A claim that an experienced arbitrator could be biased after accepting multiple appointments on related claims has been thrown out by the Supreme Court. However the Court ruled that an arbitrator has a duty to disclose appointments which may reasonably give rise to the appearance of bias.
The long-awaited judgement followed the Deepwater Horizon oil rig disaster. The rig suffered a blowout and explosion which killed 11 crewmen in the Gulf of Mexico in 2010. In one of the multiple insurance claims related to the tragedy, Chubb declined a claim made by Halliburton, a major oil field services provider.
In an attempt to reach an agreement about the claim, Halliburton started an arbitration against Chubb. The parties could not agree on the membership of the arbitration panel and the UK High Court was called on to appoint the Tribunal Chair. It chose Kenneth Rokison, one of the candidates put forward by Chubb. Mr Rokison disclosed that he had previously received several appointments by Chubb during the appointment process.
It is common for specialist arbitrators to be appointed on multiple related claims and following his appointment on the first arbitration, Mr Rokison was appointed by Chubb on a second arbitration relating to the Deepwater Horizon loss. He also accepted a third Deepwater Horizon appointment from another insurer. Mr Rokison did not disclose the subsequent appointments to Halliburton, although he later accepted that it would have been prudent to do so.
On discovering the second and third appointments Halliburton applied to the High Court to have Mr Rokison removed as Tribunal Chair in the first arbitration on the grounds of the appearance of bias.
The High Court applied the common law test for apparent bias. This asks whether a fair-minded and informed observer (the ‘Observer’), having considered the facts, would conclude that there was a real possibility of the Tribunal Chair being biased. The Court concluded that none of the grounds put forward would give rise to doubts about Mr Rokison’s impartiality and refused Halliburton’s request.
At appeal, the Court considered whether an arbitrator could accept multiple appointments on related matters with one common party, without appearing biased. It decided that Mr Rokison should have disclosed the appointments to Halliburton as a matter of good practice and law. However this alone would not have led the ‘Observer’ to conclude that he was biased and it refused Halliburton’s appeal.
Halliburton was given leave to appeal to the Supreme Court, which accepted the lower courts’ findings that there were no grounds to doubt Mr Rokison’s impartiality and dismissed the appeal. In an important decision, however, the Court went on to rule that, under English law, arbitrators do have a duty to disclose additional appointments which might reasonably give rise to an appearance of bias.
James Burgoyne of Brunel Professions said: “This case is not necessarily about whether an arbitrator is biased or not – but whether they could appear biased by accepting multiple related appointments, and therefore call the process into doubt. The Supreme Court’s ruling is helpful as it clarifies that arbitrators have a duty to disclose these appointments. It will be interesting to see how insurers respond in the future if faced with a negligence claim after an arbitrator failed to make full disclosure of related appointments.”
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This post was written by James Burgoyne