ASM Shipping Ltd. v Harris & Ors

Under section 24 of the Arbitration Act 1996, apparent bias is assessed objectively. The question is whether the circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility of bias. A finding of apparent bias against one member of a multi-member tribunal does not automatically taint every other member. The assessment depends on the particular facts, including the stage reached, the matters discussed and the issues remaining for decision. Objections must also be raised promptly. A party continuing to participate without making a sufficiently specific objection may lose the right to rely on circumstances already known, under section 73. The court may assess the circumstances cumulatively, but later events cannot revive objections already waived.

The owners applied under section 24 of the Arbitration Act 1996 to remove two arbitrators, Mr Harris and Mr Scott, from a charterparty arbitration. A third arbitrator, Mr Matthews QC, had resigned after Morison J held that he should have recused himself because of apparent bias.

The owners argued that the other two arbitrators were thereby tainted, or were independently affected by their support for Mr Matthews, their conduct during the earlier challenge, and subsequent correspondence. The charterers opposed the application. The central issues were whether justifiable doubts existed about the two arbitrators’ impartiality and whether section 73 prevented the owners from relying on matters of which they had long been aware.

1. Test under section 24. Section 24 adopts an objective test applicable to actual and apparent bias. The court must ascertain all circumstances bearing on the allegation and then ask whether a fair-minded and informed observer would conclude that there was a real possibility of bias. The focus is on the circumstances as they objectively existed, not on whether the arbitrators’ minds were in fact affected.
2. No automatic taint. The finding that Mr Matthews was apparently biased did not determine that Mr Harris and Mr Scott were individually biased. There is no invariable rule that apparent bias in one member necessarily affects the whole tribunal. The authorities concerning a fresh hearing were distinguishable because they involved tribunals that had reached, or discussed matters relevant to, a decision requiring rehearing. The particular facts and the nature and stage of the remaining issues had to be examined.
3. Waiver under section 73. An objection must be made expressly and with sufficient specificity. A warning that an objection might be made, or a statement that arbitrators should consider standing down, was insufficient. The owners continued to participate after Mr Matthews’ resignation because they had not withdrawn from the arbitration. They therefore lost the right to rely on matters known to them before 29 December 2005. Section 73 applied even though the tribunal was temporarily incomplete.
4. Cumulative assessment and result. The later conduct relied upon by the owners, including the refusal to resign, the proposed appointment of a third arbitrator and a solicitor’s alleged remarks, did not create a realistic appearance of bias. The earlier matters would not have done so in any event and, in any case, had been waived. The court had no jurisdiction to remove either arbitrator under section 24. The application was dismissed.

Morison J dismissed the owners’ section 68 challenge to the interim award, holding that Mr Matthews should have recused himself but that the owners had lost their right to object by taking up the award: [2005] EWHC 2238 (Comm). The Court of Appeal dismissed the owners’ application for permission to appeal on 16 October 2006. The present section 24 application was then dismissed.