W Ltd v M SDN BHD

The common-law test for apparent bias is whether a fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility of bias. The assessment is fact-specific. An arbitrator’s partnership in a firm that advises an affiliate of a party does not automatically establish apparent bias, particularly where the arbitrator did not perform the work, operated effectively as a separate practitioner, lacked knowledge of the relationship, and would have disclosed it if alerted. The 2014 IBA Guidelines are not binding and cannot replace the common-law test. They may assist as a check, but their categories must not displace a case-specific assessment of impartiality and independence.

The claimant, a British Virgin Islands corporation, challenged two LCIA arbitration awards under section 68 of the Arbitration Act 1996. The sole arbitrator was a partner in an Alberta law firm. After his appointment, the firm continued substantial work for a company that became an affiliate of the defendant through a common corporate parent. The arbitrator did not undertake that work and was unaware of the relationship because the firm’s conflict systems did not alert him.

The central issue was whether those circumstances created apparent bias, applying the fair-minded and informed observer test, and what weight should be given to paragraph 1.4 of the 2014 IBA Guidelines’ Non-Waivable Red List.

1. Challenges dismissed. The challenges to both awards under section 68 of the Arbitration Act 1996 failed. The related application for an extension of time was also refused.

2. The applicable common-law test was whether a fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased. The reference to bias meant an absence of demonstrated independence or impartiality. The court assessed the facts objectively, taking account of what the arbitrator knew, but not treating his account as conclusive or relying on his evidence about the effect of knowledge on his mind.

3. Applying that test, the circumstances did not establish apparent bias. The firm’s substantial work for the affiliate was not work performed by the arbitrator. He operated effectively as a separate practitioner, using the firm for administrative support. He had made disclosures when his checks brought matters to his attention and would have disclosed this relationship had he known of it. Those facts indicated a commitment to transparency and supported the conclusion that the work was not in his mind.

4. The 2014 IBA Guidelines did not bind the court. They could assist as a check, but English law required the common-law, case-specific assessment. The court criticised the apparent tension between the Guidelines’ categorical treatment of paragraph 1.4 of the Non-Waivable Red List and their recognition elsewhere that relationships involving law firms and corporate affiliates should be assessed individually. The Guidelines did not alter the result.