An arbitrator accepted an appointment in a related insurance dispute without telling Halliburton. The Supreme Court distinguished the question he should have asked at the time of appointment from the question the court had to decide later: did the circumstances known at the removal hearing give a fair-minded observer reason to doubt his impartiality?
The claims and the three arbitrations
The dispute arose from the explosion and fire on the Deepwater Horizon rig in 2010. Halliburton had provided cementing and well-monitoring services. A United States federal court later apportioned blame as to 67 per cent to BP, 30 per cent to Transocean and 3 per cent to Halliburton. Halliburton settled claims against it for about US$1.1 billion before that judgment and claimed on its Bermuda Form liability policy with Chubb. Chubb refused to pay, saying that the settlement was not reasonable and that it had acted reasonably in withholding consent. Transocean made similar claims against its insurers, including Chubb, which Chubb resisted on substantially the same grounds.
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The policy was governed by New York law but required arbitration in London by three arbitrators, with no right of appeal. Halliburton appointed Professor William W Park and Chubb appointed Mr John D Cole. They could not agree a chairman. On 12 June 2015, after a contested hearing, Flaux J appointed Mr Kenneth Rokison QC, one of Chubb’s nominees. Before that appointment Mr Rokison disclosed earlier and pending appointments involving Chubb. The court did not treat them as an obstacle, and Halliburton did not appeal. This Halliburton arbitration was reference 1.
In December 2015 Mr Rokison accepted appointment by Chubb in Transocean’s claim arising from the same incident, reference 2. He told Transocean about reference 1, and Transocean did not object, but he did not tell Halliburton. In August 2016 he accepted a jointly nominated substitute appointment in another Transocean arbitration against a different insurer, reference 3. That appointment was not disclosed to Halliburton either. Halliburton discovered both on 10 November 2016.
Mr Rokison explained, and both sides accepted, that it had not occurred to him that the IBA Guidelines required disclosure. He apologised, accepted that disclosure would with hindsight have been prudent, and offered to consider resigning from the Transocean references if preliminary issues did not end them. Chubb opposed resignation because of cost and delay. On 21 December 2016 Halliburton applied under section 24(1)(a) of the Arbitration Act 1996 to remove him, alleging circumstances giving rise to justifiable doubts about his impartiality. It did not allege deliberate wrongdoing or actual bias.
What the courts below decided
Popplewell J dismissed the application. He held that an English arbitrator owes no allegiance to the appointing party and must decide each reference on the material available to its parties. Overlapping appointments were, in his view, a regular and often useful feature of international arbitration. He concluded that nothing had to be disclosed and that Mr Rokison’s honest explanation, even if mistaken, did not show a real possibility of bias. He also rejected criticism of Mr Rokison’s response to the challenge.
The Court of Appeal dismissed Halliburton’s appeal, but disagreed about disclosure. It held that disclosure is required of facts which would or might lead the fair-minded and informed observer to conclude that there was a real possibility of bias, judged at the time disclosure should have been made. On that basis Mr Rokison ought in law to have disclosed the later appointments. The court nevertheless held that the observer would not find a real possibility of bias: the non-disclosed circumstance did not itself justify that inference, the failure was accidental, the overlap was limited, and the criticism of his later conduct had no substance.
References 2 and 3 were afterwards decided on a preliminary issue of policy construction in the insurers’ favour. They ended without any decision on the reasonableness of Transocean’s settlement. In December 2017 the reference 1 tribunal, including Mr Rokison, decided the merits for Chubb. Professor Park signed that award but added separate observations expressing disquiet about the fairness of the procedure. The other arbitrators did not treat those observations as a dissent from the award.
Impartiality in arbitration
Lord Hodge, with whom Lord Reed, Lady Black and Lord Lloyd-Jones agreed, applied the established test: whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility of bias. That observer is neither complacent nor unduly sensitive or suspicious. The same objective test applies to judges and to every arbitrator. English law does not impose a lower standard on a party-appointed arbitrator. Section 33 requires the tribunal to act fairly and impartially, and section 24(1)(a) allows removal where circumstances exist that give rise to justifiable doubts about impartiality. Unlike some other grounds, the applicant need not prove substantial injustice.
The observer must nevertheless take account of arbitration’s particular setting. Proceedings are generally private, so a party absent from a related arbitration cannot see the evidence, argument or the arbitrator’s response. Awards are subject to only limited review. Arbitrators are nominated and paid for a particular reference and may have a financial interest in future appointments. Participants also differ about the proper role of a party-appointed arbitrator, although English law requires the same impartiality from all members of the tribunal. The observer should know of that debate and of the possibility of tactical challenges, without treating a party’s own expectations as the test.
Disclosure, confidentiality and timing
The Supreme Court confirmed that disclosure is a legal duty, not merely good practice. It forms part of the section 33 duties and of an implied term in the arbitrator’s contract. An arbitrator must disclose facts and circumstances which would or might reasonably give rise to justifiable doubts about impartiality. The matters need not themselves establish bias. It is enough that they are relevant and material and could reasonably lead the observer to that conclusion. Trivial matters should not be disclosed. A matter which would clearly disqualify the arbitrator should ordinarily lead to refusal or withdrawal rather than disclosure alone.
The legal test is objective. It differs from institutional rules which ask how the particular parties might perceive the position. Whether disclosure was required is judged by the circumstances when the arbitrator knew of the matter, not by facts discovered later. The duty continues, and later events may affect the weight of a continuing failure. A failure to disclose is a factor in the bias assessment and may show insufficient regard for the party who was kept in ignorance, but it does not automatically prove apparent bias.
English-seated arbitration is also private and confidential. In a Bermuda Form arbitration, however, limited disclosure does not require express consent from every party to the disclosed arbitration. Unless they have agreed otherwise, an arbitrator may disclose its existence and the identity of the common party. Consent to that limited disclosure can be inferred from the agreement and from practice. Further detail requires express consent; without it, the second appointment must be declined. Lord Hodge held that whether the same approach applies by analogy elsewhere depends on the characteristics, custom and practice of the arbitration in question.
Multiple appointments concerning the same or overlapping subject matter, with only one common party, do not automatically create an appearance of bias. The answer depends on the contract, the facts and the expectations of the field. In some commodity, maritime and reinsurance arbitrations, such appointments are familiar and accepted, so disclosure may not be expected. That was not shown for Bermuda Form arbitration. There, absent a contrary agreement, these appointments must be disclosed. The inequality of knowledge between the common party and the other party may itself be enough, on some facts, to create an appearance of bias.
Removal is assessed at a different time. Because section 24(1)(a) asks whether the relevant circumstances exist, the court looks at the facts known when it hears the removal application.
Why the chairman was not removed
Lord Hodge held that, when Mr Rokison accepted reference 2, potentially overlapping arbitrations with only one common party might reasonably have suggested a real possibility of bias. He should have told Halliburton that Chubb was the common party seeking the appointment, whether it was a party appointment or a nomination, and that the reference arose from the same incident. A high-level statement about whether similar issues were likely could also be given without breaching confidentiality. His failure to disclose reference 2 was therefore a breach of legal duty. English law did not treat Professor Park’s position as a party-appointed arbitrator as a reason for Halliburton to avoid a corresponding disclosure obligation.
By the hearing in January 2017, however, the observer would not have found a real possibility of bias. English case law had not clearly established the duty. The sequence of the references helped explain why Mr Rokison disclosed reference 1 to Transocean but not reference 2 to Halliburton. His response showed that references 2 and 3 were likely to end on the preliminary issue, so Chubb would obtain no advantage from the overlap, and he had offered to consider resigning if they did not. There was no secret financial benefit, and no basis for inferring ill will in response to Halliburton’s challenge. The appeal therefore failed.
Lady Arden’s qualifications
Lady Arden agreed, with qualifications. She treated disclosure as a secondary consequence of the primary duty of impartiality, rooted in both section 33 and the contract of appointment, and capable of being waived by properly informed consent. She cautioned against treating mere acceptance of a further overlapping appointment as incapable of suggesting bias, unless the relevant arbitration has an accepted practice of dispensing with consent. She would not confine the analysis to Bermuda Form arbitrations. On confidentiality, she considered that the limited disclosure identified by Lord Hodge does not generally breach confidentiality because the other parties are not named, although consent would be needed in the exceptional case where they could be identified without being named.
Verdict: The Supreme Court unanimously dismissed the appeal. The arbitrator had breached his duty to disclose the related appointment. On the facts known at the removal hearing, that breach did not establish a real possibility of bias. The Court refused removal.
