arbitration is that they wish to have their dispute decided by people who are themselves active traders and so have direct knowledge of how the trade works. However, if the arbitrators themselves are to be active traders there is every likelihood that at least one member of the tribunal will at some time have had commercial dealings with one or both parties to the dispute. That is something which the parties must be taken to have had in mind."
"As a result of these factors it is impossible to assert that simply because I act against UEFA in one case, I cannot impartially arbitrate in another case in which UEFA are a party, especially when the cases have no connection other than UEFA's participation in them. To hold otherwise would be to deny the independence of any English barrister of his client."
"must be assessed according to the circumstances of the case and thus not on the basis of general or subjective assumptions which are not objectively verified in the case in hand. "a serious doubt regarding an arbitrator's independence must be based on concrete facts that can justify, objectively and reasonably, a lack of confidence on the part of a person reacting in a reasonable manner".
"It is respectfully submitted that X should have recused himself in accordance with the principles set out in [Porter v Magill] ... especially where objection was taken by a foreign party."
"In conclusion, in considering the submissions of Mr Sullivan and Mr Leggatt, I have sought to resist the temptation, to which a person such as I, who has spent many years growing familiar with the English legal system may be prone, to assume that what is so familiar to me would be clear to foreign parties, or to overlook or underestimate concerns which such foreign parties may have. Thus I have borne well in mind that Laker is a foreign party. That is why I have been particularly assisted by the findings and conclusion of such foreign or international tribunals as the Paris Court of Appeal or the LCIA Court of Arbitration."
"Nor will the reviewing court pay attention to any statement by the judge [defined to include any judicial decision maker such as an arbitrator] concerning the impact of any knowledge on his mind or his decision: the insidious nature of bias makes such a statement of little value, and it is for the reviewing court and not the judge whose impartiality is challenged to assess the risk that some illegitimate extraneous consideration may have influenced his decision."
Section 33 of the Act provides that:"(1) The Tribunal shall:
"act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent, and adopt procedures suitable for the circumstances of the particular case....So as to provide as fair means for the resolution of the matters failing to be determined.
(2) The Tribunal shall comply with that general duty in conducting the arbitral proceedings in its decisions on matters of procedure and evidence and in exercise of all others powers conferred on it."
"The Court does not have a general supervisory jurisdiction over arbitrations. We have listed the specific cases where a challenge can be made under this clause. The test of "substantive injustice" is intended to be applied by way of support for arbitral process, not by way of interference with that process. Thus it is only in those cases where it can be said that what has happened is so far removed from what could reasonably be expected of the arbitral process that we would expect the Court to take action. The test is not what would have happened had the matter been litigated. To apply such a test would be to ignore the fact that the parties have agreed to arbitrate, not litigate. Having chosen arbitration, the parties cannot validly complain of substantial injustice unless what has happened cannot on any view be defended as an acceptable consequence of that choice."
"29. The 1996 Act was intended to change the law. It was not merely a codifying statute. The court may be required in some circumstances to enforce or not to disturb an arbitrator's decision, even when the court disagrees with that decision in law or in fact.
30. So also under the 1996 Act the court may be required to enforce or decline to disturb an arbitrator's decision even when the court discerns an element of unfairness.
31. Both sections 68 and section 24 of the Act justify action by the court only when substantial injustice has been or will be caused to the applicant, not when a substantial injustice may be caused to the applicant. It follows that even unfairness does not of itself and without more vitiate an arbitral award.
32. It is more important to look at the decisions that the courts made after the 1996 Act came into force than to consider the earlier decisions.
33. For example, counsel for GS relied on Interbulk Ltd v Aiden Shipping Co Ltd (The Vimeira)  2 Lloyd's Rep 66, before the Act. In that case, at page 76, Lord Justice Ackner said:
Where there is a breach of natural justice as a general proposition it is not for the Courts to speculate what would have been the result if the principles of fairness had been applied. I adopt, with respect, the words of Mr Justice Megarry in John v Rees  2 all ER 274 at p 309 where he said:
"As everybody who has anything to do with the law well knows, the path of the law is strewn with examples of open and shut cases which, somehow, were not; of unanswerable charges which, in the event, were completely answered; of inexplicable conduct which was fully explained; of fixed and unalterable determinations that, by discussion, suffered a change.
34. Though entirely attractive as a general proposition, that is no longer the law as a result of the 1996 Act. The Act does not require the court to speculate what would have been the result if the principles of fairness had been applied, but the Act requires that the court is only to interfere if the court considers, not speculates, that the irregularity or unfairness has caused or will cause substantial injustice to the applicant.
35. It follows that there must be some instances of unfairness on the part of an arbitrator where the court should not intervene. It may be that some instances of unfairness that in fact caused substantial injustice to the applicant will not be the occasion for the court intervening simply because there is insufficient evidence to lead to the court to consider that the irregularity or unfairness has caused or will cause substantial injustice to the applicant.
38. The policy of the 1996 Act is to make it more difficult to question the decisions of arbitrators, not to make challenges easier.
39. The word "substantial" appears in many contexts in our law. One simply cannot take a definition of the word from one context and apply it without question to another totally different context. I reject totally Mr Acton Davis's submission as to the meaning of the word "substantial". In the present context, I prefer such dictionary meanings as "having a real existence", "essential", "of ample or considerable amount, quantity or dimensions".
40. In the present context, Parliament plainly meant to refer to some injustice that had some real effect as opposed to a failure to deal with arguments that causes affront or disquiet without substantial effect. The highest requirement that justice should manifestly be seen to be done may require that a judicial decision be overturned because of the manner in which it was reached, without it being demonstrated that the result produced injustice. But that is not the system applied to arbitrations by the 1996 Act."
"The power of the Court to remove an arbitrator on the grounds of bias is now to be found in s. 24(1) of the Arbitration Act, 1996, the material parts of which provide as follows:
"A party to arbitral proceedings may...apply to the court to remove an arbitrator on any of the following grounds:- that circumstances exist that give rise to justifiable doubts as to his impartiality;"
It was common ground between the parties, rightly in my view, that the same test applies in relation to the Court's power to set aside an award for serious irregularity under s. 68 of the Act when the application is made on the grounds of bias. In R. v. Gough,  AC 646 Lord Goff of Chieveley summarised the principles which apply at common law to the question of apparent bias in the following way at p. 670C:
"...having ascertained the relevant circumstances, the court should ask itself whether having regard to those circumstances, there was a real danger of bias on the part of the relevant number of the tribunal in question in the sense that he might unfairly regard (or have unfairly regarded) with favour or disfavour the case of a party under consideration by him."
Although the test in s. 24 of the Act is worded differently ("justifiable doubts as to his impartiality" as opposed to "real danger of bias") I respectfully agreed with Mr. Justice Rix in Laker Airways Inc. v. FLS Aerospace Ltd.  2 Lloyd's Rep. 45 at p. 48, col. 2 that s. 24 lays down an objective test which reflects the position at common law. Accordingly, the discussion of the common law principles to be found in R. v. Gough and similar cases illustrates the approach which ought to be adopted when a question of this kind arises in the context of arbitration.
The second of these principles calls for particularly careful consideration when one is dealing with arbitrators appointed under the rules of trade associations. In such cases it can fairly be assumed that one of the reasons why the parties have agreed to trade arbitration is that they wish to have their dispute decided by people who are themselves active traders and so have direct knowledge of how trade works. However, if the arbitrators are themselves to be active traders there every likelihood that at least one member of the tribunal will at some time have had commercial dealings with one or both of the parties to the dispute. That is something which the parties must be taken to have had in mind. As Mr. Justice Staughton pointed out in Tracomin S.A. v. Gibbs Nathaniel (Canada) Ltd.,  1 Lloyd's Rep. 586 at pp. 588-589, there are many well established features of commercial arbitration which find no parallel in the more formal procedures adopted in Courts of law. They are known to and accepted by the parties and many people number them among the advantages of arbitration over litigation as a means of resolving commercial disputes. In the case of a trade tribunal the fact that an arbitrator has previously had commercial dealings with one or both parties has never been regarded as sufficient of itself to raise a doubt about his ability to act impartially. Moreover, Mr. Nolan was right in my judgment to accept that the fact that those dealings had on occasions given rise to disputes would likewise not of itself provide grounds for doubting an arbitrator's impartiality. Disputes are part and parcel of commercial life in general and commodity trading is no exception. The vast majority are resolved amicably and those which are not are generally resolved by arbitration without generating any lasting animosity. However it might strike an outside, I am confident that most traders take a fairly robust view of such matters and would not regard them as being of any significance when considering an arbitrator's ability to act impartially. Certainly the evidence put before the Court in the present case supports that conclusion. This is important because when judging a matter of this kind one has to take into account the complainant's knowledge and experience of the trade in question and the manner in which disputes are habitually resolved: see Bremer Handelsgesellschaft m.b.H. v. Ets. Soules et Cie.  1 Lloyd's Rep. 160 per Mr. Justice Mustill at pp. 164-165. On the other hand, one cannot ignore the fact that from time to time events occur which cannot be regarded as simply part of the ordinary incidents of commercial life and it is important for every trade arbitrator to be alert to the possibility that the particular circumstances of the case may, viewed objectively, give rise to justifiable doubts about his ability to act impartially. That is all the more important given the fact that, as both Lord Goff and Lord Wolf emphasized in R. v. Gough, bias may be unconscious."
"(1) If a party to arbitral proceedings takes part, or continues to take part, in the proceedings without making, either forthwith or within such time as is allowed by the arbitration agreement or the tribunal or by any provision of the Part, any objection –
that the proceedings have been improperly conducted.
(d) that there has been any other irregularity affecting the tribunal or the proceedings, he may not raise that objection later, before the tribunal or the court, unless he shows that, at the time he took part or continued to take part in the proceedings, he did not know and could not with reasonable diligence have discovered the grounds for the objection."
"The effect of this section is that a party to an arbitration must act promptly if he considers that there are grounds on which he could challenge the effectiveness of the proceedings. If he fails to do so and continues to take part in the proceedings, he will be precluded from making a challenge at a later date. Moreover, it is clear from the language of sub-s. (1) itself that it is unnecessary for an applicant to have had actual knowledge of the grounds of objection in order for him to lose his right to challenge the award. If the respondent can show that the applicant took part or continued to take part in the proceedings without objection after the grounds of objection had arisen, the burden passes to the applicant to show that he did not know, and could not with reasonable diligence have discovered, those grounds at the time. It may often be necessary, therefore, to consider the applicant's conduct of the proceedings against the background of his developing state of knowledge."
"It would be dangerous and futile to attempt to define or list the factors which may or may not give rise to a real danger of bias. Everything will depend on the facts, which may include the nature of the issue to be decided. We cannot, however, conceive of circumstances in which an objection could be soundly based on the religion, ethnic or national origin, gender, age, class, means or sexual orientation of the judge. Nor, at an y rate ordinarily, could an objection be soundly based on the judge's social or educational or service or employment background or history, nor that of any member of the judge's family; or previous political associations; or membership of social or sporting or charitable bodies; or Masonic associations; or previous judicial decisions; or extracurricular utterances (whether in textbooks, lectures, speeches, articles, interviews, reports or responses to consultation papers); or previous receipt of instructions to act for or against any party, solicitor or advocate engaged in a case before him; or membership of the same Inn, circuit, local Law Society or chambers (see K.F.T.C.I.C. v. Icori Estero S.p.A (Court of Appeal of Paris, 28 June 1991, International Arbitration Report, vol. 6".
"Accordingly Owners knew, or with reasonable diligence could have known of everything of which they now object. Despite this they continued with the arbitration and permitted Mr Moustakas to commence his evidence knowing that once he did so no further instructions could be taken from him until he completed his evidence."
(1) Both parties agreed that the test for apparent bias is that stated in Porter v Magill: namely, the test of what a fair minded and informed observer would conclude having considered the facts. It is this notional person who must be asked whether (s)he would conclude that there was a real possibility that the tribunal was biased. In Gough Lord Goff said that he thought
"it unnecessary, in formulating the appropriate test, to require that the court should look at the matter through the eyes of a reasonable man, because the court in cases such as these personifies the reasonable man; and in any event the court has first to ascertain the relevant circumstances from the available evidence, knowledge of which would not necessarily be available to an observer in court at the relevant time. Finally, for the avoidance of doubt, I prefer to state the test in terms of real danger than real likelihood, to ensure that the court is thinking in terms of possibility rather than probability of bias."
The new test, using the words "real possibility" as opposed to "real danger", was not significantly different in that respect; although the imposition of a fair minded observer (to bring the test into line with Strasbourg jurisprudence) was different. The threshold is "a real possibility of unconscious bias".
(2) As Lord Steyn's judgment in Lawal illuminates, the position of barristers who take up part-time judicial appointments can cause difficulties and the DCA takes steps to guide appointees to avoid the more likely problems: thus MPs are advised not to sit as recorders in their constituency, solicitors who are justices in an area are not permitted to act as a solicitor before justices in that area and as a general rule barristers and solicitors ought not to sit in a judicial capacity in the courts in which they practice. The facts in Lawal illustrate the problems which may be encountered. If the Gough test had been applied, without the interpolation of the objective observer then it is debatable whether Lawal would have been decided the same way. As Lord Steyn indicated, times have moved on. It is no longer necessary, in my judgment, to draw a distinction between cases where there is a foreign party and those where there is not. The objective observer is there to ensure an even handed approach to apparent bias, whatever the nationality of the parties. The only possible justification for treating foreign parties differently could be on the basis that they may not understand as well as an indigenous party the way the legal professions in England are organised or their conventions and rules of conduct: the sorts of points, if I might say so, made by Mr Beloff QC in his submissions to the Board of the International Council of Arbitration for Sport. The interpolation of the observer does, I think, make it unnecessary in future to have to give special regard to foreigners. "In determination of their rights and liabilities, civil or criminal, everyone is entitled to a fair hearing by an impartial tribunal. That right ... is properly described as fundamental." [paragraph 2 of Locabail]. The entitlement to that right is universal [see for example Article 12(2) of the Uncitral Model Law] and not parochial and it is not to be determined by awareness or otherwise of local rules and customs.
(3) In my judgment, if the properly informed independent observer concluded that there was a real possibility of bias, then I would regard that as a species of "serious irregularity" which has caused substantial injustice to the applicant. I do not accept Mr Croall's submission that even if that conclusion was reached the court must then inquire as to whether substantial injustice has been caused. In my judgment there can be no more serious or substantial injustice than having a tribunal which was not, ex hypothesi, impartial, determine parties' rights. The right to a fair hearing by an impartial tribunal is fundamental; the Act is founded upon that principle and the Act must be construed accordingly. In these circumstances, upon a proper construction of sections 1, 33 and 68(1) & (2), if the tribunal were not impartial, then the requirements of section 68(1) & (2) are satisfied. I profoundly disagree with paragraphs 33 and 34 of HHJ Bowsher's judgment in the Groundshire case. It is contrary to fundamental principles to hold that an arbitral award made by a tribunal which was not impartial is to be enforced unless it can be shown that the bias has caused prejudice. The problem with unconscious bias is that it is inherently difficult to prove and the statements made about it by the judges themselves cannot be tested. Nor can the court know whether the bias actually made any difference or not.
(4) The IBA guidelines do not purport to be comprehensive and as the Working Party added "nor could they be". The Guidelines are to be "applied with robust common sense and without pedantic and unduly formulaic interpretation." I am not impressed by the points Mr Croall made on these lists. They come close to the point in issue The question at issue is not whether what happened fell within the red list or not. Barristers in practice who take up part-time judicial appointments are not, as Mr Croall submitted, mentioned in the lists at all. But that says nothing about the true answer to the questions in this case.
(1) In the B arbitration he was instructed by the same solicitors who were instructed on the charterers' behalf in the present arbitration;
(2) In the B arbitration there were serious allegations made against Mr Moustakas in relation to disclosure of documents and to his failure to make proper disclosure and to the authenticity of documents in his possession;
(3) The extent of X QC's knowledge of these allegations in the B is not entirely clear and would ultimately depend upon seeing the instructions [which have not been made available] which were given to him in connection with the application for disclosure which he made to the court. The observer would know that X QC said in his prepared statement to the Tribunal that he did not "recall" [and that the note for his oral submissions did not refer to] making, or Waterson Hicks or their clients making, any allegation of producing fraudulent and fabricated documents and threatening forensic investigation "but again I have no basis for thinking that any such allegation, even if made, was ever substantiated."
(4) Immediately Mr Moustakas knew X QC's name, he was concerned about his involvement with the same solicitors in the B. It is not clear whether Mr Moustakas recognised X QC before he was told his name nor whether Mr Moustakas had seen X QC at the B hearing. The evidence on this is equivocal; but the immediacy of his concern when he knew who X QC was [whether as the umpire or not] is a fact.
(5) In the present arbitration, there was a 'heavy' challenge to the way disclosure had been handled. In their skeleton opening argument the charterers submitted as follows:
"(i) The Owners have breached virtually every order as to disclosure ..
They have been engaged with their previous solicitors in suppressing documents and subsequent failure to claim privilege in respect of it before Gross J on grounds that the fax evidenced iniquitous conduct leading to the order of 21/05/03.
They have on a number of occasions claimed to have provided full disclosure on oath when subsequent events have shown this was not true ...
The Owners' record on disclosure is disgraceful. They have adopted a tactic of giving disclosure only when forced to do so and even then getting away with as little as possible. It is for example breathtaking that the Foresight File was only disclosed on 14/5/04 despite the fact that;
Owners had already by that period had a series of orders against them in relation to disclosure
They had, prior to this point confirmed that they have given full disclosure on numerous occasions
Even then they disputed as order for disclosure of that file;
As it transpired much of the file was very damaging to Owners ... and it became clear why they resisted disclosure so vigorously."
(6) These sorts of points had been made by the same solicitors in the B arbitration, and the uncomfortable feeling which Mr Moustakas had that X QC would or might have detected a 'pattern' of misbehaviour in relation to disclosure based upon his knowledge acquired as a barrister in the B action was genuine.
(7) The objection to X QC was not an attempt to disrupt the arbitration, as the owners had indicated their wish to continue with the two appointed arbitrators and without an umpire and, unless they disagreed, a replacement umpire was not needed.
Refusal to adjourn