Independence and Apparent Bias: Judicial and Arbitral Confidence: Halliburton v Chubb
The Goff Lecture 2022
Sydney and Hong Kong
Chief Justice Allsop AO[1] 3 November 2022
1 Commerce is built on trust. That trust is not incautious wishful thinking. It is the requisite degree of trust in the circumstances, usually circumscribed by practical reality, including the mutual advantage of a continuing relationship, a body of information, and a degree of familiarity with the context.
2 Just as commerce is built on the requisite degree of trust, so it is important that the agency of adjudication, which is chosen to resolve disputes that cannot be resolved by mutually agreeable compromise be able to engender the requisite degree of trust in the parties, including as to honesty and fairness, and most importantly, impartiality.
3 By using the phrase “requisite degree of” I am not intending to water down the important underpinning place of honesty, fairness, impartiality, independence and trust. What I intend is to recognise that definitions, rules and moral absolutes have their limitations, along with their importance, in the real world. Dispute resolution, including adjudication, takes place in the real world with imperfect institutions and humans, acting in good faith.
4 The subject of this evening’s discussion is the decision of the United Kingdom Supreme Court in late 2020 in Halliburton Co v Chubb Bermuda Insurance Ltd (Halliburton).[2] It contains important development and clarification of the common law of England on arbitration, recognising and incorporating real world realities in practice, but holding firm to a demand for the highest level of impartiality in arbitrations governed by English law.
5 It is first necessary to say something of the differences and similarities of judicial adjudication and arbitration to appreciate the existence and content of the legal duty of disclosure of the arbitrator or prospective arbitrator, and the duties of independence and impartiality of the judge and arbitrator.
6 The fundamental underpinning feature of judicial adjudication is the imposition of, or subjection of the disputant parties to, a form of state power: judicial power. Judicial resolution of a controversy is the state using its compulsory powers to resolve disputes brought to the jurisdiction[3] of its courts by one party. Usually, this involves full public disclosure of all issues, and an appellate structure of one, possibly two, layers. The moving or claiming party in curial adjudication may have a choice of courts, but only within recognised limits of conflict of laws. For the responding party the venue is compulsory. Once in the hands of the court, the structure and application of procedure is by reference to the law of the relevant polity. Part of that imposed structure and law will be the institutional choice and imposition of the judge and an accompanying expectation of complete independence and impartiality.
7 The arbitral process, of its nature, contains within it a greater degree of choice: Arbitrators of chosen identity and known skill can be provided for; and trusted institutions, with known and understood rules, and seat courts of known skill can be chosen to supervise the resolution of the dispute.
8 The two concepts of independence and impartiality are not easily disentangled by verbal formula. It is doubtful whether the attempt to define them separately is worthwhile,[4] other than by a recognition of their core meanings: impartiality is an absence of bias or of partiality to one side or its case; independence is a lack of control or of influence from relevant external sources.[5] An exploration of circumstances that may lead to one being undermined or compromised generally assists in the consideration of whether the other is as well. The interconnection or relationship between the two concepts is not assisted by definition or seeking exhaustively to set out what may lead to, or be seen to lead to, an undermining of independence or a compromising of impartiality, although guidelines help.[6] But guidelines often, over time, become seen as rules, with defined content, something unhelpful in a context-specific, fact-rich evaluation.[7] It can be said that, ultimately, it is impartiality that matters. That was the view of the English Departmental Advisory Committee on Arbitration Law leading to the drafting of the Arbitration Act 1996[8] and remains the, at least provisional, view of the Law Commission in its current review of the Act.[9]
9 Definition of ethical values, principles and states of affairs underpinning trust and confidence, and honesty and fairness, risks arid debate and unhelpful distinctions, which likely pay insufficient regard to the importance of context and the necessary indeterminacy of meaning. This is not to promote uncertainty; rather it is to recognise the central place of the implicit and the contextual in the requisite degree of certainty in the application of principles of a behavioural or ethical kind.
10 That is why the conjoined expression “independence and impartiality” is helpful.[10] The expression may perhaps be seen as, or as similar to, a hendiadys: a figure of speech in which a single complex idea is expressed by two words connected with “and” without subordination of one to the other or without parts of separate and equal standing.[11]
11 The importance of the trust and confidence of the members of the polity served by the court, and of litigants who come before the court, is basal. This leads to the need to express the legal rule by reference to which a judge must decide that he or she cannot be independent or impartial, both by reference to the fact of independence and impartiality, and of their appearance externally. The fact of impartiality involves an examination of conscience. That may involve the contemplation of personal circumstance and attitude and an exploration of the possibility of subconscious bias. Of greater subtlety and practical importance is the rule or test for “apparent bias”. This requires the expression in words of an evaluative assessment: necessarily by reference to the practical human context in which the question is being posed. Hence, the necessary anthropomorphous (of human form) nature of relevant tests: Trust and confidence are human and emotional conceptions, linked to rational thought. Thus the test is best couched in human terms.
12 In English law the test for apparent bias in decision-making was settled in 2002 and 2008, in Porter v Magill and Helow v Secretary of State for the Home Department: whether a “real possibility” exists that a decision-maker is biased. A “real possibility” exists where the circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility that the decision-maker was biased.[12] This replaced (or modified) Lord Goff’s expressions “real danger” and “real likelihood” in the sense explained by Lord Goff in R v Gough[13] as in terms of possibility not probability, which had been criticised by the High Court of Australia as being too stringent, over-emphasising the court’s view and under-emphasising the public perception of the circumstances, and not followed in Canada and New Zealand.[14]
13 In Porter v Magill, Lord Hope described as a “modest adjustment”[15] the introduction of the fair-minded and informed observer concluding that there was a real possibility of bias.[16] Given Lord Goff’s explanation[17] that the court’s perspective was the reasonable man observing and that the perception was one in terms of possibility not probability, and given the view of Lord Phillips of Worth Matravers MR in In re Medicaments[18] that “real danger” was the same as “real possibility” (thereby removing the connotation of immediacy as in “clear and present danger”), that was a fair comment by Lord Hope, even though his Lordship discarded the phrase “real danger” as not useful.
14 In Australia, the reasonable apprehension test, at least for non-arbitral bias, is whether “a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide.”[19]
15 A different formulation applies, however, to arbitration under both Commonwealth and State and Territory arbitration Acts. The relevant provisions give content to Article 12 of the Model Law (“justifiable doubts as to [the arbitrator’s] impartiality or independence”) by such being satisfied “only if there is a real danger of bias”.[20]
16 This statutory formulation, taken from R v Gough, was advocated strongly by those who saw the need for a higher threshold in adjudicators who were not public officials.[21]
17 Neither the English nor the Australian non-arbitral test requires certainty, only a “real possibility” or “reasonable apprehension” of bias. These standards support the fundamental principle that justice must be both done and be seen to be done. The qualifiers “real” and “reasonable” import the notion that the human construct must consider that the potential for bias is material, that it logically or experientially arises from the surrounding circumstances, for a judge to be disqualified from hearing a matter. As to the nature of the human subject, in the English test, the fair-minded observer is an independent person, not a person in the position of a litigant before the judge.[22] Further, the fair-minded English observer appreciates the context of the material before them, and reserves judgment until they have fully understood both sides of the argument.[23] In the Australian non-arbitral test, the fair-minded observer is a lay person, who is not unduly sensitive or suspicious, and who has an understanding of the relevant circumstances of the case and ordinary judicial practice.[24]
18 The need for this degree of detachment from the special knowledge and expertise of judges and lawyers reflects the constitutional importance of the judicial process as the open and public exercise of state power. As will be seen in Lord Hodge’s judgment in Halliburton the context of the arbitral process perhaps lessens the need for emphasis on public confidence, but heightens the need for emphasis on participant confidence and general confidence in the system of arbitration, as part of an international system of justice.[25]
19 The institutional integrity of a court should not be able to be impugned too lightly. At the same time, the challenge should not be so onerous as to permit judges to adjudicate in circumstances where a reasonable human perception would call that into question.
20 The textual expressions of the test in England and Australia reflect the difficulty of this balance. There is a lack of equivocation in the English test: there is a real possibility of bias, because the circumstances would lead to the fair-minded and informed observer to that conclusion. The non-arbitral test in Australia may perhaps be seen as more attenuated: the observer might reasonably apprehend that the judge might not bring an impartial or unprejudiced mind to bear. Though not to be viewed in a mathematical way, two “mights”, even if “firmly established” as they have to be[26] seem less stringent and more open to equivocation than one “would” leading to a “real possibility”.
21 All this said, one needs to be careful of over-precise linguistic expression when the proposition involves the implicit, the less than certain, the intuitive and human feeling, albeit derived from rational thought. The underlying notion is elegantly expressed in the Model Law: Are there justifiable doubts about independence or impartiality? That is a factual question that is to be examined contextually. The two contexts of a public judicial institution, and of a private panel of people partly chosen by the parties are very different. That difference does not necessarily entail the need for a differently framed question; but, rather, the recognition of a different factual context in which to answer it.
22 So, is the arbitral test in Australia higher than that for Australian judges and other public decision-makers? Those advocating for, and making, the change certainly thought so, as a way of stopping what was seen as an increasingly common procedural tactic in high value international commercial arbitrations.[27] The Explanatory Memorandum to the Act amending the Commonwealth Act expressly referred to the decision of Lord Goff in Gough, as a different (and more stringent) standard to that derived from cases such as Ebner.[28] Yet, as Lord Goff himself made clear, the test of danger or likelihood was one by reference to possibility, not probability. Australia’s arbitral test is clearly linked to R v Gough. The real question is whether it will be construed as modestly adjusted and explicated in and by Porter v Magill, Helow v Secretary and In re Medicaments.
23 Debates about refinements of degrees of possibility are likely to be arid and unhelpful. This is why Lord Hodge’s judgment, with its emphasis on the arbitration context, rather than textual comparisons, is very valuable.
24 It is important to recall that the apprehension is one of bias or partiality or pre-judgment[29]: not of loss of the adjudication. Litigants often fail to grasp this. The fact that a judge has decided a legal point before is not, of itself, a ground of objection. The apprehension must be of not being able to bring an open mind to bear on the arguments, not that the judge is more likely to follow precedent perceived to be unfavourable.
25 But some kinds of prior decisions can reasonably be seen by the hypothesised human construct to be more difficult to eradicate, consciously or subconsciously, from even the trained judicial mind. An earlier finding of fraud or dishonesty may be impossible to remove from the mind.[30]
26 Such prejudicial earlier findings raise the issue of unconscious bias.[31] There is a growing body of literature which, drawing on modern psychology, addresses the impact of subconscious forces upon the judicial (and arbitral) mind.[32] This includes dealing with the operation of confirmation bias and the role of intuitive first perceptions and ordinary human prejudices.[33] The risk of unconscious bias may rise to the level of apparent bias.[34]
27 Related to any formulation of apparent bias is the question of disclosure of matters to parties. Many judges feel more comfortable in approaching the question of disclosure broadly: disclosing matters of connection that may not justify recusal; but they do so to ensure confidence and trust in the parties of the process, given that one party will always lose. It is part of bolstering the institution, rather than complying with any legal duty expressed as an incident of judicial power. In Australia, the High Court has said[35] that where a judge is unclear whether he or she should recuse him or herself, disclosure of the circumstances should be made as a matter of prudence and professional practice, saying that it was neither useful nor necessary to describe this practice in terms of rights and duties. The place of disclosure and, for arbitrators, the legal duty attending it, was at the centre of Halliburton.
28 Legislation governing arbitration, model laws, and arbitral rules generally express independence and impartiality as core tenets of the arbitral process,[36] variously, but similarly, dealing with the test for them and with questions of disclosure.[37]
29 It is to be noted that some of the tests relating to disclosure are explicitly directed to what would be thought by the parties.[38] The reference to the perspective of a participating party is a distinct feature of these tests, as compared with tests for judicial bias and may be appropriate in the context of arbitrations where considerations of the exercise of public power and the interest of the public at large are absent, and the confidence of the parties is paramount.
30 The reality of the place of party autonomy in choice and the role of the party-appointed arbitrator should be confronted. The different institutional contexts of curial and arbitral adjudication are, again, important. In the case of a litigant before a court, a judge is allocated to a case because the state has identified a particular judicial resource is suitable. The parties have no choice in the matter. Therefore, a challenge to a judge involves an argument that the state’s process of allocation of a judge to be imposed on the parties should be overturned as a matter of law: This is a legal right to demand of the state that a particular person should not remain allocated. In contrast, in arbitration, the question is whether the parties will consent to submit their dispute before a particular person or persons. Disclosure is thus not merely a question of confidence; it goes to the very foundation of whether the parties will choose this person or persons to adjudicate their dispute. The first point of disclosure arises at the point of choice of arbitrator. Especially because of the confidentiality of arbitration, matters of importance may not be public knowledge and may therefore suggest disclosure. Thus, there must be some scope for parties to communicate with a prospective appointee in order that the party ascertain the suitability of the person for nomination by the party. Institutional rules reflect this freedom.[39]
31 Although it is generally accepted that party-appointed arbitrators must be independent and impartial, as required by national laws and institutional rules,[40] the requisite degree of impartiality required of a party-appointed arbitrator remains a vexed question in international arbitration. Indeed, the contested role of the party-appointed arbitrator has led some, most notably Jan Paulsson, to call for the abandonment of party-appointed arbitrators altogether.[41] The epicentre of the contemporary debate appears to be whether party-appointed arbitrators do or should play a particular role, sometimes dubbed a ‘special role’ in an arbitration as compared with a neutral, presiding arbitrator. For Raymond Bishop and Lucy Reed, a ‘special role’ arises because of the “natural distinction between [parties’] expectations for the party-appointed arbitrators and the presiding arbitrator.”[42] By virtue of being selected by a party, and consequently being likely to share a similar national, linguistic, cultural and legal background to that party, a party-nominated arbitrator may be seen to have a particular obligation to understand their appointing party’s case, ensure that the presiding arbitrator is not biased against their appointing party, and ‘translate’ their appointing party’s case when language, cultural or legal background may be distorting the other tribunal members’ understanding of their claims.[43] Redfern and Hunter describe such a function as “useful” in ensuring “due process for the party that nominated him or her, without stepping outside the bounds of independence and impartiality.”[44] Bishop and Reed contend that a distinctive role for the party-appointed arbitrator is the prevailing practice in international arbitration.[45] From one perspective, these views are not a denial or qualification of the duty of impartiality;[46] rather they reflect how practically that duty should be seen to operate in the real world. It is not partiality for one party; it is ensuring that that party’s case is well understood by the whole tribunal. The distinction is subtle, but perhaps real, although the danger of sliding towards partiality can be recognised.[47]
32 Others are opposed to any recognition of a ‘special role’ for party-appointed arbitrators on the basis that so doing inevitably introduces confusion as to the expected standards of impartiality and independence.[48] The Chief Justice of Singapore wrote in 2017 that he was “fundamentally uncomfortable” with the suggestion that party-appointed arbitrators owe their appointing party any special duty.[49] Chief Justice Menon stressed that all arbitrators are obliged to consider carefully the cases presented by both sides and cautioned that “the line between driving a lively discussion to ensure that a party’s case is fully understood and urging that party’s position upon the arbitral tribunal may be so fine that it is impossible to work with in practice.”[50] Chief Justice Menon’s driving concern was the maintenance of confidence in the institution of arbitration, and the perception that it is a procedurally fair process of dispute resolution.[51]
33 It is difficult, however, to avoid the recognition that, as Gary Born says, party-appointed arbitrators are an important pillar supporting the trust and confidence of commercial parties in international arbitration.[52] As an incident of the centrality of party autonomy in international arbitration, and as a matter of practical reality,[53] the ability for parties to name a person of their choice to the arbitral tribunal engenders an arbitration with legitimacy for them.[54] Such legitimacy may be seen as crucial to the parties’ investment in the fairness of the process of the arbitration and their respect for its outcome, whether favourable to them or not.[55] It may be better to say that the characteristics of party-appointed arbitrators may differ from those of presiding arbitrators without offending the basal requirement that all arbitrators be independent and impartial. As Born notes, co-arbitrators may have qualities such as a shared nationality with an appointing party, particular experience, philosophical outlook and professional ties that may be desirable for a party-appointed arbitrator but inappropriate for a presiding arbitrator. Such characteristics can be seen to bring the necessary cultural and conceptual diversity to the resolution of a complex case which might involve cultural, or legal or other diversity.[56]
34 I now turn to Halliburton. The case concerned a large insurance claim arising from the explosion and fire on the Deepwater Horizon drilling rig in the Gulf of Mexico in 2010. Various parties were liable for damages and penalties, including a BP company which leased the rig, Transocean which owned the rig and provided crew and drilling teams, and Halliburton which provided cementing and other services to BP in relation to relevant activities. Halliburton had taken out liability insurance with Chubb. It made a claim for the amount of money it had paid in the settlement of private claims of US$1.1bn. Transocean settled the private claims for US$212m. Later, in 2014, after the settlements, the Federal Court apportioned blame between these three parties in the proportions of BP 67%, Transocean 30% and Halliburton 3%. Chubb declined Halliburton’s insurance claim on the basis, inter alia, that it was not a reasonable settlement. Transocean also made insurance claims against its liability insurers, which included Chubb. Chubb contested its liability to Transocean on substantially the same grounds as its defence to Halliburton’s claims. Both Transocean and Halliburton had arranged their cover under the Bermuda Form with an ad hoc arbitration provision. Both their policies were layered, with Chubb the top layer of each policy, and the policies were, relevantly in identical terms. The policies were governed by New York law and the arbitration clause in each provided for arbitration in London by a tribunal of three arbitrators, two party-appointed, the third chosen by agreement of the two party-appointed arbitrators, or failing agreement, by the High Court in London.
35 Halliburton nominated Professor Park of Boston University, an experienced arbitrator; Chubb nominated Mr Cole, an accomplished insurance executive, counsel and arbitrator. They could not agree upon a chair. After a contested hearing, on 12 June 2015, the High Court appointed Mr Rokison QC whom Chubb had proposed (amongst others) to the Court. Halliburton’s objections to all Chubb’s proposed arbitrators were that they were English lawyers or former judges known to Chubb.
36 Mr Rokison had disclosed to the Court and to Halliburton that he had previously acted as an arbitrator in arbitrations where Chubb was a party, including some as a party-appointed arbitrator nominated by Chubb and that he had two pending references in which Chubb was a party. There was no suggestion that this disclosure was in any way deficient.
37 The matter before the High Court in which Mr Rokison was appointed can be referred to as it was in the decision as reference 1.
38 Six months later, in December 2015, Mr Rokison accepted appointment by Chubb in an arbitration concerning an excess liability claim by Transocean arising out of the same incident. This second arbitration was referred to as reference 2. Before accepting appointment in reference 2, Mr Rokison disclosed his appointment in reference 1 and the other Chubb arbitrations which he had disclosed to Halliburton in reference 1. There was no objection to Mr Rokison by Transocean. Mr Rokison did not, however, then disclose to Halliburton in reference 1 of his proposed appointment in reference 2.
39 Later, in August 2016, Mr Rokison accepted appointment in another Deepwater Horizon arbitration on the joint nomination of parties, Transocean and another insurer on the same layer of insurance as Chubb’s layer in reference 2. This was referred to as reference 3. The proposed appointment to reference 3 was also not disclosed to Halliburton.
40 In both references 2 and 3 there was a preliminary issue of policy interpretation on uncontested facts which was potentially dispositive of both claims. This was heard in November 2016.
41 In November 2016, Halliburton learned of Mr Rokison’s appointments in references 2 and 3. Halliburton’s attorney wrote to Mr Rokison, referring to the IBA Guidelines on Conflicts which contemplated a continuing duty of disclosure of matters on the “Orange List”. In explanation (accepted by Halliburton as truthful) Mr Rokison said that it had not occurred to him that he was under a duty to disclose the later appointments and that he did not believe that the IBA Guidelines had been breached; but he said that with the benefit of hindsight it would have been prudent to inform Halliburton; and he apologised. He offered to resign from references 2 and 3 if the preliminary issue did not bring the arbitrations to an end. Halliburton’s lawyer repeated his concern and called for Mr Rokison’s resignation. (Mr Justice Popplewell described some of the terms of the attorney’s correspondence as “grossly offensive”.) Chubb would not, however, agree to Mr Rokison’s resignation. Mr Rokison again wrote, repeating his views that the IBA Guidelines had not been breached, but again accepting that, with hindsight, it would have been prudent to have made disclosure. He said that he had not learnt of any facts about the incident in references 2 and 3 that were not public knowledge. He said that he would resign if it were only up to him and suggested that the parties agree upon a substitute chair. On 21 December 2016, Halliburton sought Mr Rokison’s removal as arbitrator in the High Court under s 24(1)(a) of the 1996 Act. The application was heard by Mr Justice Popplewell who dismissed it on 3 February 2017.
42 The hearing in reference 1 meanwhile took place between 27 January and 6 February 2017.
43 On 1 March 2017, awards were issued in references 2 and 3 deciding the preliminary issues in favour of Chubb and the other insurer. This brought an end to the claims, without the need to consider any relevant evidence or submissions.
44 On 5 December 2017, the Tribunal in reference 1 issued its final award on the merits, deciding in Chubb’s favour. The award was signed by all three arbitrators, though Professor Park qualified his signature with “separate observations” to confirm his participation; but he expressed an inability to join in the award because of his “profound disquiet about the arbitration’s fairness”. The separate observations did not, however, dissent from any finding of fact, statement of applicable law, process of reasoning or final conclusions.
45 Interestingly, for the discussion of party-appointed arbitrators, the evidence in the High Court challenge revealed that Professor Park had been Halliburton’s party-appointed arbitrator in three references against different insurers in Deepwater Horizon claims, without formal disclosure. The Halliburton attorney who had confronted Mr Rokison in the correspondence suggested in evidence that Professor Park was in a different position as a party-appointed arbitrator: to be distinguished from Mr Rokison’s position as a chair or umpire. The use of the word “umpire” implied an advocacy role for a party-appointed arbitrator beyond any notion of cultural translation.
46 From these facts the Supreme Court dealt with the questions of disclosure, confidentiality and apparent bias. In (if I may be permitted to say) a thoughtful and sophisticated judgment, Lord Hodge JSC for the Court (with additional insightful comments from Lady Arden JSC) clarified a number of important aspects of the English common law in relation to apparent bias and disclosure in the context of arbitration under English law. In summary, the conclusions were:
(1) The obligation of impartiality is a core principle and the duty applies equally to party-appointed arbitrators and the presiding arbitrator or chair. This resolves, for English law, the debate about the role of the party-appointed arbitrator, though in the operation of the duty to disclose and of the test of apparent bias, the existence of the debate and differences of views were recognised to be important.
(2) The relevant human construct to assess both whether a duty of disclosure arises and whether there is a real possibility of bias is the fair-minded and informed observer and the test of bias is whether the observer would consider there was a real possibility of bias, assessed objectively. This assessment is made having regard to the customs and practices of international arbitration in any particular field. This equates, as Lord Goff had urged in R v Gough, the expression of the test for apparent bias in arbitration with that of curial adjudication.
(3) There is a legal duty of disclosure which is a component of, or drawn from, the statutory and contractual duty to act fairly and impartially. The duty of disclosure is wider than matters that would give rise to an apprehension of bias and extends to matters that would or might give rise to an apprehension of bias. The duty of disclosure is a continuing one. This can be seen to distinguish the position of arbitrator from that of judge if, as in Australia, the similar disclosure is a matter of prudence and professional practice.
(4) The duty of disclosure does not override the arbitrator’s duty of privacy and confidentiality, but absent a contract restricting disclosure, certain matters can be disclosed without breach of the duty of privacy and confidentiality and without obtaining specific or express consent: the identity of the common party in multiple references; whether a proposed appointment to another reference was to be a party-appointment or as nomination as the third arbitrator; a statement of the fact that the other reference arises from the same incident or had the same or overlapping subject matter; and a high-level statement about whether similar issues were likely to arise in the other reference. Consent to such disclosures can be inferred.
(5) A failure by the arbitrator to make disclosure which should have been made is a factor to be taken into account by the fair-minded and informed observer construct as to whether there is a real possibility of bias.
(6) The relevant dates to evaluate whether the duty of disclosure has been complied with, or whether there is a real possibility of bias are different. For the former, the test is prospective: by reference to facts and circumstances at the time the duty arose. For the latter, the test is by reference to facts and matters known at the date of the relevant application to the Court, such as to remove the arbitrator.
47 Time does not permit detailed examination of the reasons of Popplewell J or the Court of Appeal. Neither found a basis for apprehended bias, but the Court of Appeal said that Mr Rokison had failed to comply with a legal duty of disclosure.
48 The appeal to the Supreme Court by Halliburton attracted interventions by the LCIA, the ICC and CIArb that the Court of Appeal’s judgment was out of step with international standards in their discussion of multiple common appointments. Other interventions were made by LMAA,[57] GAFTA[58] and ARIAS (UK)[59] which were anxious to see unimpaired the ability to appoint common arbitrators to chain or string, supply, transport, shipping and reinsurance arbitrations.
49 Halliburton’s case was one of unconscious apparent bias: in Mr Rokison taking the benefit of paid appointments in references 2 and 3, Mr Rokison gave Chubb an unfair advantage in being a common party in related arbitrations where (to the ignorance of Halliburton) he could be influenced by evidence and submissions in references 2 and 3 which could affect his approach in reference 1; Chubb would know of his responses to evidence and submissions in references 2 and 3, but Halliburton would not; the failure to disclose deprived Halliburton of forming its own view about the position; and Mr Rokison was said not to have paid proper regard to Halliburton’s interests in the fairness of procedure.
The duty of impartiality – discussion of principle[60]
50 Lord Hodge applied in the arbitral context the relevant test for apparent bias in judicial proceedings taken from Porter v Magill[61] and Helow v Secretary of State for the Home Department.[62] Without going into detailed textual comparison (and, if I may say, rightly so), he said that the English common law test was “similar” to the test of “justifiable doubts” in the UNCITRAL Model Law.[63]
51 This test was held to apply to judges and all arbitrators. However, the importance of the reasons of Lodge Hodge can be found in his Lordship’s emphasis on context and his helpful discussion of the contextual differences between judicial and arbitral adjudication.[64]
52 First, frank disclosure in arbitration is crucial because of the privacy of consensual arbitration. There may be no public record to which to have regard in evaluating an arbitrator, which makes it difficult or impossible for an arbitrator’s participation in multiple references and the submissions and evidence led in them to be known by those not participating in those references.
53 Secondly, there is usually no appeal from an arbitral award, and there are very limited powers of review. Therefore, the choice of the arbitrator is of critical importance.
54 Thirdly, the judge holds public office and is paid by the state; the arbitrator is chosen by one or both parties or by an institution and is remunerated by the parties, and ultimately, by the losing party. An arbitrator in practice has an interest in future appointments. This may give rise to an interest in avoiding action that may alienate the parties, such as assertive case management.
55 Fourthly, there is a diverse range of persons who may be appointed as arbitrators, coming from many jurisdictions and different legal traditions, with potentially diverging views on ethically acceptable conduct.
56 Fifthly, and importantly, Lord Hodge recognised the differing understandings of the obligations of the party-appointed arbitrator. His Lordship referred to the “lively debate” as to the role of party-appointed arbitrators, referring to the articles and writings of Paulsson, van den Berg, Brower and Rosenberg, Born, and Redfern and Hunter, discussed above. Lord Hodge rejected the nuances involved in the debate: No allegiance or duty is owed; no representative role is undertaken. Once appointed, independence and impartiality are unqualified. [65]
57 Lord Hodge was expressly influenced by the place of London in arbitral adjudication, and the English legal system’s reputation for guaranteeing neutrality and impartiality.[66] His Lordship drew from Chief Justice Menon’s article that the requirement that all arbitrators had the same undifferentiated duty reflects an increasingly widespread legal norm. Whilst recognising that the view was not universal, and that some legal systems do accept that the party-appointed arbitrator has a special role in relation to his or her appointing party, this was not so in English law. So, in applying the relevant test, one does not have regard to the characteristics of the party including whether one or more was foreign.
58 The contrast in the approach in different legal systems was illuminated by the discussion of the 2018 Second Circuit decision in Certain Lloyd’s Underwriters v Florida[67] which expressly recognised a distinction between party-appointed arbitrators and “neutral” arbitrators and that party-appointed arbitrators were expected to espouse the view of the appointing party and serve as de facto advocates.
59 Lord Hodge then sought to reconcile this international divergence in the perception of the role of party-appointed arbitrator in a subtle and important discussion of the attribution of knowledge to the human construct: The fair-minded and informed observer would be credited with the knowledge that some, perhaps many, parties and arbitrators have the view reflected in the Second Circuit’s reasons, and that there is a debate within the arbitration community as to the role of the party-appointed arbitrator and the compatibility of that role with the requirement of impartiality.[68] This was not to recognise a different obligation within the application of the test in England; rather, it is to understand the context in which the objective judgment (by the Court through the human construct) will be made.
The duty of disclosure: discussion of principle [69]
60 The Court of Appeal was, in Lord Hodge’s view, correct to hold that there is a legal duty to disclose in English law. In arbitration, it arises from the obligation under the 1996 Act to act fairly and impartially, which gives rise to an implied term for the need to disclose matters.
61 To align or reconcile the duty to disclose with the duty of privacy and confidentiality, it becomes necessary to obtain the consent of relevant parties to disclosure, failing which consent the offered appointment must be declined. However, the context of particular trades or institutions (such as dealt with by the LMAA and GAFTA) may found an implied consent to multiple appointments. Importantly also, there was the recognition of the entitlement to disclose, confidentially, the existence of a current or past arbitration involving the common party and the identity of the common party, but not the identity of other parties without obtaining consent from all such parties. Such entitlement comes from common practice. Jurisprudentially this can be seen, as Lord Hodge said[70], as the law recognising the realities of accepted and acceptable commercial and arbitral practice as a guide to the formulation of legal rules. Further, there was a public interest in upholding the integrity of arbitration as a system of dispute resolution calling for proper disclosure and calling for the giving of certainty to the legal standing of established arbitral practice.
62 Thus, at least in Bermuda Form arbitrations, an arbitrator may (subject to contrary agreement) make disclosure on a confidential basis of the existence of the arbitration and the identity of the common party without the express consent of other parties. Consent of the common party is inferred.
63 As to the content of the duty, Lord Hodge considered that with one qualification the duty as expressed by the Court of Appeal was correct:
…Disclosure should be given of facts and circumstances known to the arbitrator which … would or might give rise to justifiable doubts as to his impartiality … [which] means facts or circumstances which would or might lead the fair-minded and informed observed, having considered the facts, to conclude that there was a real possibility that the arbitrator was biased.[71]
64 The qualification of Lord Hodge was to what was “known”. Generally there is no duty to inquire; one must disclose what one knows. However, Lord Hodge would not rule out circumstances raising a duty to make reasonable inquiries, noting that the IBA Guidelines, Part 1, General Standard 7(d) provide for a duty to make reasonable inquiries.[72] His Lordship thus left to future cases the development of the question by reference to arbitral practice and rules.
65 Lord Hodge then discussed the phrase “would or might”.[73] Any obligation to disclose something that “might” give rise to justifiable doubts can only arise, his Lordship said, where the matter might reasonably give rise to such doubts. Lord Hodge discussed the human contextual reality: the existence of matters that, if unexplained, would give rise to justifiable doubts, so the necessity to disclose and explain; or matters, more than trivial, which could, by themselves or with other facts, give rise to justifiable doubts, if later discovered. This analysis, necessarily less than precise, begins to explain the wider notion of disclosure and its relationship to the test for apparent bias, by reference to appropriate human conduct to maintain trust in the particular tribunal members and in the institution and process of arbitration as a whole.[74]
66 As the discussion of Lord Hodge makes clear, the good sense of this approach comes from the consensual character of the process and the central value of party autonomy. It is the parties’ process. That is the attraction of arbitration: The existence of matters that might reasonably found a justifiable doubt as to impartiality, then or later, calls forth a sense of entitlement in the parties to know of the matter and to consider their positions for themselves. Reasonable minds can, and often do, differ about these sorts of questions. To recognise that and the policy of supporting trust and confidence in a consensual relationship built on party choice and autonomy justifies this wider penumbra of the obligation to disclose.
67 The development of English law to impose this duty was seen to be consistent with developments elsewhere.[75]
68 Whilst the expression of the obligation under English law is not directed, as many arbitral rules are,[76] to the perceptions of the parties, the distinction is unlikely to be sharp in practice. As expressed in summary form by Lord Hodge[77] it is sufficient if matters are such that they are relevant and material to an assessment of the arbitrator’s impartiality and could reasonably lead to such an adverse conclusion. In practice, and in the context of the reality of the parties before the arbitrator, it is difficult to see how the objectively perceived relevance to the parties is not central to the objective assessment by the fair-minded and informed observer.
69 The duty of disclosure is continuing and subject to changing circumstances.[78] Its fulfilment is to be tested prospectively, and not retrospectively by reference to matters known later to the fair-minded and informed observer at the point of assessing bias.
70 However, the question of whether justifiable doubts exist is to be assessed by reference to the fact as they exist at the time of the application.[79]
71 Against that detailed discussion, Lord Hodge concluded that Mr Rokison should have disclosed to Halliburton the multiple references, but that in all the circumstances, by the time the matter came before the Court, the fair-minded and informed observer would not reach a conclusion of apparent bias.[80] Particular relevant circumstances to that evaluation included that Mr Rokison gave an explanation of his failure to disclose his appointments in references 2 and 3 which was accepted by Halliburton’s lawyers as a genuine oversight, Mr Rokison was of the view that there was no material overlap between the references and had offered to resign if the separate issues in references 2 and 3 did not dispose of those references, and Mr Rokison at all times adopted courteous and measured responses.[81]
72 Where does all this leave us? Halliburton highlights, with clarity, the intimate relationship between the duties of impartiality and of disclosure. Parties are only equipped to make a judgment upon whether they are satisfied that an arbitrator is sufficiently impartial notwithstanding a potential lack of complete independence if they are aware of all of the relevant circumstances, including multiple or overlapping appointments.[82] An explicit duty of disclosure is a necessary incident of the private and confidential nature of most arbitrations, which may prevent the parties from ascertaining a complete picture of the circumstances from their own inquiries alone. In what may be seen as a welcome development supporting the all-important trust of parties in the arbitral process, the legal obligation to disclose a wider range of matters than those which would found a conclusion of apparent bias can now be taken to be recognised not just in many arbitral institutional rules, but also by the common law of England.
73 Commentary on the Supreme Court’s decision has canvassed areas for further development of the common law of England with respect to disclosure and remaining issues for debate.[83] That does not reveal an omission in the judgment. Rather, it reflects that decision-making, in the context of concrete problems rather than exhaustive rule-making, is the foundation of the common law’s support for honest good sense in commerce.
74 The emphasis (with respect, correctly) placed by Lord Hodge on context may contain the key for those in Australia who may have to determine, as a matter of statutory construction, whether there really is any practical difference (at least in likely result) between the Gough test introduced into Australian arbitration legislation, with or without its “modest adjustment” in Porter v Magill of a fair-minded and informed observer (bearing in mind Lord Phillips’ view as to the identity of “real possibility” and “real danger”, removing any connotation of the immediacy of the threat from the word “danger”, and Lord Hodge’s view of the “similarity” of the Model Law “justifiable doubts” to the English test) and the Australian judicial test if applied in the context of arbitral adjudication in the relevant field of commerce in which the arbitration takes place, and if firmly established.
75 An issue that is perhaps under-explored in the commentary to date is the impact of the decision on the position of the party-appointed arbitrator. I make several final observations in this regard.
76 First, English law has set its face against recognition of any form of special duty or role of a party-appointed arbitrator, or of the chair.
77 That said, secondly, there is a recognition of the legitimacy of other views and other approaches about this in other jurisdictions.
78 Thirdly, it is not clear how taking these matters into account as part of context in the appreciation of the fair-minded and informed observer’s task will play out. That, perhaps, is only an aspect of the intensely factual and contextual nature of the relevant evaluation.
79 Fourthly, the use by Lord Hodge of the Second Circuit decision in the Florida case may not, with respect, fully deal with the subtleties involved. The American position, even after the change of the AAA/ABA Code of Ethics in 2004 towards recognition that all arbitrators should abide by the same formal ethical standards, is expressed, partly by reference to pre-2004 prevailing authority in the Supreme Court[84] discussed in Florida, in language accepting the place of advocacy on the part of party-appointed arbitrator. The views of others as to the importance of the party having an impartial, but culturally and conceptually aware nominee, can be seen as more subtle than the American position. The confidence of parties in the arbitral process is crucial. That confidence is bolstered by an ultimate demand for honesty and impartiality; but it also may be seen to be bolstered by parties being happy with their informed choice of arbitrator to decide their dispute with the other side’s appointee and a chair chosen by them or appointed independently. There is already a qualification to independence: the arbitrator is chosen not imposed. But there need not, and should not, be a qualification to impartiality, unless the parties wish to choose a system and supervising court that finds impartiality to be legitimately qualified by a duty to advocate one side’s case.
80 Fifthly, whether one personally agrees with the views of Chief Justice Menon and Jan Paulsson, or with those of Gary Born, Raymond Bishop and Lucy Reed, may not matter. Different arbitral laws, statutory and general, may express themselves differently, as the Second Circuit and the Supreme Court did in Florida and Halliburton. This displays a choice that is given to parties and their advisors about the law of the arbitration and the seat. Parties can choose the approach they wish to have taken.
81 Sixthly, and finally, the debate about party-appointed arbitrators may underscore the distinction between institutional and ad hoc arbitration. A denial of the right of party-appointment would throw into high relief the need for integrity of the institution appointing the arbitration panel or the pool from which the panel is chosen. Reliance on the institution may simply push the relevant questions of independence, impartiality and disclosure further away from the knowledge of the parties and from the operation of party autonomy. Or, it may give institutions the opportunity to fashion bespoke solutions to any perceived problems of compromise of impartiality by party-appointment, such as by “blind” appointments, where the arbitrators do not know whether they are party-appointed or not.
[1] Chief Justice of the Federal Court of Australia. I am grateful to my associate Lucy Nason for her assistance in research and discussion in the preparation of this paper.
[2] [2020] UKSC 48; [2021] AC 1083; See by way of commentary Charles Kimmins, Nigel Rawding, Luke Pearce and Olivia Valner, ‘The Test for Apparent Bias and Arbitrators’ Duties of Disclosure Following Halliburton v Chubb: Welcome Clarification, but Questions Remain’ (2021) 38(3) Journal of International Arbitration 359 and Daze C Nga and Peace O Adeleye, ‘The English Supreme Court’s Decision in Halliburton v Chubb: An Examination of the Issues Arising from Arbitrators’ Acceptance of Multiple Appointments in Related Arbitrations and Arbitrator’s Duty to Disclose’ (2022) 88(1) The International Journal of Arbitration, Mediation and Dispute Management 201.
[3] “Jurisdiction” in the sense of the authority to decide.
[4] Gary Born, International Commercial Arbitration (3rd ed, Kluwer Law International, 2021), pp 1908-9 and footnote 857.
[5] See Abaclat v. Argentina, Decision on the Proposal to Disqualify A Majority of the Tribunal in ICSID Case No. ARB/07/05 of 4 February 2014 at paragraph 75 as quoted in Born, International Commercial Arbitration, at footnote 857.
[6] See the IBA Guidelines on Conflicts of Interest in International Arbitration (2014).
[7] Also, guidelines can, by their length and any attempt at exhaustive listing, create uncertainty and confusion. Text has its limits as well as its strengths. Sometimes, the more guidelines, the more text, the more construction and interpretation, and the greater the degree of confusion or uncertainty. Cf W Ltd v M Sdn Bhd [2016] EWHC (Comm) 422 at [27]-[41] (Knowles J); I McGilchrist, The Master and his Emissary (Yale University Press, 2009); and J Allsop ‘Thinking about the Law: The importance of how we attend and of context (paper delivered to the Middle Temple, 18 July 2022).
[8] UK Departmental Advisory Committee on Arbitration Law, Report on the Arbitration Bill (1996) at paragraphs 102-104. See also Born, International Commercial Arbitration, at 1909 and footnote 860.
[9] Law Commission, Review of the Arbitration Act 1996: A consultation paper (Law Commission Consultation paper 257), September 2022 at [3.3]. I respectfully agree with Rozas that the distinction can be over-emphasised. Fernández Rozas, ‘Clearer Ethics Guidelines and Comparative Standards for Arbitrators’ in M Fernández-Ballesteros & D Arias (eds), Liber Amicorum Bernardo Cremades (2010) at 414, as quoted in Born, International Commercial Arbitration, at footnote 861
[10] See, for example, Article 12 of the UNCITRAL Model Law 1985 with amendments as adopted in 2006; Article 11 of the UNCITRAL Arbitration Rules 2021; Article 11 of the ICC Arbitration Rules 2021; Article 5 of the LCIA Rules 2020; Article 11 of the HKIAC Administered Arbitration Rules 2018; Article 13 of the SIAC Rules 2016; Article 32 of the CIETAC Arbitration Rules 2015; Article 14 of the ICDR Rules 2021; Article 21 of the ACICA Rules 2021.
[11] Fowler’s Dictionary of Modern English Usage (3rd ed, Clarendon Press, 1996), 357-8.
[12] Porter v Magill [2002] 2 AC 357 at 494 [103] (Lord Hope); Helow v Secretary of State for the Home Department [2008] 1WLR 2416 [1]-[3].
[13] R v Gough [1993] AC 646 at 670.
[14] By the High Court of Australia in Webb v The Queen (1994) 181 CLR 41 at 50 as noted by Lord Hope in Porter v Magill [2002] 2 AC 357 at 493 [100].
[15] Porter v Magill [2002] 2 AC 357 at 494 [103].
[16] This was the human construct preferred in Australia and elsewhere.
[17] R v Gough [1993] AC 646 at 670.
[18] Director General of Fair Trading v Proprietary Association of Great Britain; Re Medicaments and Related Classes of Goods (No 2) [2001] 1 WLR 700 at 726-727 [85].
[19] Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344 [6] (Gleeson CJ, McHugh, Gummow and Hayne JJ).
[20] See section 18A of the International Arbitration Act 1974 (Cth). All uniform Commercial Arbitration Acts in s 12 employ the language of the Commonwealth Act.
[21] S Luttrell, Bias Challenges in International Commercial Arbitration: The Need For a “Real Danger” Test (Kluwer, 2009) and N Brown and S Luttrell, Submission on the Review of the International Arbitration Act 1974 (Cth) at page 13 as referred to in D Jones and J Walker Commercial Arbitration in Australia (3rd ed, Thomson Reuters) at 143-144 [5.220]).
[22] Helow v Secretary of State for the Home Department [2008] 1 WLR 2416 at [2] (Lord Hope); Harb v Aziz [2016] EWCA Civ 556 at [69].
[23] Helow v Secretary of State for the Home Department [2008] UKHL 62; [2009] 2 All ER 1031 at [2]-[3] (Lord Hope).
[24] Johnson v Johnson (No 3) (2000) 201 CLR 488 at [12]-[13]; British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283 at [46]-[48].
[25] See Allsop, ‘International Arbitration and Conformity with International Standards of Due Process and the Rule of Law’ (Speech, XXIIIrd ICCA Congress, Mauritius, 10 May 2016) and Allsop and S Walpole, ‘International Commercial Dispute Resolution as a System’ in S Menon and A Reyes (eds), Transnational Commercial Disputes in an Age of Anti-Globalism and Pandemic (forthcoming, Bloomsbury, 2023).
[26] Re JRL; Ex parte CJL (1996) 161 CLR 342 at 352
[27] N Brown and S Luttrell, Submission on the Review of the International Arbitration Act 1974 (Cth) at page 12 as referred to in D Jones and J Walker Commercial Arbitration in Australia (3rd ed, Thomson Reuters) at 143-144 [5.220]).
[28] See International Arbitration Amendment Bill 2009 Explanatory Memorandum[88]-[92]
[29] The word “bias” is a loaded term, sometimes connoting ill-will. Its legal breadth, especially in its apprehended form, involves, as Deane J said in Webb v The Queen (1994) 181 CLR 41 at 80, “prejudice, partiality or prejudgment”
[30] See, for example, British American Tobacco Australia Services Ltd v Laurie [2011] HCA 2; 242 CLR 283 cf [2009] NSWCA 414.
[31] (I was tempted to remark on the appropriateness of dealing with subconscious bias in a footnote.) Unconscious bias refers to the influence of cognitive shortcuts or heuristics on how we perceive the world around us and make decisions. In its most objectionable form, unconscious bias can constitute subconscious favouritism towards or prejudice against people of a particular group that influences one’s actions or perceptions. For recent commentary see: Chris Guthrie, Jeffrey Rachlinski and Andrew Wistrich, ‘Blinking on the Bench: How Judges Decide Cases’ (2007) 93 Cornell Law Review 101; Australian Law Reform Commission (ALRC), Without Fear or Favour: Judicial Impartiality and the Law on Bias (Report No 138), 2021; Edna Sussman, ‘Arbitrator Decision-Making: Unconscious Psychological Influences and What You Can Do About Them’ (2013) 24(3) The American Review of International Arbitration 487; Natalie Allen et al, “If Everyone is Thinking Alike, Then No One is Thinking’: The Importance of Cognitive Diversity in Arbitral Tribunals to Enhance the Quality of Arbitral Decision Making’ (2021) 38(5) Journal of International Arbitration 601; Stepan Puchkov, ‘Subconscious Bias as a Factor Influencing Arbitral Decision-Making’ (2018) 84(1) The International Journal of Arbitration, Mediation and Dispute Management 52.
[32] According to the so-called ‘System 1’ and ‘System 2’ conceptualisation of the way humans process information (with ‘System 1’ being constantly alert, fast and intuitive and ‘System 2’ being slow, analytical and high effort), it is theorised that we fall into irrationality and unconscious bias when we fail to engage our System 2 thinking or where System 2 does not detect errors made by System 1. Intuitive, subconscious, System 1 judgments can stem from the influence of one’s cultural background, prior experiences and personal inclinations. There are also certain identifiable cognitive and heuristic errors often described as ‘blinders’ that the processes of System 1 tend to produce, including the ‘confirmation blinder’ (the tendency when one forms an initial view to interpret or even seek out subsequent information to support the initial view and disregard information that is inconsistent with it) and the ‘hindsight blinder’ (the tendency to overestimate the probability that an event will occur after the fact). For the application of this theory to judicial and arbitral practice see, eg, Puchkov, ‘Subconscious Bias as a Factor Influencing Arbitral Decision-Making’, 54-55; Sussman, ‘Arbitrator Decision-Making: Unconscious Psychological Influences and What You Can Do About Them’ at 495; Allen et al, ‘If Everyone is Thinking Alike, Then No One is Thinking’, 609, 613-614; The Hon Justice K Mason AC, ‘Unconscious Judicial Prejudice’ (2001) 75 Australian Law Journal 676, 679-680 quoted in ALRC, Without Fear or Favour: Judicial Impartiality and the Law on Bias at [11.52].
[33] Judges and arbitrators are not immune to the influence of unconscious bias, constrained as they are by the bounds of human rationality and fallibility. The fact that judges and arbitrators may be influenced by unconscious bias does not mean that a judge or arbitrator cannot be meaningfully impartial. Nonetheless, the potential for (potentially pernicious) unconscious prejudice to influence judges and arbitrators demands vigilance. The Australian Law Reform Commission suggested in its recent report on judicial impartiality and the law on bias in Australia that the potential operation of confirmation bias on the minds of judges is one reason why it may generally be appropriate for a judge to recuse himself or herself from hearing a case involving a person against whom he or she has previously made an adverse credibility finding. See Benjamin N Cardozo, The Nature of the Judicial Process (Yale University Press, 1921); Rebecca Helm, Andrew Wistrich & Jeffrey Rachlinski, ‘Are Arbitrators Human’ (2019) 13(4) Empirical Legal Studies 666; Allen et al, “If Everyone is Thinking Alike, Then No One is Thinking’, 610; ALRC, Without Fear or Favour: Judicial Impartiality and the Law on Bias at [2.61] 62, [4.26] 114 and [4.82] 133-134; Lord Neuberger, “Judge not, that ye be not judged’: judging judicial decision-making’ (38th F A Mann Lecture, London, 29 January 2015), [29].
[34] See, eg, in a judicial context, GetSwift Ltd v Webb [2021] FCAFC 26; 283 FCR 328 and, in an arbitral context, Cofely Ltd v Bingham and another [2016] EWHC 240 (Comm).
[35] Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at [69]-[70]
[36] Rule 1 of the IBA Rules of Ethics for International Arbitrators 1987, entitled the “Fundamental Rule” is that “arbitrators shall proceed diligently and efficiently to provide the parties with a just and effective resolution of their disputes, and shall be and shall remain free from bias”.
[37] Some institutional rules and arbitration laws contain general provisions mandating the independence and impartiality of arbitrators. For example, Article 5.3 of the LCIA Rules 2020 provides that “all arbitrators shall be and remain at all times impartial and independent of the parties” and Article 11(1) of the ICC Arbitration Rules 2021 provides that “every arbitrator must be and must remain impartial and independent of the parties involved in the arbitration.” See also s 33(1)(a) of the English Arbitration Act 1996 (which provides that the tribunal shall “act fairly and impartially as between the parties…”) and Article 11.1 of the HKIAC Administered Arbitration Rules 2018 (“an arbitral tribunal confirmed under these Rules shall be and remain at all times impartial and independent of the parties”). The test for whether an arbitrator is independent and impartial is often expressed in the context of provisions concerning challenge to arbitrators. For example, Article 12 of the UNCITRAL Model Law 1985 (with amendments as adopted in 2006) provides that an arbitrator may be challenged if circumstances exist that “give rise to justifiable doubts as to his impartiality or independence.” This formulation of the test is echoed in Article 12 of the UNCITRAL Arbitration Rules 2021, which provides: “any arbitrator may be challenged if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence.” Section 24(1)(a) of the English Arbitration Act 1996 is similarly worded, providing that a party may apply to a court to remove an arbitrator where “circumstances exist that give rise to justifiable doubts as to his impartiality.” The “justifiable doubts” formulation in provisions on challenge is also present in Article 11 of the HKIAC Administered Arbitration Rules 2018; Article 14 of the SIAC Rules 2016; Article 14 of the ICDR Rules 2021; and Article 21 of the ACICA Rules 2021. Some provisions on disclosure, however, go further. While Article 11 of the UNCITRAL Arbitration Rules 2021 provides that an arbitrator “shall disclose any circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence”, Articles 13.4 and 13.5 of the SIAC Rules 2016 provide that nominated arbitrators and arbitrators respectively must disclose “any circumstances that may give rise to justifiable doubts as to his impartiality or independence” (emphasis added).
[38] Article 5.4 of the LCIA Rules 2020 provides that candidates for nomination as arbitrator must sign a declaration stating whether there are any circumstances “which are likely to give rise in the mind of any party to any justifiable doubts as to his or her impartiality or independence” (emphasis added). Similarly, Article 11(2) of the ICC Arbitration Rules 2021 provides that prospective arbitrators shall disclose “any facts or circumstances which might be of such a nature as to call into question the arbitrator’s independence in the eyes of the parties, as well as any circumstances that could give rise to the reasonable doubts as to the arbitrator’s impartiality” (emphasis added).
[39] See, eg, Article 11.5 of the HKIAC Administered Arbitration Rules 2018; Article 14.6 of the SIAC Rules 2016; Article 14(6) of the ICDR Rules 2021 and Article 20.4 of the ACICA Rules 2021.
[40] Formally different standards for party-appointed arbitrators are certainly the exception rather than the rule. See, for example, the LMAA’s published guidance on the LMAA Terms 2021, which states that it is the duty of every member of an arbitral tribunal to attend to all matters with strict impartiality except in the rare case where the arbitration clause requires otherwise: LMAA, ‘Notes on London Arbitration and Frequently Asked Questions’, accessible at: https://lmaa.london/notes-on-london-arbitration/. As is well-known, the 1977 AAA/ABA Code of Ethics for Arbitrators in Commercial Disputes took the position that party-appointed arbitrators were permitted to be “pre-disposed” to their appointing party’s case. However, the revised version of the Code published in 2004 moved away from this standard, standing that it is “preferable” for all arbitrators to abide by the same formal ethical standards. For a discussion of this shift see Alfonso Gomez-Acebo, Party-Appointed Arbitrators in International Commercial Arbitration (Kluwer Law International, 2016), 357.
[41] Jan Paulsson, ‘Moral Hazard in International Dispute Resolution’ (2010) 25(2) ICSID Review – Foreign Investment Law Journal 339.
[42] Raymond Doak Bishop and Lucy F Reed, ‘Practical Guidelines for Interviewing, Selecting and Challenging Party-Appointed Arbitrators in International Commercial Arbitration’ (1998) 14(4) Arbitration International 395, 404.
[43] Ibid, 405. See also Nigel Blackaby and Constantine Partasides QC with Alan Redfern and Martin Hunter, Redfern and Hunter on International Commercial Arbitration (6th ed, Oxford University Press, 2015) at [4.30], 239.
[44] Blackaby, Partasides, Redfern and Hunter, Redfern and Hunter on International Commercial Arbitration at [4.30], 239.
[45] Bishop and Reed, ‘Practical Guidelines for Interviewing, Selecting and Challenging Party-Appointed Arbitrators in International Commercial Arbitration’, 405.
[46] Ibid. 405-406.
[47] Antonino Albert de Fina described the role as “delicate”: ‘The Party Appointed Arbitrator in International Arbitrations – Role and Selection’ (1999) 15(4) Arbitration International 381, 382.
[48] Gomez-Acebo contends that the role of ‘cultural translator’ amounts to nothing more than carrying out one’s duties as an arbitrator diligently and that cultural misunderstandings where perceived ought be corrected regardless of whether the clarification aids the appointing party’s case. Further, he contends that accepting a particular role for the party-appointed arbitrator brings with it an unavoidable risk of imbalance between the parties because reasonable minds may differ on the content of that particular role, resulting, perhaps, in one party’s case receiving more time and care than another’s. See Gomez-Acebo, Party-Appointed Arbitrators in International Commercial Arbitration, 103-106.
[49] Sundaresh Menon, ‘Adjudicator, Advocate or Something in Between? Coming to Terms with the Role of the Party-Appointed Arbitrator’ (2017) 34(3) Journal of International Arbitration 347, 363-364.
[50] Ibid.
[51] Ibid, 359.
[52] Born, International Commercial Arbitration, 1767, 1941-1946.
[53] Empirical studies show that the ability for parties to have input into the composition of the tribunal’s expertise and experience is perceived as a significant benefit of arbitration compared with litigation: Born, International Commercial Arbitration, 30.
[54] Veeder describes party-appointed arbitrators as the “historical keystone” of international arbitration, without which parties would not be (and historically would not have been) incentivised to arbitrate: V.V. Veeder, ‘The Historical Keystone to International Arbitration: The Party-Appointed Arbitrator from Miami to Geneva’ (2013) Proceedings of the ASIL Annual Meeting, 107, 387, 401-402. Brower and Rosenberg contend that parties are more likely to hold confidence in an arbitral tribunal “that they themselves had a say in constituting”: Charles N Brower and Charles B Rosenberg, ‘The Death of the Two-Headed Nightingale: Why the Paulsson-van den Berg Presumption that Party-Appointed Arbitrators are Untrustworthy is Wrongheaded’ (2013) 29(1) Arbitration International 7, 13.
[55] Born, International Commercial Arbitration, 1767.
[56] Ibid, 1945-1946.
[57] The London Maritime Arbitrators Association.
[58] The Grain and Feed Trade Association.
[59] The Insurance and Reinsurance Arbitration Society (UK).
[60] Halliburton [2021] AC 1083 at 1110-1117 [49]-[69].
[61] [2002] 2 AC 357.
[62] [2008] 1 WLR 2416.
[63] And also to the tests contained in the IBA Guidelines General Standard 2(c) and Article 10.1 of the LCIA Rules 2014.
[64] Halliburton [2021] AC 1083 at 1112-1117 [56]-[68].
[65] Lord Hodge said at 1114 [63]: “Notwithstanding this perception of the reality in some quarters, a party-appointed arbitrator in English law is expected to come up to precisely the same high standards of fairness and impartiality as the person chairing the tribunal. Popplewell J correctly summarised the position in English law, and I would venture to say also in Scots law, when he stated in his judgment (para 19): “the duty to act independently and impartially involves arbitrators owing no allegiance to the party appointing them. Once appointed they are entirely independent of their appointing party and bound to conduct and decide the case fairly and impartially. They are not in any sense . . . a representative of the appointing party or in some way responsible for protecting or promoting that party’s interests.””
[66] Ibid at 1114 [63].
[67] Certain Underwriting Members of Lloyds of London v Florida 892 F3d 501 (2nd Cir 2018), importantly a decision under the Federal Arbitration Act 9 USCA 10(a)(2).
[68] Halliburton [2021] AC 1083 at 1115-1117 [66]-[68].
[69] Ibid at 1117-1130 [70]-[116].
[70] Ibid at 1126 [103].
[71] Ibid at 1127 [107].
[72] Ibid at 1127 [107].
[73] Ibid at 1128-1130 [108]-[115].
[74] Lord Hodge noted the disagreement in major English texts on the subject: both Redfern and Hunter (Law and Practice of International Commercial Arbitration (6th ed, 2015) at paras 4.79-4.80) and Merkin and Flannery (Merkin & Flannery on the Arbitration Act 1996 (6th ed, 2019) at 286-287) expressing the views that an arbitrator should disclose on the “could reasonably” or “would or might” basis, whilst Russell (Russell on Arbitration (24th ed, 2015) at para 4-131) restricted any legal obligation to disclose to the “would” basis. Like the Court of Appeal, Lord Hodge favoured the former rather than the latter that had been favoured by Popplewell J. It is at this point perhaps that one can see the difference between the Australian “two mights” and the English would lead to a real possibility. Two mights (that is might lead to the real possibility) can be seen to circumscribe disclosure in England as wider than would lead to a real possibility. But again the potential aridity of such a linguistic debate is to be recognised: The two mights in the context of recusal in Australia is to be firmly established; and the might lead to a real possibility in England is assessed in the context of reasonably debatable disclosure.
[75] Halliburton [2021] AC 1083 at 1129-1130 [112]-[114], with Lord Hodge referring to Article 12 of the UNCITRAL Model Law and the laws of Scotland, Germany, Belgium, Sweden, Austria and Switzerland.
[76] See the discussion and footnote references at paragraph [32] above.
[77] Halliburton [2021] AC 1083 at 1130 [116].
[78] Ibid at 1131 [120].
[79] Ibid at 1131-1132 [121]-[122]. See also R v Gough [1993] AC 646 at 670 (the court must ascertain the relevant circumstances “from the available evidence, knowledge of which would not necessarily be available to an observer in court at the relevant time”) and AT&T Corporation v Saudi Cable Co [2000] 2 Lloyd’s Rep 127 at [42] per Lord Woolf (“the court considers on all the material which is placed before it whether there is any real danger of unconscious bias on the part of the decision maker”) (emphasis added) and at [63] per Lord Potter (the court’s task embodies the standards of the informed observer viewing the matter at the relevant time, “which is of course the time when the matter comes before the court”).
[80] Ibid at 1138-1139 [149]-[150].
[81] Ibid at 1138-1139 [147]-[149].
[82] As recognised by the Law Commission in its recent paper published in connection with a review of the English Arbitration Act 1996: Law Commission, Review of the Arbitration Act 1996: A consultation paper (Law Commission Consultation paper 257), September 2022 at 20 [3.8].
[83] Those issues include the extent of the duty of disclosure (is an arbitrator obliged to disclose only those matters of which he or she has knowledge, or must an arbitrator actively make inquiries?), and the extent to which the parties’ choice of a particular set of institutional rules to govern their arbitration may modify the common law position (for example, the potential application of more onerous disclosure requirements when doubts as to independence and impartiality are assessed from the perspective of the parties rather than an objective bystander, as is the case under the LCIA Rules 2020 and the ICC Arbitration Rules 2021). Commentary has also discussed a matter of particular relevance to arbitral practice: the relationship between potentially competing imperatives of disclosure and confidentiality and how compliance with those two duties may or should be achieved in non-Bermuda Form arbitrations, an issue left open in Halliburton. See Halliburton [2021] AC 1083 at 1126 [105], 1127 [107], 1140 [153]-[154] (Lord Hodge) and 1141 [162] (Lady Arden); Kimmins et al, ‘The Test for Apparent Bias and Arbitrators’ Duties of Disclosure Following Halliburton v Chubb: Welcome Clarification, but Questions Remain’ at 368-369 and 370-372; Nga and Adeleye, ‘The English Supreme Court’s Decision in Halliburton v Chubb: An Examination of the Issues Arising from Arbitrators’ Acceptance of Multiple Appointments in Related Arbitrations and Arbitrator’s Duty to Disclose’ at 216-217; and Law Commission, Review of the Arbitration Act 1996: A Consultation paper at 26-27 [3.52]-[3.54].
[84] Especially Commonwealth Coatings Corp v Continental Casualty Co 393 US 145 (1968).
