Introduction
On
Given
In this briefing, we analyse the
The Facts
The case is one of the many pieces of satellite litigation commenced by insureds against their insurers that followed on from the many very sizeable claims brought against the companies involved in the Deepwater Horizon disaster in 2010.
Deepwater Horizon was an offshore rig in the
The United States Government brought proceedings against each of
Halliburton subsequently settled certain claims against it by way of a settlement in the amount of
As required by many Bermuda Form policies, Halliburton then commenced a
This was not to be Mr Rokison's only appointment in proceedings arising out of Deepwater Horizon:
- Mr Rokison subsequently accepted appointments in two further disputes in
December 2015 andAugust 2016 - one between Chubb andTransocean (in which he was Chubb's party-appointed arbitrator) and another betweenTransocean and another insurer (in which he was appointed jointly by the parties). The dispute between Chubb andTransocean also related to essentially the same issue as had arisen in the dispute between Halliburton and Chubb — denial of policy coverage as a result of an allegedly unreasonable settlement.
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Mr Rokison did not disclose the fact of his subsequent appointment to Halliburton but disclosed his prior appointment in the dispute involving Halliburton to
Transocean . InNovember 2016 , over a year after initiating its arbitration, Halliburton became aware of Mr Rokison's subsequent appointments. It raised concerns about the failure to disclose and, eventually, called on him to resign. Mr Rokison explained the circumstances of his appointment and acknowledged that it would indeed have been prudent to disclose his subsequent appointments to Halliburton; but took the view that he would resign if the parties mutually agreed on his resignation and his replacement. Absent agreement between Halliburton and Chubb on this point, he did not resign.
-
In
November 2016 , Halliburton filed an application under section 24(1)(a) AA 1996 to remove him on grounds of perceived bias.2 This application was dismissed by theHigh Court . Halliburton's appeal against the decision was also dismissed on19 April 2018 . Given the importance of the issues at stake (albeit far-removed from the underlying substance of the dispute), Halliburton was granted leave to appeal to theSupreme Court .
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In the meantime, the tribunals in the three proceedings in which Mr Rokison sat rendered awards - Chubb prevailed in both its cases, and the other insurer did so in its dispute with
Transocean .
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The hearing in the
Supreme Court concluded on18 November 2019 . In a decision rendered a year later, theSupreme Court found that while Mr Rokison was in breach of his obligation to disclose his appointment in the other references, but this did not render him liable to be removed under section 24(1)(a) AA 1996.
Summary of the
There were two issues which the
- Duty to disclose
Deciding on the duty to disclose, the
The
- English law imposes a continuous duty of disclosure. In order to fall to be disclosed, a fact does not need to be one which would cause the informed observer to conclude there was a real possibility of bias; to be disclosable, it is enough that such fact is "relevant and material to such an assessment of the arbitrator's impartiality and could reasonably lead to such an adverse conclusion".6 Which facts are liable to be disclosed is to be determined based on an objective test; and assessed "in the eyes of the parties". 7
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On the specific question of whether disclosure was required when an arbitrator has accepted, or is considering, multiple appointments (i.e. multiple appointments by a common party in relation to a same or overlapping subject matter) - the
Supreme Court concluded that disclosure would be required, as multiple appointments of this kind would have the potential to confer an unfair advantage on the common party - and the arbitrator should be aware of this.8 Disclosure in these circumstances would, however, depend on the circumstances of the particular arbitration - in particular those being conducted pursuant to industry-specific rules such as GAFTA and LMAA where there is an accepted practice of arbitrators accepting multiple appointment without disclosure.9
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However, since English law imposes a duty of confidentiality in relation to arbitrations (to which arbitrators are also subject), such disclosure as must be made would have to be limited to: (i) the identity of the common party, (ii) whether the arbitrator was nominated by the party or by another or by the institution, (iii) second reference arose out of the "same incident")". 10
Lord Hodge (who gave the leading judgment) noted that, while this would impinge on the privacy of the other arbitration strictly construed, one could infer consent for such limited disclosure on the part of the common party based on their wish to appoint the same arbitrator in multiple proceedings.11 Of course, where the other arbitration was subject to binding rules or express restrictions such disclosure could not be made.12 As a general rule, whether and to what extent the arbitrator can make a disclosure depends on whether a consent could be inferred, having regard to the customs and practices of arbitration in their field.13
Whilst
Critically, she understood the majority's decision regarding high-level disclosure not as implying that such a disclosure was enough to discharge the duty of disclosure, but rather that, if further information were required to be disclosed, then the consent of the parties in the other arbitration would be required - and if that consent were not forthcoming, then the arbitrator would be compelled to decline the appointment which had required disclosure to be made.15
On the facts before it, the
- Consequences of breach of obligation to disclose
Despite finding that Mr Rokison had breached the obligation to disclose, the
Of central importance to its finding in this respect was the point in time at which any enquiry pursuant to s. 24 AA 1996 should take place.
The
When making its assessment, the
A practitioner's view
Given its importance for both the English and the wider global arbitration community, Halliburton v. Chubb will no doubt fuel debate for the foreseeable future.
Whilst the English law position on an arbitrator's legal duty to disclose is now well-settled, there are several notable aspects of the judgment that are worth highlighting.
First: much of the
Second: the
Third: the
Fourth: the
Fifth: following on from the above, it is clear that, in determining what the correct course of action is as regards any disclosures that need to be made, an arbitrator will need to make several judgement calls - is the previous arbitration confidential? Is disclosure in a given case dispensed on account of the industry involved? Was there implicit consent to disclosure of certain information? What are the consequences of not disclosing? Is there an obligation to disclose more than just the high-level summary? The risk of erring in the application of a standard that is so fluid in the face of different and rapidly changing customs and practices is real. This inherent uncertainty may be of particular concern to international practitioners considering whether or not to accept appointments in arbitrations seated in
Sixth: there is a sense that English law on arbitration deviates from international standards, and especially so in the area of impartiality and independence. To the extent IBA Guidelines are recognised good practice, this the second instance where an English Court has reached a conclusion that is inconsistent with them.19 There are several jurisdictions that have a more exacting threshold of impartiality than that is demanded by the English courts; and courts in those jurisdictions may infer apparent bias in situations that are otherwise permissible under English law. For instance, the IBA Guidelines have been statutorily recognised in
Whilst the
Best practice to help maintain that integrity is for arbitrators to disclose any facts as may potentially be relevant to the greatest extent permissible whilst respecting confidentiality. However, if any doubts remain, or if an arbitrator is not able to give the disclosure that is properly required, they would be well-advised to follow
Footnotes
1.
2.Section 24(1)(a) AA 1996 provides as follows: "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" (emphasis added).
3.Id., ¶2.
4.Id., ¶¶ 75 & 76. This duty is encompassed within the general duty of the Tribunal set out at s. 33 AA 1996. The full text of s. 33 AA 1996 reads as follows:
"(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".
5.Id.,¶116.
6.Id.,¶116.
7.Id.,¶72.
8.Id.,¶130.
9.Id.¶¶91, 182.
10.Id.,¶146.
11.Id.,¶99.
12.Id.,¶154.
13.Id.,¶116.
14.Id.,¶185.
15.Id., ¶188.
16.Id.,¶149.
17.See generally, Id.,¶128.
18.Id.,¶57; 1996 Report on the Arbitration Bill, ¶9 (https://bit.ly/2JfaVqp).
19.The first was the case of
20.
21.
22.
23.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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