Earlier today, the UK Supreme Court issued its judgment in the case of Halliburton Company (Appellant) v Chubb Bermuda Insurance Ltd (Respondent).

In a landmark decision, the Court has confirmed that a legal obligation of disclosure applies to arbitrators sitting in London-seated arbitrations, and helpfully clarified the circumstances in which acceptance of and the failure to disclose multiple appointments in overlapping references with only one common party may give rise to an appearance of bias.  The Supreme Court’s decision on these important points of principle largely reflects the position advocated by the ICC Court, on whose behalf Three Crowns appeared in the appeal.

Background

The underlying arbitration concerned a disputed insurance claim by Halliburton arising from the Deepwater Horizon incident in the Gulf of Mexico in April 2010.  During the course of that arbitration, Halliburton learned that the chair had subsequently accepted an appointment as Chubb’s party appointed arbitrator in another related reference also arising from the Deepwater Horizon incident, but had failed to disclose such fact in the Halliburton arbitration.   As a result, Halliburton applied to the High Court for removal of the chair under Section 24 of the English Arbitration Act 1996, arguing that these circumstances had given rise to justifiable doubts as to the chair’s impartiality.

Halliburton’s challenge was rejected by the English High Court and by the Court of Appeal.  The UK Supreme Court, on appeal, considered the following two issues:

1. whether and to what extent an arbitrator may accept appointments in multiple references concerning the same or overlapping subject matter with only one common party without thereby giving rise to an appearance of bias; and
2. whether and to what extent he/she may do so without disclosure.

Judgment

While the Supreme Court rejected Halliburton’s appeal, it rectified several concerns with the Court of Appeal’s judgment that led to the ICC Court’s intervention.  In particular, the Supreme Court held that:

• There is a legal duty under English law to disclose facts or circumstances which might or would lead a fair-minded and informed observer to conclude that there is a real possibility that an arbitrator is biased.
• An arbitrator’s acceptance of appointments in multiple references concerning the same or overlapping subject matter with only one common party may, depending on the relevant custom and practice, give rise to an appearance of bias.  In reaching this conclusion, the Supreme Court noted the ICC’s submission that interrelated arbitrations concerning the same or overlapping subject matter with only one common party are not common in ICC arbitrations and therefore such circumstances may more readily give rise to an appearance of bias.
• Whether an arbitrator has a legal duty to disclose appointments in multiple references with one common party depends on the distinctive customs and practices of the arbitration in question.  In cases where disclosure is called for, an arbitrator’s acceptance of multiple appointments and the failure to disclose the appointments taken in combination might well give rise to the appearance of bias.

The Three Crowns team comprised Constantine Partasides QC (who delivered the ICC Court’s oral submissions before the Supreme Court), Todd Wetmore, Alexandra van der Meulen, Maanas Jain, Nicola Peart, Ridhi Kabra, and Holly Pelham-Stewart. The judgment, and a recording of the ICC Court’s submissions, can be accessed here.

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