B & Anor v J & Ors

Under section 24 of the Arbitration Act 1996, an arbitrator expressly nominated by the parties is not disqualified merely because he has prior knowledge of the parties or business, has previously formed views, or may give evidence. The court must assess the circumstances objectively and in the round, asking whether a fair-minded and informed observer would conclude that there is a real possibility, or real danger, of bias. Freedom of contract remains important, particularly where the arbitrator was identified in the agreement. Removal may nevertheless be justified where the arbitrator’s evidence would concern an important disputed matter in his own cause. General allegations, strained inferences and trivial or incidental matters do not establish justifiable doubts as to impartiality.

The claimants applied under section 24 of the Arbitration Act 1996 to remove F as arbitrator in a family arbitration. F had been expressly nominated in a 2009 family agreement, after having worked for the family businesses and acquiring extensive knowledge of their affairs. The claimants alleged apparent bias arising from his employment relationship, reporting arrangements, refusal to provide financial information, likely role as a witness, and resignation.

The central issues were whether the circumstances gave rise to justifiable doubts as to F’s impartiality and whether his nomination in the agreement required the parties to be held to their bargain.

1. Application dismissed. The court found no justifiable doubts as to F’s impartiality and no substantial injustice within section 24(1)(a) of the Arbitration Act 1996.
2. The court distinguished between arbitrations in which the parties expressly nominate the arbitrator and those in which they do not. The same objective test for apparent bias applies to both, but freedom of contract and the parties’ knowledge at the time of contracting carry particular weight where the arbitrator was expressly nominated.
3. The question was whether, having regard to all the circumstances, a fair-minded and informed observer would conclude that there was a real possibility, or real danger, that the tribunal would be biased. The evidence had to be assessed objectively and in the round.
4. There was no absolute rule preventing an arbitrator in an expressly nominated arbitration from giving evidence. Removal may be justified where the arbitrator would be the principal witness on an important disputed matter, particularly where his credibility or own cause was in issue. That was not established here.
5. F’s prior employment, intimate knowledge of the family businesses, reporting arrangements and response to a request for financial information were matters within the parties’ contemplation when he was nominated. They did not show actual or apparent bias. The communications were temperate and did not create a material dispute making F a necessary witness.
6. The arguments based on sham resignation and a possible constructive dismissal claim lacked evidential foundation. The court left open a future removal application if F later acted in a manner demonstrating actual bias. The parties were invited to agree an order.

First-instance application. No appellate history is stated in the judgment.