The process of selecting suitable arbitrators is of paramount importance in striving to achieve a fair and optimal outcome for both policyholders and (re)insurers. Under English law, the 2020 Supreme Court decision in Halliburton Company (Appellant) v Chubb Bermuda Insurance Ltd [2020] UKSC 48 (the "Halliburton decision") developed the law on which arbitrator appointments might be challenged. The Halliburton decision is the most significant decision impacting the appointment of an arbitration panel, with discussion around potential bias where an arbitrator is appointed in respect of the same subject matter on multiple panels with a common party. We discuss the developing implications of this decision below.
The Halliburton decision
The Halliburton decision involved claims arising out of the Deepwater Horizon incident, in relation to Halliburton's offshore services. Halliburton sought arbitration in respect of Chubb's denial of excess liability coverage under its Bermuda Form policy. Central to the dispute was the appointment of Mr. Kenneth Rokison QC as arbitrator by the English High Court. Issues arose in the context of Chubb having used Mr. Rokison previously, causing Halliburton to seek his removal on the basis of his lack of independence and impartiality. Specifically, Halliburton took the position that there was unconscious bias, allowing Chubb to influence Mr. Rokison with arguments in other matters without the ability for Halliburton to know or answer these arguments due to confidentiality in arbitration.The Supreme Court ultimately rejected Halliburton's challenge. Among other things, the Court set out the general framework for pre-appointment disclosure of the arbitrator's appointment in other arbitrations over the same subject matter with a common party. The Court confirmed that such duty of disclosure is ongoing, that consent to disclose can be implied in certain circumstances, and such disclosure is required of the arbitrator as a matter of law in the context of Bermuda Form arbitrations. The Court held that the mere fact of appointments with overlapping subject matter with only one common party does not itself give rise to an appearance of bias; it depends on the circumstances, including the custom and practice in arbitrations in the relevant field. The test to be applied is the objective test of apparent bias to a fair-minded and informed observer, taking into account (i) the differing perceptions of the roles of the party-appointed arbitrator, and (ii) the relevant customs and practices in the relevant industry, given the fact that there are different expectations as to the degree of independence of an arbitrator in different fields.
Post-Halliburton developments
Subsequent case law provides further clarification on the circumstances in which an arbitrator can be successfully removed.
The Supreme Court set the framework for challenging arbitration appointments in circumstances where arbitration is commenced in respect of the same subject matter against different insurers through a (re)insurance tower. Though somewhat vaguely described and necessarily context-driven, subsequent case law has provided some additional context on challenging an arbitration appointment.
In H1 and another v W and others [2024] All ER (D) 155, the claimant insurer successfully sought removal of W, a British Film Institute nominated arbitrator, from his role in determining an insurance dispute. The arbitration related to a claim arising from the filming of a television series, involving safety on set and prevalence of risk assessments in Sweden in 2018. In that case, the arbitrator was successfully removed following comments by which the arbitrator expressed the view that expert evidence was not necessary because he "knew them all personally extremely well on the [insured's] side", and did not know the insurer's expert witnesses. It was not enough for the arbitrator to say he wanted to hear everyone in full, as a fair-minded and informed observer would conclude that the arbitrator would be materially influenced in his assessment of the expert evidence by the extraneous consideration quoted above.
In Aiteo Eastern E&P Company Ltd v Shell Western Supply and Trading Ltd and other companies [2024] EWHC 1993, the claimant (a Nigerian company) enjoyed partial success in overturning a series of four partial arbitration awards by a panel appointed by the International Chamber of Commerce on the basis of alleged bias by one of the members of the tribunal, Rt. Hon Dame Elizabeth Gloster DBE. Several lenders to the claimant had alleged breaches of certain facility agreements and commenced arbitration against the claimant. Gloster disclosed that she had been party nominated in two other unrelated arbitrations in the last two years by parties represented by Freshfields. However, Gloster’s clerk inadvertently failed to disclose in her ICC Arbitrator Statement that she gave expert advice in a conference to a client of Freshfields on an unrelated matter.
Moreover, following her appointment, Freshfields replaced counsel previously representing the party which had nominated Gloster in yet another unrelated case, and this was not disclosed. The claimant was successful in arguing for Gloster's removal before the Commercial Court, but, unhappy with the ultimate decision reached in the arbitration, then applied to the English High Court to overturn the arbitration decision due to irregularity and bias. The English court was satisfied that this irregularity invalidated one of the partial awards where substantial injustice arose from the fact that the arguments were addressed by a tribunal where one member was affected by apparent bias, and ordered a reconsideration of the same. The remaining decisions were left undisturbed for separate reasons which resolved the apparent bias, including that they were the result of each of the arbitrators reaching the same decision individually and independently.
Thus, it remains possible to exclude an arbitrator for breach of duty to disclose the potential for conflicts alone. One must examine the alleged conflict in context and hold it up to the "fair-minded and informed observer" standard. Factors to consider include:
- repeated nomination by the same party;
- involvement with a party outside of the context of arbitration;
- comments by the arbitrator that would tend to suggest their impartiality is undermined.
Conclusion
The case law makes clear that all factors must be assessed and weighed separately, leaving it to the parties to raise matters they feel may cause them prejudice in the final outcome of arbitration. The Halliburton decision and subsequent cases ultimately empower the parties to seek to remedy perceived unfairness and replace arbitrators where cause can be established. The parties, and their representatives, should maintain a lookout for such factors described above, to ensure that the high stakes coverage arbitrations (re)insurers and policyholders increasingly find themselves in, reach the best possible conclusion.If you have any questions or would like to discuss any of these topics and what they mean for you and your business, please contact our International Arbitration experts below.
