Cofely Ltd v Bingham & Anor

For the purposes of Arbitration Act 1996, apparent bias is assessed by asking whether the fair-minded and informed observer, having considered the facts and the practical operation of the legal profession, would conclude that there was a real possibility of bias. Repeated appointments involving the same party or claims representative may be significant, particularly where they create material financial dependence or an incentive to remain in favour. The arbitrator’s response to concerns, including evasive or aggressive conduct and failure to recognise the relevance of disclosure, may reinforce the appearance of bias. Where apparent bias is established, substantial injustice is inferred. An objection is not lost under section 73 where the relevant grounds emerge only through a reasonable information-gathering process.

Cofely applied under section 24(1)(a) of the Arbitration Act 1996 for the removal of Anthony Bingham as arbitrator in its arbitration with Knowles Ltd. Cofely alleged apparent, rather than actual, bias arising from Mr Bingham’s extensive appointments and income from matters involving Knowles, Knowles’s influence over appointments, the circumstances disclosed in Eurocom Ltd v Siemens Plc, and Mr Bingham’s response to requests for information.

The defendants disputed the existence of circumstances giving rise to justifiable doubts and raised section 73 as a possible bar. The central issues were whether the cumulative circumstances created a real possibility of apparent bias and whether Cofely had waived its objection by continuing to participate.

1. Removal. Cofely established circumstances giving rise to justifiable doubts as to Mr Bingham’s impartiality under section 24(1)(a) of the Arbitration Act 1996. If he did not resign, an order for his removal would be made.
2. Applicable test. The common-law test is reflected in section 24: whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased. The observer is assumed to know the facts and to understand how the legal profession operates in practice. The observer reserves judgment, considers both sides, and takes account of context.
3. Relevant circumstances. Over the preceding three years, 18% of Mr Bingham’s appointments and 25% of his arbitral and adjudicative income arose from cases involving Knowles. Knowles could influence appointments by nominating preferred candidates, narrowing qualifications and excluding others. Its blacklist created a potential incentive for an arbitrator dependent on Knowles-related work to remain in favour. The fact that most appointments were made by appointing bodies did not remove the significance of Knowles’s influence.
4. Conduct and response. The relationship evidence was materially strengthened by Mr Bingham’s evasive and aggressive response to reasonable requests for information, his failure to recognise the possible relevance of disclosure, and his conduct of an unrequested hearing and ruling on apparent bias. By pressing Cofely’s counsel to state the consequences of information which Cofely was still gathering, he descended into the arena. His continuing lack of awareness of the problem increased the risk of unconscious bias.
5. Other grounds. Alleged unilateral communications and the earlier conduct of the arbitration, including the handling of section 47 applications, did not independently or cumulatively establish apparent bias. The court found nothing untoward in the arbitration before March 2015.
6. Section 73. The objection arose from events from March 2015 onwards. Cofely was engaged in a reasonable information-gathering exercise and could not decide whether grounds for objection existed until the relevant information had been obtained. Section 73 therefore did not apply.
7. Where actual or apparent bias is established, substantial injustice need not be separately proved.

First-instance decision in the Commercial Court. No appellate history is stated in the judgment.