A recent decision of the United Kingdom Supreme Court (UKSC) in Halliburton Company v Chubb Bermuda Insurance Ltd (formerly known as Ace Bermuda Insurance Ltd) [2020] UKSC 48 found that an arbitrator’s failure to disclose multiple arbitral appointments with overlapping subject matter was in breach of his duty of disclosure, but that there was no apprehension of bias to warrant his removal.

The appellant (Halliburton) made a claim under its liability insurance cover with the defendant (Chubb) for claims Halliburton had previously settled arising out of an explosion on a drilling rig in the Gulf of Mexico (the Incident). Chubb determined that Halliburton’s settlement was not reasonable and declined coverage.  A dispute arose between the parties and Halliburton commenced arbitral proceedings under the terms of the insurance policy (Arbitration 1). Each party nominated an arbitrator, but they were unable to agree the chair of the Arbitral Tribunal. Following a contested High Court hearing, Mr Rokison, who had been nominated by Chubb, was appointed as chairman.

Chubb subsequently appointed Mr Rokison as arbitrator in a separate dispute between Chubb and Transocean Holdings in relation to the Incident (Arbitration 2). Mr Rokison also accepted appointment in a dispute between Transocean Holdings and another insurer in relation to the Incident (Arbitration 3). Mr Rokison did not disclose his appointment in Arbitrations 2 and 3 to Halliburton.

Eighteen months into Arbitration 1, Halliburton discovered Mr Rokison’s involvement in Arbitrations 2 and 3. Mr Rokison advised Halliburton that he had not disclosed those appointments to it because it had not occurred to him at the time of accepting the appointments that he was under any obligation to do so. Halliburton applied to the High Court to exercise its powers under s 24 of the Arbitration Act 1996 (UK) to remove Mr Rokison as arbitrator in circumstances which gave rise to justifiable doubts as to his impartiality based on the appearance of bias. The primary judge dismissed Halliburton’s challenge to Mr Rokison’s impartiality, finding that Mr Rokison was under no duty to disclose, as his conduct did not give rise to any justifiable concerns about his impartiality. Halliburton appealed.

The Court of Appeal disagreed with the primary judge and found that Mr Rokison did have a duty to disclose the later appointments to Halliburton. However, it agreed that a fair-minded and informed observer would not conclude that there was a real possibility of bias. Further, the Court determined that an accidental failure to disclose multiple appointments was not enough to successfully challenge an arbitrator’s impartiality and that “something more of substance” was required.

Halliburton appealed to the UKSC, arguing that the Court’s decision in relation to apparent unconscious bias was out of step with internationally accepted standards and practices. The UKSC found in favour of Chubb, and held that Mr Rokison’s failure to disclose:

•    his appointment in Arbitration 2 to Halliburton was a breach of his legal duty of disclosure; and
•    his role in Arbitrations 2 and 3 would not cause the fair-minded and informed observer to infer from the circumstances that there was a real possibility of unconscious bias and therefore did not merit the removal of Mr Rokison.

In reaching its decision, the UKSC had regard to the following:

•    Arbitrators are required by law to disclose facts and circumstances of other appointments which might give rise to justifiable doubts as to their impartiality, and this is to be assessed at the time the facts and/or the circumstances become known to the arbitrator.
•    An arbitrator’s failure to disclose relevant facts and circumstances will not necessarily amount to apparent bias, but will be taken into account by a Court in considering whether there is justifiable doubt as to an arbitrator’s impartiality.

The above UK authorities provide some useful points when considering an arbitrator’s obligation to disclose, including:

•    that the need for arbitrators to disclose multiple appointments will depend on the context of the arbitration, including the customs and practices of arbitrations of that type;
•    that the Court’s assessment of apparent bias will be fact-specific; and
•    ultimately, there is a legal duty of disclosure in circumstances that give rise to doubt as to an arbitrator’s impartiality.

The full decision can be found here.