A & Ors v B & Anor

An arbitrator is removable for apparent bias only where the fair-minded and informed observer, having considered all relevant circumstances, would conclude that there was a real possibility of bias. The test is objective and takes account of the ordinary operation of the legal profession. Past or simultaneous instructions from a firm acting for a party do not, without more, establish apparent bias. Disclosure and apparent bias are distinct questions. Inadvertent late disclosure of circumstances which do not themselves establish apparent bias will not ordinarily amount to serious irregularity or substantial injustice under the Arbitration Act 1996. The IBA Guidelines cannot alter the applicable domestic legal test.

The claimants applied under sections 24(1)(a) and 68 of the Arbitration Act 1996 to remove the sole arbitrator and challenge a partial award for serious irregularity. The arbitrator had been instructed by the solicitors acting for the first defendant in unrelated Commercial Court litigation while also conducting the arbitration. He disclosed that involvement shortly before issuing the award, having failed inadvertently to disclose it earlier.

The LCIA Court had rejected the challenge, but the decision was not binding and the application was determined afresh. The issues were whether the circumstances created justifiable doubts as to impartiality and whether the late disclosure independently constituted serious irregularity causing substantial injustice.

1. Apparent bias. The application was dismissed. The test under section 24(1)(a) of the Arbitration Act 1996 is the objective test whether the fair-minded and informed observer, having considered all relevant facts, would conclude that there was a real possibility of bias. The observer is assumed to understand the ordinary relationships and working practices of the legal profession. Nationality is irrelevant.
2. Instructions received by a barrister from a firm acting for a party, whether in the past or concurrently with the arbitration, do not ordinarily create apparent bias. The alleged unconscious desire not to disappoint the firm, confidence arising from previous professional dealings, and the existence of a fee relationship were theoretical on the evidence. Actual predisposition or a materially substantial proportion of instructions might raise a different issue, but neither was established.
3. The alleged risks that the arbitrator would have to defend or criticise the solicitors’ conduct, or communicate information between the two matters, did not arise on the facts. The court assessed the circumstances as established by the material before it at the time of the application.
4. Disclosure is distinct from apparent bias. An inadvertent failure to disclose does not itself establish apparent bias where the disclosed circumstances would not have caused the fair-minded and informed observer to see a real possibility of bias. Article 5.3 of the LCIA Rules did not impose a wider obligation whose breach could constitute serious irregularity in the absence of apparent bias.
5. The IBA Guidelines did not override domestic law. Properly construed, paragraph 2.3.2 of the Waivable Red List concerned a case where the arbitrator’s actual client was the law firm involved in the arbitration, not the ordinary English barrister-solicitor relationship. ASM Shipping Ltd of India v TTMI Ltd of England was materially different and did not assist the claimants.
6. Section 68 is a high-threshold, longstop remedy. Even assuming an earlier disclosure obligation, late disclosure of circumstances which did not establish bias neither amounted to serious irregularity nor caused substantial injustice. The applications to remove the arbitrator and set aside the award were dismissed.