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You are here: BAILII >> Databases >> United Kingdom Supreme Court >> Halliburton Company v Chubb Bermuda Insurance Ltd [2020] UKSC 48 (27 November 2020) URL: http://www.bailii.org/uk/cases/UKSC/2020/48.html Cite as: [2020] 3 WLR 1474, [2021] AC 1083, [2021] Lloyd's Rep IR 1, [2020] WLR(D) 653, 193 Con LR 1, [2021] 1 Lloyd's Rep 1, [2020] UKSC 48, [2021] BLR 1, [2020] 2 CLC 710, [2021] 2 All ER 1175 |
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[2020] UKSC 48
On appeal from: [2018] EWCA Civ 817
JUDGMENT
Halliburton Company (Appellant) v Chubb Bermuda Insurance Ltd (formerly known as Ace Bermuda Insurance Ltd) (First Respondent)
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before
Lord Reed Lord Hodge Lady Black Lord Lloyd-Jones Lady Arden
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JUDGMENT GIVEN ON |
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27 November 2020 |
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Heard on 12 and 13 November 2019 |
Appellant |
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1st Respondent |
Lord Grabiner QC |
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Michael Crane QC |
Neil Kitchener QC |
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Toby Landau QC |
Owain Draper |
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David Scorey QC |
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David Peters |
(Instructed by K & L Gates LLP (London)) |
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(Instructed by Clyde & Co LLP) |
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1st Intervener |
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Constantine Partasides QC |
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Maanas Jain |
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Nicola Peart |
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(Instructed by Three Crowns LLP (London)) |
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2nd Intervener |
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Charles Kimmins QC |
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Nigel Rawding QC |
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Luke Pearce |
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Olivia Valner |
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(Instructed by Freshfields Bruckhaus Deringer LLP (London)) |
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3rd Intervener |
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Louis Flannery QC |
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Duncan Bagshaw |
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(Instructed by Mishcon de Reya LLP (London)) |
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5th Intervener |
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Christopher Smith QC |
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(Instructed by Gateley Plc (London)) |
Interveners:-
(1) International Court of Arbitration of the International Chamber of Commerce
(2) London Court of International Arbitration
(3) Chartered Institute of Arbitrators (written submissions only)
(4) London Maritime Arbitrators Association (written submissions only)
(5) Grain and Feed Trade Association (written submissions only)
LORD HODGE: (with whom Lord Reed, Lady Black and Lord Lloyd-Jones agree)
4. The appellants (“Halliburton”) entered into a Bermuda Form liability policy (“the Policy”) with ACE Bermuda Insurance Ltd, which is now called Chubb Bermuda Insurance Ltd (“Chubb”) in 1992 and the Policy was renewed annually. Chubb and the three arbitrators involved in the arbitration which I discuss below are the defendants in this action to remove one of the arbitrators. But Chubb alone defended the proceedings and appears as the respondent in this appeal. Because the appeal raises questions of law of general importance in the field of arbitration this court allowed and received written and oral representations from the International Court of Arbitration of the International Chamber of Commerce (“ICC”) and the London Court of International Arbitration (“LCIA”) and written submissions from the Chartered Institute of Arbitrators (“CIArb”), the London Maritime Arbitrators Association (“LMAA”) and the Grain and Feed Trade Association (“GAFTA”). The court is very grateful to the interveners for their contribution to the clarification of the wider issues raised by this appeal.
5. At first instance, the names of the parties to, and the arbitrators in, the arbitrations referred to in these proceedings were anonymised. In the judgment handed down by the Court of Appeal, the names of the parties to the Halliburton/Chubb arbitration were revealed and only the names of the arbitrators were anonymised. During the hearing of this appeal, this court questioned the need for and appropriateness of such anonymity once the names of the parties to the arbitration had been disclosed and gave the parties to these proceedings, including the arbitrators, an opportunity to make submissions on the issue.
6. Arbitration in the United Kingdom is as a norm a private form of dispute resolution and both the arbitration and the arbitral award are not generally a matter of public record. In England and Wales, the rules of procedure (CPR rule 62.10) empower the court to order that a claim under the Arbitration Act 1996 (“the 1996 Act”) or otherwise affecting arbitration proceedings or an arbitration agreement be heard in public or in private but create a norm that such claims are heard in private. The obligations of confidentiality which are usually imposed in arbitration agreements are designed to protect the privacy of the parties to the arbitration and the evidence led in arbitral hearings. But nobody has suggested any basis in the public interest for preserving the anonymity of the arbitrators themselves in a challenge of this nature. I am satisfied that the principle of open justice, which this court discussed in Dring (on behalf of the Asbestos Victims Support Group) v Cape Intermediate Holdings Ltd [2019] UKSC 38; [2020] AC 629, paras 41-43, points towards disclosure. This court has emphasised the importance of avoiding incremental exceptions to the principle of open justice: Khuja v Times Newspapers Ltd [2017] UKSC 49; [2019] AC 161, paras 12-14 per Lord Sumption; In re S (A Child) (Identification: Restrictions on Publication) [2004] UKHL 47; [2005] 1 AC 593, para 29 per Lord Steyn, endorsing the warning of Lord Woolf MR in R v Legal Aid Board, Ex p Kaim Todner [1999] QB 966, 977. The arbitrators in the Halliburton/Chubb arbitration were defendants in the action but understandably took no part in the proceedings. The arbitrator, whose decisions are challenged in these proceedings, Mr Kenneth Rokison QC has a long-established reputation for integrity and impartiality. But the protection of that reputation is not a sufficient ground for anonymity, particularly when the courts below have founded on that reputation in their reasoning. In any event, the challenge in this case involves no assertion of actual bias but relies entirely on an assertion of an objective appearance of bias. I am satisfied that there are no good grounds for maintaining the anonymity of the arbitrators in this appeal.
Factual background
7. BP Exploration and Production Inc (“BP”) was the lessee of the Deepwater Horizon drilling rig. Transocean Holdings LLC (“Transocean”) owned the rig and had contracted with BP to provide crew and drilling teams. Halliburton provided cementing and well-monitoring services to BP in relation to the temporary abandonment and the plugging of the well.
8. The blow out of the well caused extensive damage and loss of life. It resulted in numerous legal claims by the US Government and corporate and individual claimants against BP, Halliburton and Transocean. The US Government claimed civil penalties under federal statutes and the private claims for damages were pursued through a Plaintiffs’ Steering Committee (“PSC”). After a trial to determine liability, the Federal Court for the Eastern District of Louisiana in a judgment handed down on 4 September 2014 (“the Federal Judgment”) apportioned blame between the defendants as follows: BP 67%, Transocean 30%, and Halliburton 3%.
9. Before the Federal Judgment was handed down, Halliburton settled the PSC claims against it by paying approximately US$1.1 billion. Following that judgment, Transocean settled the PSC claims for about US$212m and paid civil penalties to the US Government of about US$1 billion.
10. Halliburton claimed against Chubb under the Policy but Chubb refused to pay Halliburton’s claim, contending among other things that Halliburton’s settlement was not a reasonable settlement and that Chubb had acted reasonably in not consenting to the settlement. Transocean made similar claims against its liability insurers, including Chubb. Chubb contested Transocean’s claim against it on substantially the same grounds.
11. Both Transocean and Halliburton had purchased liability insurance from Chubb on the Bermuda Form. The Bermuda Form policy was created in the 1980s to provide high excess commercial general liability insurance to companies operating in the United States after the market for such insurance collapsed in that country. Bermuda Form policies usually contain a clause providing for disputes to be resolved by arbitration. Bermuda Form arbitrations are ad hoc arbitrations which are not subject to the rules of an arbitral institution. Transocean and Halliburton had arranged liability insurance in layers and both had obtained cover for the top layer from Chubb. It appears that the material policy terms were the same. The Policy was governed by the law of New York. The Policy contained a standard arbitration clause which provided for arbitration in London by a tribunal of three arbitrators, one appointed by each party and the third by the two arbitrators so chosen. If the party-appointed arbitrators could not agree on the appointment of the third arbitrator, the High Court in London was to make the appointment. The arbitrators were to deliver the award within 90 days of the conclusion of the hearing. There was no right of appeal from the award.
12. Halliburton invoked the arbitration clause of the Policy and nominated Professor William W Park, Professor of Law at Boston University, USA, who is a very experienced arbitrator, as its party-appointed arbitrator on 27 January 2015. Chubb nominated Mr John D Cole, an accomplished US insurance executive, counsel and arbitrator as its party-appointed arbitrator. The nominated arbitrators were not able to agree on the appointment of the third arbitrator as chairman. As a result, after a contested hearing in the High Court in which each side put forward several candidates, on 12 June 2015 Flaux J appointed Mr Rokison, who was one of the arbitrators whom Chubb had proposed to the court, as the third arbitrator. Halliburton’s main objection to Chubb’s candidates, including Mr Rokison, was that they were English lawyers and the Policy was governed by the law of New York but it also objected to the appointment of Mr Rokison as chair of the tribunal because insurers had a practice of repeatedly appointing retired judges or QCs known to them, such as Mr Rokison, as party-appointed arbitrators. Nonetheless, Halliburton did not appeal against that order. I refer to this Halliburton/Chubb reference to arbitration as “reference 1”.
13. Before he expressed his willingness to be appointed, Mr Rokison disclosed to Halliburton and the court that he had previously acted as an arbitrator in several arbitrations in which Chubb was a party, including as a party-appointed arbitrator nominated by Chubb, and that he was currently appointed as arbitrator in two pending references in which Chubb was involved. The High Court did not treat these appointments as an impediment to his appointment in reference 1.
14. Halliburton served its statement of claim in reference 1 on 18 September 2015. Chubb served its statement of defence on 11 December 2015.
15. In December 2015 Mr Rokison accepted appointment as an arbitrator by Chubb in relation to an excess liability claim by Transocean arising out of the same incident (“reference 2”). The appointment was made on behalf of Chubb by Clyde & Co, who were also Chubb’s solicitors in reference 1. Within Chubb, the same manager, Mr Trimarchi, was responsible for monitoring the claims made by both Halliburton and Transocean and took the decision to refuse the claims in each case.
16. Before accepting appointment by Chubb in reference 2, Mr Rokison disclosed to Transocean his appointment in reference 1 and in the other Chubb arbitrations which he had disclosed to Halliburton. Transocean did not object. But in an omission which is central to the disclosure issue in this appeal, Mr Rokison did not disclose to Halliburton his proposed appointment by Chubb in reference 2.
17. In August 2016 Mr Rokison accepted appointment in another arbitration arising out of the Deepwater Horizon incident as a substitute arbitrator on the joint nomination of the parties in a claim made by Transocean against a different insurer on the same layer of insurance as the claim in reference 2. I refer to this as “reference 3”. Nobody disclosed this proposed appointment to Halliburton. This further omission also is a ground of the non-disclosure claim in this appeal but the submissions on this appeal have focused more on the non-disclosure of the appointment in reference 2.
19. On 10 November 2016 Halliburton discovered Mr Rokison’s appointment in references 2 and 3. Mr Thomas Birsic, an attorney at K & L Gates, Halliburton’s US lawyers, wrote to Mr Rokison on 29 November 2016 to raise its concerns. He referred to the International Bar Association Guidelines on Conflicts of Interest in International Arbitration (“the IBA Guidelines”), which, he stated, imposed on an arbitrator a continuing duty of disclosure of potential conflicts of interest in accordance with the Orange List in those guidelines, and asked for confirmation of the fact of the two later appointments and an explanation of the failure to make prior disclosure of those appointments.
20. Mr Rokison responded by email on 5 December 2016. He explained how he had come to be appointed in the later references. He explained, and both parties have accepted his explanation as truthful, that he had not disclosed those appointments to Halliburton, because it had not occurred to him at the dates of those appointments that he was under any obligation to do so under the IBA Guidelines. He stated that he appreciated, with the benefit of hindsight, that it would have been prudent for him to have informed Halliburton through its lawyers and apologised for not having done so. He explained that while the three references all arose out of the Deepwater Horizon incident, the roles which Halliburton and Transocean had played had been very different. His involvement in the two Transocean arbitrations had been confined to two two-day hearings on the construction of the policy in which the only evidence had been about the circumstances in which the parties entered into the relevant insurance contracts. He stated his commitment to remain independent and impartial and acknowledged the importance of both parties in an arbitration sharing confidence that their dispute would be determined fairly on the evidence and the law without bias. He concluded:
“I do not believe that any damage has been done but, if your clients remain concerned, I would be prepared to consider tendering my resignation from my appointment in the two Transocean cases if the results of the determination of the preliminary issues of construction, which are likely to be issued shortly, do not effectively bring them to an end.”
21. Halliburton’s lawyer responded by repeating his concerns about Mr Rokison’s impartiality and calling for him to resign. But Chubb would not agree to his resignation which, in its assessment, would cause the proposed hearing of evidence in the arbitration to be postponed and thereby cause wasted costs and delay. Mr Rokison responded in an email of 15 December 2016 in which he stated that he sought to take into account his duty to both parties. He repeated his view that he had not breached the IBA Guidelines by a failure to disclose the later appointments but referred to his earlier statement that with hindsight he accepted that it would have been prudent to have made disclosure to avoid any sense of lack of transparency on his part. He repeated that in references 2 and 3 he had not learned anything about the facts of the incident which was not public knowledge. But, recognising that it was fundamentally important that both parties should have confidence in the impartiality of the arbitral tribunal and in particular its chairman, he stated that, if he could decide the matter in accordance with his own self-interest, he would resign. Nonetheless, he owed duties to both parties to complete the task and would be in breach of his duties if he resigned in the face of strong opposition from one party. He therefore proposed that the parties should concentrate on trying to agree upon a mutually acceptable replacement chairman who would be available before the hearing in the arbitration (which was scheduled to start towards the end of January 2017). If they could so agree, he would gladly resign. If they could not, he would have to continue and leave it to the court to decide whether he should be removed.
22. Halliburton responded by issuing a Claim Form in the High Court on 21 December 2016 seeking an order under section 24(1)(a) of the 1996 Act that Mr Rokison be removed as an arbitrator. Halliburton then raised further questions about the overlap between the references, to which Mr Rokison responded by email on 4 January 2017, stating that he was not aware that there were any common issues. Halliburton’s lawyers in an email of 5 January 2017 asked Mr Rokison whether he had seen any document in which Chubb or any other respondent in references 2 or 3 had set out similar defences to those pleaded in reference 1. Mr Rokison did not reply to that enquiry. But on 10 January 2017 Chubb released to Halliburton the pleadings in reference 2 which revealed the substantial similarity in its defences which I mentioned in para 10 above, which were challenges to the reasonableness of the settlement which Transocean had negotiated. In its pleaded defence in reference 2, Chubb had also advanced, as an additional defence, the issue of construction of the policy which was the subject matter of the preliminary issue determination.
23. Mr Justice Popplewell heard Halliburton’s application in the High Court on 12 January 2017, in which Halliburton sought to have Mr Rokison replaced by Sir Stephen Tomlinson who had just retired from the Court of Appeal, and delivered a judgment, which I discuss below, on 3 February 2017, dismissing the application.
26. On 5 December 2017 the tribunal in reference 1 issued its Final Partial Award on the merits, deciding in Chubb’s favour. The award was signed by all three arbitrators, although Professor Park, the arbitrator whom Halliburton had appointed, qualified his signature of the award in “Separate Observations”. Professor Park stated that he had signed the award to confirm his participation but that he was unable to join in the award as a result of his “profound disquiet about the arbitration’s fairness”. He explained that:
“… arbitrators who decide cases cannot ignore the basic fairness of proceedings in which they participate. One side secured appointment of its chosen candidate to chair this case, over protest from the other side. Without any disclosure, the side that secured the appointment then named the same individual as its party-selected arbitrator in another dispute arising from the same events. The lack of disclosure, which causes special concern in the present fact pattern, cannot be squared with the parties’ shared ex ante expectations about impartiality and even-handedness.”
The other arbitrators, Mr Rokison and Mr Cole, responded to the separate observations, stating that they did not regard them as being part of the tribunal’s award so as to render it a majority award. This was because those observations did not contain any opinion dissenting from any part of the award, which contained findings of fact, statements of applicable law, the process of reasoning and the final conclusions drawn from that reasoning.
27. It appears from Chubb’s written case and Mr Birsic’s second witness statement that Halliburton appointed Professor Park as its party-appointed arbitrator in three references against different insurers in insurance claims arising out of the Deepwater Horizon disaster, without formal disclosure. But K & L Gates suggest, in Mr Birsic’s second witness statement, that their proposal, which they made when they requested the arbitration and nominated Professor Park, that the arbitrations be consolidated revealed the multiple nominations. Mr Birsic also suggests that the fact that Professor Park was a party-appointed arbitrator rather than a chair or umpire is a significant distinction from Mr Rokison’s position. I will return to the question whether that distinction is legally relevant in English law in my discussion below.
Halliburton’s pleaded case
28. In its claim Halliburton sought the removal of Mr Rokison as arbitrator in reference 1 and the appointment of another arbitrator to chair the tribunal in his place. The grounds for the claim were that circumstances existed that gave rise to justifiable doubts as to his impartiality and in particular (i) his acceptance of the appointments by Clyde & Co in references 2 and 3 and his failure to notify Halliburton or give it the opportunity to object and (ii) his offer to resign from the tribunal in reference 1 but Chubb’s refusal to permit him to do so.
The judgments at first instance and in the Court of Appeal
29. In his judgment of 3 February 2017 ([2017] EWHC 137 (Comm); [2017] 1 WLR 2280) Popplewell J addressed the three elements of Mr Rokison’s conduct which were said to give rise to the appearance of bias. The first was his acceptance of the appointments in the Transocean arbitrations in references 2 and 3. The judge rejected the contention that the arbitrator would derive a secret benefit in the form of remuneration which he would receive from the arbitrations. In English law, arbitrators were under a duty to act independently and impartially and owed no allegiance to the party which appointed them. This principle was enshrined in section 33 of the 1996 Act. He also rejected the contention that the overlap between the references was a concern because the arbitrator would learn information in the Transocean references which was relevant to the issues in reference 1 and that information would be available to Chubb but not to Halliburton. He observed that it was a regular feature of international arbitration that the same underlying subject matter gives rise to more than one claim and more than one arbitration without identity of parties. It was common for arbitrators with the relevant expertise to sit in different arbitrations arising out of the same factual circumstances or subject matter. It was desirable that arbitrators be able to do so for three reasons. First, arbitration was a consensual process allowing parties to appoint their chosen arbitrators in accordance with the procedures set out in their contract. Secondly, the parties to an arbitration often wished their tribunal to have particular knowledge and expertise in the law and practices of the businesses and market in which the parties operated. Thirdly, the 1996 Act sought speedy finality, which was served when the tribunal was already familiar with the background to and uncontroversial aspects of the subject matter of the dispute.
“The informed and fair-minded observer would not therefore regard [Mr Rokison] as unable to act impartially in the reference between [Halliburton] and [Chubb] merely by virtue of the fact that he might be an arbitrator in other references arising out of the incident, and might hear different evidence or argument advanced in another such reference. The objective and fair-minded assessment would be that his experience and reputation for integrity would fully enable him to act in accordance with the usual practice of London arbitrators in fulfilling his duties under section 33 by approaching the evidence and argument in the [Halliburton] reference with an open mind; and in deciding the case, in conjunction with the other members of the tribunal, in accordance with such material, with which [Halliburton] will have a full and fair opportunity to engage.”
31. Popplewell J also rejected a submission that the chairman of a tribunal had an enhanced duty to maintain demonstrable impartiality as the ultimate guarantor of fairness and impartiality. This submission, he opined, misunderstood the English law of arbitration which required all arbitrators, including party-appointed arbitrators, to maintain the same high standards of impartiality. The judge did not think that there was a risk of the tribunal in reference 1 having to address issues which arose in references 2 and 3 if the preliminary issues in the latter references were decided in the insurers’ favour. If the tribunals’ determinations of the preliminary issues in those references went against the insurers, there was very little risk of overlap because (i) the issue of the reasonableness of Halliburton’s settlement was legally and factually distinct from that of Transocean’s settlement as the two companies had played different roles on the rig, were alleged to have committed different breaches of duty and had reached different settlements and (ii) Mr Rokison had offered to resign from the Transocean references if the preliminary issue were resolved against the insurers.
32. On element 2, which was the alleged failure to disclose the appointments to Halliburton, the judge held that, because of his conclusion on element 1 that the circumstances did not give rise to any justifiable concerns about the arbitrator’s impartiality, there was nothing which had to be disclosed. Even if the disclosure ought to have been made, the failure did not give rise to a real possibility of apparent bias against Halliburton because Mr Rokison’s explanation in correspondence, which was not challenged, was that it did not occur to him that he was under a duty to do so. Even if that honest belief were mistaken, it did not raise a real possibility of apparent bias. The judge also rejected element 3, which was Mr Rokison’s response to Halliburton’s challenge to his impartiality. Popplewell J discussed and rejected each of the complaints about that response, commenting that Mr Rokison had dealt with the challenge, which the judge said had included a “grossly offensive” suggestion, in a courteous, temperate and fair way which demonstrated his even-handedness.
33. Halliburton sought and obtained permission to appeal from Popplewell J and renewed its challenge on appeal to the Court of Appeal in a hearing on 7 February 2018. The Court of Appeal (Sir Geoffrey Vos C, Simon and Hamblen LJJ) dismissed the appeal in a judgment dated 19 April 2018 ([2018] EWCA Civ 817; [2018] 1 WLR 3361).
34. In the Court of Appeal Halliburton did not challenge Popplewell J’s summary of the relevant legal principles in para 16 of his judgment but suggested, and the court accepted, that, in assessing whether there was a real possibility that the tribunal was biased, regard should be had to the risk of unconscious bias. The question for the Court of Appeal was the application of those principles to the facts of the case.
36. Applying those conclusions to the facts of the case the Court of Appeal held that the degree of overlap between reference 1 and references 2 and 3 was in fact very limited. The latter references were decided on the preliminary issue. As a result, the question of the reasonableness of the settlement by Transocean and the reasonableness of the insurers’ withholding of consent to that settlement did not arise. In any event, the circumstances were different: Halliburton settled before the Federal Judgment and Transocean after that judgment had allocated responsibility for the incident between the three parties. The fact that an arbitrator obtained a financial benefit from appointment to an arbitral tribunal was not disqualifying; otherwise objection could be taken to every party-appointed arbitrator.
“Under the common law, judges should disclose facts or circumstances which would or might provide the basis for a reasonable apprehension of lack of impartiality.”
When a judge was aware of a matter which could arguably be said to give rise to a real possibility of bias and disclosed that matter, such disclosure enabled parties to consider the disclosure and decide whether there was no legitimate problem or to make submissions to the judge or to address the potential problem by waiver. The judge in turn could decide in the light of those submissions whether to withdraw from the case. The court stated that the test for apparent bias applied equally to arbitral tribunals and the practical advantages of early disclosure were just as important. The court held that the question whether there should be disclosure was to be decided prospectively, as it depended on the prevailing circumstances at that time when the disclosure should have been made. When deciding whether circumstances existed that would or might lead to the conclusion that there was a real possibility of bias, with the result that those circumstances needed to be disclosed, a court should not have regard to matters known only at a later stage.
39. Applying those conclusions to the facts of the case, the Court of Appeal recognised that in the context of international commercial arbitration it was good practice to make disclosure where a party had such concerns. That practice combined with the other factors, such as the degree of overlap between the references and the nature of other connections, might have been argued to combine to give a basis for a reasonable apprehension of lack of impartiality. On that basis, the court disagreed with the judge and held that Mr Rokison ought as a matter of law to have made disclosure to Halliburton at the time of his appointments in references 2 and 3. Nonetheless, the court agreed with the judge’s overall conclusion that the fair-minded and informed observer, having considered the facts, would not conclude that there was a real possibility that Mr Rokison was biased. In reaching that conclusion the court took account of the following factors: (i) the non-disclosed circumstance did not of itself justify an inference of apparent bias, (ii) the failure to disclose was accidental and not deliberate, (iii) there was only a limited degree of overlap between the references, (iv) mere oversight in such circumstances would not give rise to justifiable doubts as to impartiality, and (v) there was no substance in Halliburton’s criticism of Mr Rokison’s conduct after it challenged the non-disclosure. The Court of Appeal therefore dismissed the appeal.
Halliburton’s case and the interventions
40. Halliburton renews its challenges before this court and founds on concerns expressed by LCIA, ICC and CIArb that the Court of Appeal’s judgment is out of step with internationally accepted standards and practices.
41. Halliburton in its written case confirms that it does not suggest that Mr Rokison was guilty of any deliberate wrongdoing or actual bias. Its case is one of apparent unconscious bias and it founds on five points: (i) he accepted the benefit of a paid appointment on Chubb’s nomination when he was sitting on an arbitral tribunal in reference 1; (ii) in so doing, he gave Chubb the unfair advantage of being a common party to two related arbitrations with a joint arbitrator while Halliburton was ignorant of the proceedings in reference 2 and thus unaware whether and to what extent he would be influenced in reference 1 by the arguments and evidence in reference 2; (iii) Chubb would be able to communicate with him in reference 2, for example by its submissions and the evidence it led, on matters which might be relevant to reference 1 and would know of his responses to those communications while Halliburton would not even know that they had occurred; (iv) he failed to disclose his appointment to Halliburton and thereby prevented it from forming its own view as to whether it might lead to unfairness and from either making submissions to the tribunal in reference 1 or otherwise proposing or taking practical steps to mitigate the unfairness; and (v) he did not pay proper regard to Halliburton’s interest in the fairness of the procedure. Under point (v) Halliburton also suggests that Mr Rokison had regard only to what he and Chubb both wanted, which was his appointment to sit as arbitrator in reference 2. In my view, the evidence before Popplewell J, which I have summarised above, clearly negatives that gloss but that negation does not wholly remove the force of point (v). Halliburton submits that English law does not require a party to an arbitration to have its disputes resolved by someone who has acted in this manner and argues that the fair-minded and informed observer would see such conduct as giving rise to justifiable doubts as to the arbitrator’s impartiality.
Discussion
“are founded on the following principles, and shall be construed accordingly - (a) the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense; (b) the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest; (c) in matters governed by this Part the court should not intervene except as provided by this Part.”
The 1996 Act is not a complete code of the law of arbitration but allows the judges to develop the common law in areas which the Act does not address.
(i) The duty of impartiality
“(1) The tribunal shall -
(a) 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
(b) adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling 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 the exercise of all other powers conferred on it.”
“A party to arbitral proceedings may (upon notice to the other parties, to the arbitrator concerned and to any other arbitrator) apply to the court to remove an arbitrator on any of the following grounds:
(a) that circumstances exist that give rise to justifiable doubts as to his impartiality; …
(d) that he has refused or failed -
(i) properly to conduct the proceedings, …
and that substantial injustice has been or will be caused to the applicant.”
I will return to consider section 24(1)(a) later in this judgment but note at this stage (i) that by the use of the present tense of the verb “exist” the court is directed to the circumstances as they exist at the time at which it hears the application for removal of the arbitrator and (ii) that, in contrast with section 24(1)(d), the applicant does not have to show that substantial injustice has been or will be caused to it.
52. In this appeal the court is concerned with an allegation of apparent bias. We are not concerned with any disqualifying interest in the outcome of the arbitration nor are we required to “make windows into men’s souls” in search of an animus against a party or any other actual bias, whether conscious or unconscious. No such allegation is made against Mr Rokison. We are concerned only with how things appear objectively. There is no disagreement as to the relevant test. As Lord Hope of Craighead stated in Porter v Magill [2001] UKHL 67; [2002] 2 AC 357, para 103:
“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.”
The courts have given further guidance on the nature of this judicial construct, the “fair-minded and informed observer” (to whom in this judgment I also refer as “the objective observer”). Thus, in Helow v Secretary of State for the Home Department [2008] UKHL 62; [2008] 1 WLR 2416, Lord Hope (paras 1-3) explained that the epithet “fair-minded” means that the observer does not reach a judgment on any point before acquiring a full understanding of both sides of the argument. The conclusions which the observer reaches must be justified objectively and the “real possibility” test ensures the exercise of a detached judgment. He continued:
“Then there is the attribute that the observer is ‘informed’. It makes the point that, before she takes a balanced approach to any information she is given, she will take the trouble to inform herself on all matters that are relevant. She is the sort of person who takes the trouble to read the text of an article as well as the headlines. She is able to put whatever she has read or seen into its overall social, political or geographic context. She is fair-minded, so she will appreciate that the context forms an important part of the material which she must consider before passing judgment.” (Emphasis added)
I have added the emphasis in this citation because the context in which the test falls to be applied in this appeal is of particular importance.
“As a rule, persons enter into these contracts with the express view of keeping their quarrels from the public eyes, and of avoiding that discussion in public, which must be a painful one, and which might be an injury even to the successful party to the litigation, and most surely would be to the unsuccessful.”
It is because arbitrations are private that arbitrators have no power to order concurrent hearings without the consent of the parties: Oxford Shipping Co Ltd v Nippon Yusen Kaisha: “The Eastern Saga” [1984] 2 Lloyd’s Rep 373; [1984] 3 All ER 835. The 1996 Act says nothing about privacy or confidentiality. But that was a deliberate omission. In its report on the Arbitration Bill (February 1996), paras 10-17, the Departmental Advisory Committee on Arbitration Law (“the DAC”) recorded that users of commercial arbitration in England “place much importance on privacy and confidentiality as essential features of English arbitrations” but, recognising that there was uncertainty as to the breadth and existence of certain exceptions to those principles, recommended that there be no statutory formulation of those principles but that the courts should be left to develop the law “on a pragmatic case-by-case basis.” I will consider the principles of privacy and confidentiality further when I discuss the duty of disclosure in paras 70-116 below.
62. Sixthly, in the field of international arbitration there are differing understandings of the role and obligations of the party-appointed arbitrator. There has been a lively debate as to the justification for party-appointed arbitrators and their role. See, for example, the concerns about partisanship expressed by Professor Jan Paulsson, “Moral Hazard in International Dispute Resolution” (2010) 25 ICSID Review, Foreign Investment Law Journal, p 339 and Professor Albert Jan van den Berg, “Dissenting Opinions by Party-Appointed Arbitrators in Investment Arbitration” in Looking to the Future: Essays on International Law in Honor of W Michael Reisman, ed Mahnoush Arsanjani et al (Brill Academic 2010) and the defence of party-appointed arbitrators by Judge Charles N Brower and Charles B Rosenberg, “The Death of the Two-Headed Nightingale: Why the Paulsson-van den Berg Presumption that Party-Appointed Arbitrators are Untrustworthy is Wrongheaded”, (2013) Arbitration International, Vol 29 No 1, pp 7-44. Other experienced commentators have suggested that, without compromising his or her independence and impartiality, the party-appointed arbitrator’s role involves a sensitivity to the appointing party’s legal, cultural and commercial background and its position in the arbitration (Born, International Commercial Arbitration, 2nd ed (2014), p 1808) and making sure that the arbitral tribunal properly understands the case of the appointing party (Redfern and Hunter, Law and Practice of International Arbitration, 6th ed (2015), para 4.30). In his written case, Lord Grabiner, who appears on behalf of Halliburton, goes further and refers to the selection of an arbitrator by a party as “forum shopping”. He quotes from an article by Professor Martin Hunter, “Ethics of the International Arbitrator”, ASA Bulletin, Kluwer Law International 1986, Vol 4 Issue 4, pp 173-196, at p 189, in which the author draws a distinction between impartiality and neutrality and states:
“Indeed, when I am representing a client in an arbitration, what I am really looking for in a party-nominated arbitrator is someone with the maximum predisposition towards my client, but with the minimum appearance of bias.”
In arbitrations where the parties have, or one party has, an expectation that the party-nominated arbitrator will be pre-disposed towards it, it is perceived that the person chairing the tribunal, whether appointed by the party-nominated arbitrators jointly or by an appointing institution or the court, has a particular role in making sure that the tribunal acts fairly and impartially.
“[T]he duty to act independently and impartially involves arbitrators owing no allegiance to the party appointing them. Once appointed they are entirely independent of their appointing party and bound to conduct and decide the case fairly and impartially. They are not in any sense … a representative of the appointing party or in some way responsible for protecting or promoting that party’s interests.”
As Popplewell J went on to state, the duty on all arbitrators to act fairly and impartially is enshrined in section 33 of the 1996 Act. Lord Grabiner submits that London is the premier seat for international arbitration. He points to a survey of international arbitration which Queen Mary University of London carried out in 2018 which reveals that the main reasons why parties in international arbitration choose to arbitrate in England are the reputation of London and that the English legal system guarantees neutrality and impartiality. It is therefore important that English law upholds rules which support the integrity of international arbitration.
64. In applying the test of the fair-minded and informed observer it would be wrong to have regard to the characteristics of the parties to the arbitration, including the fact that one or more were foreign parties, as Popplewell J stated in para 16(6) of his judgment, referring to the judgment of Flaux J in A v B [2011] EWHC 2345 (Comm); [2011] 2 Lloyd’s Rep 591, paras 23-24; see also ASM Shipping Ltd of India v TTMI Ltd of England [2005] EWHC 2238 (Comm); [2006] 1 Lloyd’s Rep 375, para 39(2) per Morison J. The requirement in English law that all arbitrators, whether party-appointed or independently appointed, comply with the same high standards of impartiality, appears to be increasingly widely accepted as the legal norm internationally: see the article by the Chief Justice of Singapore, Sundaresh Menon, “Adjudicator, advocate or something in between? Coming to terms with the role of the party-appointed arbitrator”, Arbitration 2017, 83(2), pp 185-202. But this does not negate the fact that in some quarters there are understandings of the arbitral process which appear not to accept that requirement. Further, some legal systems take a different view and accept the proposition that a party-appointed arbitrator has a special role in relation to his or her appointing party.
67. The fair-minded and informed observer would also be aware that in international arbitration the parties to an arbitration and their legal advisers may often have only limited knowledge of the reputation and experience of a professional who is appointed by an institution or by the court to chair their arbitration. While many parties and their advisers who are engaged in high value international arbitrations devote considerable resources to researching the background of people who might be suitable for selection as party-appointed arbitrators or as nominees for third party appointment, there is no basis for assuming that that practice is universal. The professional reputation and experience of an individual arbitrator is a relevant consideration for the objective observer when assessing whether there is apparent bias as an established reputation for integrity and wide experience in arbitration may make any doubts harder to justify. But the weight which the fair-minded and informed observer should give to that consideration will depend upon the circumstances of the arbitration and whether, objectively and as a generality, one could expect people who enter into references of that nature to be informed about the experience and past performance of arbitrators. In the context of many international arbitrations, it is likely to be a factor of only limited weight. The weight of that consideration may also be reduced if the circumstances give rise to a material risk of unconscious bias on the part of a person of the utmost integrity: Almazeedi v Penner [2018] UKPC 3, para 1 per Lord Mance.
68. On other hand, the objective observer is alive to the possibility of opportunistic or tactical challenges. Parties engage in arbitration to win. Their legal advisers present their cases to the best of their ability, and this pursuit can include making tactical objections or challenges in the hope of having their dispute determined by a tribunal which might, without any question of bias, be more predisposed towards their view or simply to delay an arbitral determination. The courts are alive to similar tactical objections in litigation. In Locabail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451, the Court of Appeal (Lord Bingham of Cornhill CJ, Lord Woolf MR and Sir Richard Scott V-C) addressed the circumstances in which judicial office holders may be required to disqualify themselves from hearing a case. The court stated (para 25) that it would be dangerous and futile to attempt to define or list the factors which may or may not give rise to what we now describe as a real possibility of bias; “[e]verything will depend on the facts, which may include the nature of the issue to be decided”. The court stated (para 21):
“If objection is then made, it will be the duty of the judge to consider the objection and exercise his judgment upon it. He would be as wrong to yield to a tenuous or frivolous objection as he would to ignore an objection of substance.”
The court went on (para 22) to cite with approval dicta of Mason J in the High Court of Australia in In re JRL, Ex p CJL (1986) 161 CLR 342, 352:
“Although it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour.”
An arbitrator when deciding to accept a reference is not under the same obligation as a judge to hear a case but, having taken up the reference, the arbitrator may reasonably feel under an obligation to carry out the remit unless there are substantial grounds for self-disqualification. Similarly, a court, when asked to remove an arbitrator, needs to be astute to see whether the ground of real possibility of bias is made out.
(ii) Disclosure
a) The role of disclosure
70. An arbitrator, like a judge, must always be alive to the possibility of apparent bias and of actual but unconscious bias. The possibility of unconscious bias on the part of a decision-maker is known, but its occurrence in a particular case is not. The allegation, which is advanced in this case, of apparent unconscious bias is difficult to establish and to refute. One way in which an arbitrator can avoid the appearance of bias is by disclosing matters which could arguably be said to give rise to a real possibility of bias. Such disclosure allows the parties to consider the disclosed circumstances, obtain necessary advice, and decide whether there is a problem with the involvement of the arbitrator in the reference and, if so, whether to object or otherwise to act to mitigate or remove the problem: see Almazeedi (above) para 34; Davidson v Scottish Ministers (No 2) [2004] UKHL 34; 2005 1 SC (HL) 7. In the latter case, Lord Hope of Craighead stated (para 54):
“[T]he best safeguard against a challenge after the event, when the decision is known to be adverse to the litigant, lies in the opportunity of making a disclosure before the hearing starts. That is the proper time for testing the tribunal’s impartiality. Fairness requires that the quality of impartiality is there from the beginning, and a proper disclosure at the beginning is in itself a badge of impartiality.”
That statement mutatis mutandis applies to the arbitrator as much as to the judge. In Davidson (above, para 19) Lord Bingham of Cornhill spoke with approval of the practice of judges to “disclose a previous activity or association which would or might provide a basis for a reasonable apprehension of lack of impartiality” (emphasis added). When, on being asked to accept an appointment, an arbitrator knows of a matter which ought to be disclosed to the parties to the reference, prompt disclosure to those parties of that matter provides the safeguard as the quality of impartiality is shown to have been there from the beginning. But the obligation of impartiality continues throughout the reference and the emergence during the currency of the reference of matters which ought to be disclosed means that an arbitrator’s prompt disclosure of those matters can enable him or her to maintain what Lord Hope calls the “badge of impartiality”.
b) Whether there is a legal duty of disclosure?
“the present position under English law to be that disclosure should be given of facts and circumstances known to the arbitrator which, in the language of section 24 of the Act, would or might give rise to justifiable doubts as to his impartiality.”
The court continued:
“Under English law this means facts or circumstances which would or might lead the fair-minded and informed observer, having considered the facts, to conclude that there was a real possibility that the arbitrator was biased.” (Emphasis added)
77. Moving away from the circumstances of this appeal, if one supposes that an arbitrator has a close financial relationship with a party to the arbitration in which he or she is or is to be appointed, there can be little doubt that such a relationship could readily give rise to justifiable doubts as to the arbitrator’s impartiality. Indeed, if the arbitrator had a financial interest in the dispute he or she would be disqualified and the award would be voidable: Dimes v Proprietors of Grand Junction Canal (1852) 3 HL Cas 759; 10 ER 301. But absent disclosure, the other party to the arbitration would be unaware of that disqualifying interest. In such circumstances it would in my view be incumbent on the arbitrator to disclose the relationship in order to comply with his statutory duty of fairness under section 33 of the 1996 Act. The duty of fairness is engaged because it is necessary that the other party to the arbitration be aware of the arbitrator’s financial connection with the first party and so be able to form a judgment as to his or her suitability as an arbitrator.
c) The relationship between disclosure and the duty of privacy and confidentiality
83. English-seated arbitrations are both private and confidential, if the law governing the confidentiality of the arbitration is English law. The obligations on the parties to uphold the privacy and confidentiality of an arbitration have been characterised as implied obligations arising out of the nature of arbitration itself: Dolling-Baker v Merrett [1990] 1 WLR 1205 (CA), 1213 per Parker LJ; Ali Shipping Corpn v Shipyard Trogir [1999] 1 WLR 314, 326 per Potter LJ. In the latter case Potter LJ stated, “the parties have indicated their presumed intention simply by entering into a contract to which the court attributes particular characteristics”. This analysis coincides with the view expressed by Sir Patrick Neill QC in his lecture, “Confidentiality in Arbitration” which he delivered in 1995, which is published in (1996) 12 Arb Int 287-318, and which the DAC cited with approval in their Report on the Arbitration Bill (para 12). In that lecture he described the privacy and confidentiality of arbitration proceedings as “a fundamental characteristic of the agreement to arbitrate” (p 316). In Department of Economics, Policy and Development of the City of Moscow v Bankers Trust Co [2004] EWCA Civ 314; [2005] QB 207, Mance LJ stated (para 2): “Among features long assumed to be implicit in parties’ choice to arbitrate in England are privacy and confidentiality”. Mance LJ went on to state (para 30) that the changes to the CPR in 1997 and 2002:
“rest clearly on the philosophy of party autonomy in modern arbitration law, combined with the assumption that parties value English arbitration for its privacy and confidentiality. Party autonomy requires the court so far as possible to respect the parties’ choice of arbitration. Their choice of private arbitration constitutes an election for an alternative system of dispute resolution to that provided by the public courts. The same philosophy limits court intervention to the minimum necessary in the public interest, which must include the public interest in ensuring not that arbitrators necessarily decide cases in a way which a court would regard as correct, but that they at least decide them in a fundamentally fair way: see section 1 of the 1996 Act.”
In his illuminating judgment in Emmott v Michael Wilson & Partners Ltd [2008] EWCA Civ 184; [2008] Bus LR 1361 Lawrence Collins LJ (para 84) described the fundamental characteristics of privacy and confidentiality in an agreement to arbitrate under English law as being “really a rule of substantive law masquerading as an implied term”. Arbitrators also must respect the private nature of the proceedings in which they are engaged: The Eastern Saga (para 57 above). They are bound to uphold the privacy and confidentiality of the arbitration, whether as a result of contract or in performance of an equitable duty because they have acquired the information in circumstances importing an obligation of confidence.
“In my judgment the content of the obligation may depend on the context in which it arises and on the nature of the information or documents at issue. The limits of that obligation are still in the process of development on a case-by-case basis. On the authorities as they now stand, the principal cases in which disclosure will be permissible are these: the first is where there is consent, express or implied; second where there is an order or leave of the court (but that does not mean that the court has a general discretion to lift the obligation of confidentiality); third, where it is reasonably necessary for the protection of the legitimate interests of an arbitrating party; fourth, where the interests of justice require disclosure, and also (perhaps) where the public interest requires disclosure.”
As I have stated (para 57 above), the DAC did not support legislative definition but left the task of developing the rules relating to the privacy and confidentiality of arbitrations, including the boundaries of and exceptions to those obligations, to the judiciary. Parliament enacted the 1996 Act against that background. In this appeal the court is not concerned with identifying an exception to the duty of privacy and confidentiality but seeks to discover the extent to which the parties have implicitly consented to disclosure.
95. But in this appeal the parties disagree as to the practice of disclosure in Bermuda Form arbitrations. Halliburton asserts that there is both a practice and a legal requirement to disclose the minimum information necessary to achieve proper disclosure while Chubb says that there is no established practice of disclosure in Bermuda Form arbitrations. I will address that question in para 137 below after I have considered the content of the duty of disclosure. It is sufficient at this stage to state that I am satisfied that in English law such multiple appointments must be disclosed in the absence of contrary agreement.
98. Mr Rokison’s disclosure, which Clyde & Co passed on to Transocean on 23 December 2015, stated:
“… I have acted as party-appointed arbitrator and chairman in many ‘Bermuda Form’ arbitrations, a number of which, not surprisingly, have involved [Chubb], who have appointed me as their nominated arbitrator on various occasions. I have also previously acted as chairman in two other arbitrations, in which [Chubb] was a party.
Currently I have only three pending cases involving [Chubb]. In one, I am their appointee; in the second, I have been appointed as sole arbitrator by agreement between the parties; and, in the third, I have been appointed as third arbitrator by order of the London Commercial Court. The last of these also happens to involve what I understand is a different aspect of the Deepwater Horizon incident.
I do not consider that the above matters affect my independence or impartiality, which I have always been at pains to maintain, but I nonetheless consider that these are matters which ought to be disclosed at this stage, rather than risking possible disruption of the arbitral proceedings after they have got under way.”
99. It is not disputed that the duty of privacy and confidentiality is not absolute, that the parties to an arbitration can determine as a matter of contract the extent to which they wish matters to be treated as confidential, or that there is a common practice for arbitrators in English-seated arbitrations to make such high-level disclosure of their involvement in other relevant arbitrations without obtaining the express consent of the parties to the arbitrations about which disclosure is being made. Halliburton’s position is that the arbitrator’s duty of confidentiality does not prevent the disclosure of the names of the parties to the disclosed arbitration. Chubb’s position is that the arbitrator’s duty of confidentiality covers the identity of the parties but that the information which Mr Rokison disclosed to Transocean, which did not include the identity of the parties other than Chubb itself, which was the common party who proposed his appointment, or the issues in the disclosed arbitrations, was confidential to Chubb alone and the disclosure was made on Chubb’s behalf. The needed consent can therefore be inferred.
101. This current practice of arbitrators in English-seated arbitrations vouches two things. First, as a general rule the duty of privacy and confidentiality is not understood to prohibit all forms of disclosure of the existence of a related arbitration in the absence of express consent. Secondly, the duty of disclosure does not give an arbitrator carte blanche to disclose whatever is necessary to persuade a party that there is no justification for doubts about his or her impartiality. There will be many matters which cannot be disclosed without the express consent of the parties to that arbitration. As I discuss further in para 146 below, the information that can be disclosed in this context without having to obtain the express consent of the parties to the disclosed arbitration is limited. In many cases such a limited disclosure may satisfy the recipient, as Transocean’s response to Mr Rokison’s disclosures shows. If an arbitrator needs to disclose more detail about another arbitration in order to comply with the duty of disclosure, the arbitrator or proposed arbitrator must obtain the consent of the parties to the arbitration or proposed arbitration about which he or she is making a disclosure.
“We are there to give effect to their transactions, not to frustrate them: we are there to oil the wheels of commerce, not to put a spanner in the works, or even grit in the oil.”
There is a public interest in upholding the integrity of arbitration as a system of alternative dispute resolution by ensuring that there is proper disclosure of an arbitrator’s involvement in related arbitrations in a field of arbitration in which repeated appointments occur but in which there is no common understanding that disclosure is not required. There is also a strong public interest in giving greater certainty as to the legal standing of established arbitral practice and the relationship between the duty of disclosure and an arbitrator’s duty to respect the privacy and confidentiality of an arbitration.
d) The risk of further challenges?
106. For completeness, I also address the suggestion by Chubb that the recognition of a legal duty of disclosure will tend to increase the number of challenges to appointment and to awards and possibly give rise to personal claims against arbitrators. Halliburton, ICC, LCIA and CIArb do not agree and none of the respondents to the court’s questions are able to assist the court with empirical evidence on the matter. There is some empirical evidence that, in the years immediately after the IBA Guidelines were adopted in 2004, there was an increase in challenges to arbitrators as a result of disclosures. But three points may be made. First, this increase was not a consequence of making disclosure a legal duty but may have been the result of more extensive disclosure which followed the formulation of good practice. Secondly, that statement of good practice exists and is influential internationally whether or not a jurisdiction has a legal duty of disclosure. Thirdly, the challenges have rarely succeeded. Further, research carried out within the court in relation to jurisdictions which impose a legal duty of disclosure found very little evidence of personal claims against arbitrators. I respectfully question whether there is a basis in English law for a claim for damages relating to disclosure or non-disclosure, in the absence of bad faith, where the legal duty is a component of the statutory duties of fairness and impartiality which do not support such claims. In any event, section 29 of the 1996 Act will protect arbitrators against personal claims for non-disclosure in most circumstances so long as the arbitrator has not acted in bad faith. The LCIA Arbitration Rules (article 31) and the ICC Arbitration Rules (article 41) contain exclusion provisions and parties, arbitrators and institutions, who have not already done so, can adapt their contracts or rules to confer a wider immunity against personal claims in the light of this ruling.
e) What is the content of the duty?
“[T]o take two opposite extremes, disclosure could not avoid an objection to a judge who in the light of the matter disclosed clearly ought not to hear the case; and non-disclosure could not be relevant, if a fair-minded and informed observer would not have thought that there was anything even to consider disclosing.”
An obligation to disclose a matter which “might” give rise to justifiable doubts arises only where the matter might reasonably give rise to such doubts.
“any circumstances known to the individual (or which become known to the individual before the arbitration ends) which might reasonably be considered relevant when considering whether the individual is impartial and independent.”
Professor Davidson in the second edition of his book (in 2012) (paras 7.29-7.30) observes that this is an objective test and suggests that the factors listed in the Red and Orange Lists of the IBA Guidelines will usually provide useful guidance.
113. Several jurisdictions have adopted the UNCITRAL Model Law which provides in article 12(1):
“When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence. An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall without delay disclose any such circumstances to the parties …” (Emphasis added)
The word “likely” in the UNCITRAL Model Law must be interpreted in the context of the Model Law itself, which appears to suggest that the obligation to disclose arises if the circumstances could reasonably give rise to justifiable doubts. This is because the wording of article 12(1) is in contrast with article 12(2) which provides that an arbitrator may be challenged “if circumstances exist that give rise to justifiable doubts” (emphasis added).
f) Summary on disclosure
(iii) Whether a failure to make disclosure can demonstrate a lack of impartiality
117. Is disclosure relevant to apparent bias? Mr Michael Crane QC on behalf of Chubb correctly makes the point that the inequality of knowledge, which Halliburton lists as one of the principal concerns arising from multiple references concerning overlapping subject matter with only one common party, raises a question of the fairness of the arbitral proceedings, which can be dealt with under section 24(1)(d)(i) of the 1996 Act if there is proof of substantial injustice. That is so; but a failure of that arbitrator to disclose the other references could give rise to justifiable doubts as to his or her impartiality. I agree with the dicta of Cockerill J in PAO Tatneft v Ukraine [2019] EWHC 3740 (Ch), para 57 that:
“the obligation of disclosure extends … to matters which may not ultimately prove to be sufficient to establish justifiable doubts as to the arbitrator’s impartiality. However, a failure of disclosure may then be a factor in the latter exercise.”
(iv) The time of the assessment of the need for disclosure
(v) The time of assessment of the possibility of bias
122. There is support for this view in the case law concerning the application of the test in other circumstances. In R v Gough [1993] AC 646, Lord Goff of Chieveley stated (p 670E) that the court had 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”. In AT & T Corpn v Saudi Cable Co [2000] 2 Lloyd’s Rep 127, the Court of Appeal (Lord Woolf MR, Potter and May LJJ) dealt with an application for the removal of an arbitrator as chairman of an ICC Tribunal on the ground of apparent bias. Lord Woolf in para 42 of his judgment described the court’s task in this way:
“The court considers on all the material which is placed before it whether there is any real danger of unconscious bias on the part of the decision maker. This is the case irrespective of whether it is a judge or an arbitrator who is the subject of the allegation of bias.” (Emphasis added)
Lord Woolf’s formulation of the test pre-dated the refinement of Lord Goff’s formulation by Lord Hope in Porter v Magill but that refinement is not material to the point for which I cite this passage. In R (Condron) v National Assembly for Wales [2006] EWCA Civ 1573; [2007] LGR 87 the Court of Appeal (Ward, Wall and Richards LJJ) addressed a challenge to a decision to allow a planning application taken by the Planning Decision Committee of the Assembly on the basis of apparent bias arising from a remark made by a member of the committee to an objector on the day before the decision. After the decision, the objectors to the application complained to the Commissioner for Standards who produced a report several months later which stated that he found no evidence of bias in the members’ consideration of the application. The judge disregarded evidence of the Commissioner’s assessment of what had occurred at the meeting of the committee, because it would not have been available to the objectors or the hypothetical observer at the time of the decision. Richards LJ, with whom the other Lord Justices agreed, disagreed with the judge’s approach and stated (para 50):
“The court must look at all the circumstances as they appear from the material before it, not just at the facts known to the objectors or available to the hypothetical observer at the time of the decision.”
At para 63 of AT & T Corpn Potter LJ in his concurring judgment described the court’s task as embodying the standards of the informed observer viewing the matter at the relevant time, “which is of course the time when the matter comes before the court”.
124. I turn then to the two principal issues in this appeal.
(vi) The issues
a) Issue 1
128. It is clear that interrelated arbitrations meeting the description of issue 1 are rarer in some circumstances than in others. Mr Constantine Partasides QC, who appears on behalf of ICC, represents to the court that such interrelated arbitrations are not common in ICC arbitrations and therefore such circumstances may more readily give rise to an appearance of bias. GAFTA and LMAA explain that multiple appointments are common in their fields of operation: see paras 43 and 44 above. There is also evidence from ARIAS (UK) of such practice in reinsurance arbitrations: para 43 above. It appears that it is not uncommon for a number of arbitrations involving claims against different insurers arising out of the same incident to commence at around the same time and for the same arbitrator to be appointed in respect of several or all of those arbitrations: see for example, Jacobs, Masters and Stanley, Liability Insurance in International Arbitration. The Bermuda Form, 2nd ed (2011), para 14.32. It is of note that both Halliburton and Chubb made such appointments in relation to the Deepwater Horizon disaster. It does not appear that this practice is inherently problematic so long as the arbitrator can approach each individual arbitration objectively and with an open mind; it depends on the facts of the individual case: see, in analogous judicial proceedings, Locabail (UK) Ltd (above), para 25 (p 480G-H); Stubbs v The Queen [2018] UKPC 30; [2019] AC 868, para 16. Mr Crane also cited many arbitral appeals in which courts or arbitral bodies have rejected challenges to an arbitrator’s impartiality based on his or her participation in prior or contemporaneous related arbitrations.
130. The Court of Appeal in para 53 of its judgment agreed with the judge that the mere fact that an arbitrator accepts appointments in multiple references concerning the same or overlapping subject matter with only one common party “does not of itself give rise to an appearance of bias”. The court referred to the judgment of Dyson LJ in AMEC Capital Projects Ltd v Whitefriars City Estates Ltd [2004] EWCA Civ 1418; [2005] 1 All ER 723, paras 20 and 21, in support of the view that something more, which was something of substance, was required. I do not interpret the Court of Appeal as saying that the acceptance of multiple appointments can never be sufficient of itself to give rise to the appearance of bias. But if that is what the court meant, I would respectfully disagree, especially because the inequality of knowledge between the common party and the other party or parties has the potential to confer an unfair advantage of which an arbitrator ought to be aware. It must depend on the circumstances of the particular arbitration, including the custom and practice in arbitrations in the relevant field, which should be examined closely.
b) Issue 2
“It may be the practice in certain types of arbitration, such as maritime, sports or commodities arbitration, to draw arbitrators from a smaller or specialised pool of individuals. If in such fields it is the custom and practice for parties to frequently appoint the same arbitrator in different cases, no disclosure of this fact is required, where all parties in the arbitration should be familiar with such custom and practice.”
Para 3.1.5 of that Part also lists as a circumstance which might require disclosure:
“The arbitrator currently serves, or has served within the past three years, as arbitrator in another arbitration on a related issue involving one of the parties, or an affiliate of one of the parties.”
(vii) Must there be disclosure of multiple appointments in the context of Bermuda Form arbitrations?
138. The need for disclosure can be illustrated by the circumstances of this case which I discuss more fully in the next section. In summary, on appointment as arbitrator in reference 1, Mr Rokison became subject to the statutory duties in section 33 of the 1996 Act, to act fairly and impartially in conducting arbitral proceedings, in decisions on matters of procedure and evidence and in the exercise of all powers conferred on him (para 49 above). Those duties were owed to both Halliburton and Chubb. One of Halliburton’s complaints (para 41 above) is that relevant information and the opportunity for communication with the common arbitrator were available to Chubb in reference 2 which were not available to Halliburton. Being unaware of the appointment in reference 2, Halliburton was not able to assess whether and to what extent this involved unfairness and how to respond to that appointment. The appointment in reference 2 had the potential to give rise to unfairness, which Halliburton had no opportunity to address. The failure to give a party to an arbitration that opportunity, Halliburton argues, might amount to apparent bias. I agree.
(viii) Application to the facts
139. Before accepting his appointment by the High Court, Mr Rokison disclosed his prior involvement in arbitrations involving Chubb, including those in which he was appointed by Chubb. The High Court appointed him to reference 1 against the wishes of Halliburton but as one of the nominees of Chubb. The court’s decision to appoint Mr Rokison, which was not challenged, means that Halliburton’s wish to have another person to be the chair of the arbitral tribunal is of little if any relevance to the objective assessment of Halliburton’s claim of appearance of bias.
142. The possibility that the common party to two overlapping references might obtain an advantage over its opponent in one or the other arbitration by having access to information about the common arbitrator’s responses to the evidence led or the arguments advanced in the arbitration which was the first to be heard can readily be seen as a cause of concern to the other party in the arbitration in which the evidence and legal submissions are heard later. That is why, in an application under section 18 of the 1996 Act, Leggatt J declined to appoint as the third arbitrator in two related arbitrations a person who had been appointed the third arbitrator in a prior overlapping arbitration, holding that there would be a legitimate concern that he would be influenced by arguments and evidence in the earlier arbitration: Guidant LLC v Swiss, In re International SE [2016] EWHC 1201 (Comm); [2016] 1 CLC 767.
143. In the present case, the existence of possibly overlapping arbitrations with only one common party would not necessarily cause the fair-minded and informed arbitrator to conclude that there was a real possibility of bias, when assessed at the date when the appointment to reference 2 was made. But if Halliburton had been aware of the appointment in reference 2, it might have had concerns about the fairness of its arbitration because of the inequality of knowledge and opportunities to communicate with the arbitrator set out in para 41 above. Such circumstances might reasonably cause the objective observer considering the matter at that time to conclude that there was a real possibility of bias. The circumstances were both relevant and material to that assessment.
144. I recorded in para 27 above the fact that Halliburton had not formally disclosed their appointment of Professor Park in three arbitrations arising out of the Deepwater Horizon incident and the suggestion that the fact that Professor Park was a party-appointed arbitrator rather than a chair or umpire is a significant distinction from Mr Rokison’s position. As I have said, that is not a distinction which English law would recognise as a basis for a party-appointee avoiding the obligation of disclosure. The disagreement among people involved in international arbitration as to the role of the party-appointed arbitrator is a circumstance which points to the disclosure of such multiple nominations; it does not provide a ground for non-disclosure.
145. I am persuaded that Mr Rokison was under a legal duty to disclose his appointment in reference 2 to Halliburton because at the time of that appointment the existence of potentially overlapping arbitrations with only one common party was a circumstance which might reasonably give rise to the real possibility of bias.
146. In my view the disclosure in such circumstances ought to have included (i) the identity of the common party who was seeking the appointment of the arbitrator in the second reference (ii) whether the proposed appointment in the second reference by the common party was to be a party-appointment or a nomination for appointment by a court or a third party, and (iii) a statement of the fact that the second reference arose out of the same incident. The disclosure of this information would impinge upon the privacy of the second reference to the extent that the identity of the common party and the prospect of its involvement in a related arbitration were disclosed, but an arbitrator’s duty of privacy and confidentiality would not prevent such disclosure because one can infer consent for such limited disclosure: see paras 78-98 above. A high-level statement as to whether similar issues were likely to arise, such as Mr Rokison gave to Transocean when he made a proper disclosure of his prior involvement in arbitrations involving Chubb including in an arbitration concerning the Deepwater Horizon incident (para 98 above), would also involve no breach of the arbitrator’s duty of privacy and confidentiality. If further information had to be imparted to achieve proper disclosure or to satisfy Halliburton that the appointment in reference 2 was not a problem, Mr Rokison would have had to obtain the express consent of both parties to the second reference to that disclosure.
148. By the date of the hearing for removal in January 2017 Mr Rokison had given an explanation of his failure to disclose the appointments in references 2 and 3. Halliburton’s lawyers accepted that his explanation of oversight was genuine and they did not challenge his statement that he believed that there was not a material overlap between the references. Chubb also points out that reference 2 followed about six months behind reference 1 and suggests it is more likely that Transocean rather than Halliburton would have cause for concern about one arbitration being a dress rehearsal for the later arbitration.
149. Having regard to the circumstances known to the court at the date of the hearing at first instance, I am not persuaded that the fair-minded and informed observer would infer from the oversight that there was a real possibility of unconscious bias on Mr Rokison’s part. First, there appears to have been a lack of clarity in English case law as to whether there was a legal duty of disclosure and whether disclosure was needed; that can be seen from the judgment at first instance of the able and experienced commercial judge. Secondly, the time sequence of the three references may explain why Mr Rokison saw the need to disclose reference 1 to Transocean but did not identify the need to tell Halliburton about reference 2. Thirdly, his measured response to Halliburton’s robust challenge disclosed that it was likely that references 2 and 3 would be resolved by the preliminary issue and that there would not be any overlap in evidence or legal submissions between them and reference 1. As the arbitral tribunal had held hearings on the preliminary issues in November 2016, Mr Rokison would have been aware of its likely decision when he corresponded with K & L Gates in December 2016 and January 2017 (paras 19-22 above). Indeed, the awards handed down on 1 March 2017 revealed that his discreet prediction was correct. If that had not been the outcome of the preliminary issues, he had also offered to consider resigning from his appointments in references 2 and 3. As a result of Mr Rokison’s response, there was no likelihood of Chubb gaining any advantage by reason of the overlapping references. Fourthly, there is no question of Mr Rokison having received any secret financial benefit in this case; if that objection were valid it would mean that every party-appointed arbitrator receives a disqualifying benefit. In this regard I agree with the Court of Appeal in para 82 of its judgment and with Popplewell J in para 20 of his judgment. Fifthly, I am satisfied that there is no basis for inferring unconscious bias in the form of subconscious ill-will in response to the robustness of the challenge which K & L Gates mounted on behalf of Halliburton. As Popplewell J stated (in para 56 of his judgment), he responded in a courteous, temperate and fair way and there is no evidence that he bore any animus towards Halliburton as a result.
Summary of the law
154. That legal duty of disclosure, which is a component of the arbitrator’s statutory duty to act fairly and impartially, does not override the arbitrator’s duty of privacy and confidentiality in English law; but, absent a contract restricting or prohibiting disclosure or binding rules which have different effect, the disclosure of information of the nature described at para 146 above may be made without obtaining the express consent of the parties to the relevant arbitration where the needed consent is inferred. Such consent may be inferred from the arbitration agreement itself in the context of the practice in the relevant field. (paras 76-81, 88-104, 146)
Conclusion
158. I would dismiss the appeal.
LADY ARDEN:
Disclosure: secondary obligation arising from the primary impartiality duty
163. The debate to which I have referred may account for any reticence in English arbitration law to referring to a duty to disclose but I have no doubt that the law of England and Wales is rigorous in its approach to arbitrator bias and conflicts of interest. Ensuring impartiality is a key principle of our arbitration law. Indeed, as there is force in the view expressed by Professor McKendrick and others that the courts must be especially mindful of the these issues in relation to arbitration where the proceedings take place in private and subject to strict obligations of confidentiality (Ewan McKendrick, chapter 4: Arbitrations, Multiple References and Apparent Bias: A Case Study of Halliburton Co v Chubb Bermuda Insurance Ltd (2018), in Axel Calissendorff and Patrik Schöldstrom (eds), Stockholm Arbitration Yearbook 2019, Stockholm Arbitration Yearbook Series, Volume 1 (Kluwer Law International; Kluwer Law International (2019), pp 55-68, see further Paul Stanley QC, Haliburton v Chubb, 9 May 2018 at pp 4-6 and see Julia Dias QC Resignation in the Face of Confidentiality? (2020) TDM 2).
164. I would urge caution in relation to the conclusion of the Court of Appeal (judgment para 77) that the mere acceptance of a multiple appointment in the sense described above did not give rise to an objective appearance of apparent bias. The Court of Appeal considered that, although there was a risk that an arbitrator might acquire inside information in the new arbitration, something more, which had to be something of substance, was required to establish apparent bias. In their judgment, an arbitrator could be trusted to decide a case solely on the evidence or other material before him in the reference in question (judgment, paras 51, 86). In my judgment, unless the arbitration is one in which there is an accepted practice of dispensing with any need to obtain parties’ consent to further appointments, an arbitrator should proceed on the basis that a proposal to take on a further appointment involving a common party and overlapping subject-matter (in that it arises out of the same event) is likely to require disclosure of a potential conflict of interest. The fact that an arbitrator is to be trusted to decide the case on the evidence is not a complete answer to the objections based on inequality of arms and material asymmetry of information that have been raised by Halliburton (see paras 41 and 142 above). Moreover, as Paul Stanley QC points out at p 18 of the article already cited, this trust may not translate easily for the many parties to arbitrations who are familiar with different legal systems.
Disclosure: rooted in both the contract of appointment and section 33
Disclosure: not available with incompatible conflicts of interest
Disclosure where more than one form of arbitration involved
Disclosure of multiple appointments
Confidentiality - an important implied term
173. There is an implied term as to confidentiality in an arbitration agreement which binds an arbitrator: see Ali Shipping Corpn v Shipyard Trogir [1999] 1 WLR 314 and cf Emmott v Michael Wilson & Partners Ltd [2008] EWCA Civ 184; [2008] Bus LR 1361, cited by Lord Hodge in para 83 above.
“The LMAA believes that users of ad hoc maritime arbitration particularly value confidentiality. Any new general rule of English law requiring disclosure of confidential information against parties’ wishes runs a serious risk of undermining the attractiveness of London as the preeminent seat for maritime arbitration.” (para 22)
177. The principle of confidentiality was not codified in the 1996 Act (see para 85 above). This was because it was too difficult to reach a statutory formulation “in the light of ‘the myriad exceptions’ and the qualifications that would have to follow”: see Department of Economics, Policy and Development of the City of Moscow v Bankers Trust Co [2004] EWCA Civ 314; [2005] QB 207, para 3. In those circumstances, the Departmental Advisory Committee concluded that the courts should continue to be left to work out the implications “on a pragmatic case-by-case basis”.
178. The Court of Appeal considered that the disclosure which the arbitrator had to make had to be:
“regarded as being an exception to that duty, a duty which is recognised not to be absolute.” (para 91)
181. Moreover, neither the Court of Appeal nor the judge found that there was any custom as to what might be disclosed by an arbitrator or proposing arbitrator without the parties’ consent (as to what must be proved to show a custom, see generally Baker v Black Sea & Baltic General Insurance Co Ltd [1998] 1 WLR 974).
Conclusion