Halliburton Company v Chubb Bermuda Insurance Ltd (formerly known as Ace Bermuda Insurance Ltd)

An arbitrator must act impartially and must disclose facts or circumstances which would or might reasonably cause the fair-minded and informed observer to conclude that there was a real possibility of bias. Multiple appointments involving overlapping subject matter and one common party may require disclosure. The answer depends particularly on the customs and practices of the relevant arbitral field.

Non-disclosure is relevant to apparent bias but does not automatically establish it. The disclosure duty is assessed when it arose, whereas apparent bias on an application for removal is assessed from the circumstances known at the date of the hearing. Limited disclosure may be compatible with arbitral confidentiality, but consent is required if adequate disclosure would otherwise reveal protected information.

Halliburton and Chubb were parties to a London-seated Bermuda Form insurance arbitration arising from the Deepwater Horizon disaster. The chairman, Mr Kenneth Rokison QC, subsequently accepted appointments in two related arbitrations involving Transocean. Chubb was a party to one of them. He did not disclose the later appointments to Halliburton.

Halliburton applied under section 24(1)(a) of the Arbitration Act 1996 to remove him for apparent bias. Popplewell J dismissed the application in [2017] EWHC 137 (Comm). The Court of Appeal dismissed Halliburton’s appeal in [2018] EWCA Civ 817, although it held that disclosure ought to have been made.

The Supreme Court considered when multiple appointments create apparent bias, when an arbitrator has a legal duty of disclosure, how confidentiality constrains disclosure, and the dates at which disclosure and apparent bias must be assessed.

1. Appeal dismissed. Lord Hodge, with whom Lord Reed, Lady Black and Lord Lloyd-Jones agreed, held that the circumstances known at the removal hearing would not cause the fair-minded and informed observer to conclude that there was a real possibility of bias. Lady Arden agreed, subject to qualifications concerning disclosure and confidentiality.

2. Impartiality is a core requirement of arbitration. The objective test is whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility of bias. The test applies equally to every arbitrator, including a party-appointed arbitrator. Its application must reflect the privacy of arbitration, limited appellate oversight, the manner of appointment and remuneration, international differences concerning arbitral roles, informational asymmetry and the risk of tactical challenges.

3. Multiple appointments concerning the same or overlapping subject matter with only one common party may themselves create an appearance of bias. The result depends on all the circumstances, especially the customs and practices of the relevant arbitral field. The Court of Appeal’s proposition that something more of substance was invariably required was too broad.

4. Section 33 of the Arbitration Act 1996, together with the arbitrator’s contract of appointment, imposes a legal duty to disclose known facts or circumstances which would or might reasonably cause the objective observer to conclude that there was a real possibility of bias. The duty may arise even where later examination shows no apparent bias. The parties may waive or modify it. Whether reasonable enquiries may sometimes be required was left open.

5. The duty of disclosure does not override arbitral privacy and confidentiality. Whether consent to disclosure can be inferred depends on the agreement and the customs and practices of the relevant field. In a Bermuda Form arbitration, an arbitrator may ordinarily disclose the existence of a related arbitration, the common party, the capacity in which appointment is sought, and that the references arise from the same incident. Further confidential information requires consent; if necessary consent is withheld, the proposed appointment must be declined.

6. A failure to disclose is a factor in the apparent-bias assessment and may, in combination with the undisclosed circumstances, establish apparent bias. The disclosure duty is assessed prospectively when it arises. By contrast, section 24(1)(a) requires apparent bias to be assessed from the circumstances existing when the removal application is heard.

7. Mr Rokison breached his duty by failing to disclose his appointment in the second reference. Nevertheless, by the removal hearing his genuine oversight had been explained, the relevant law had lacked clarity, the time sequence explained the omission, the related references were likely to end on a preliminary issue, no secret benefit existed, and his response to the challenge was measured. No justifiable doubt about his impartiality then existed.

1. United Kingdom Supreme Court: The appeal was dismissed in [2020] UKSC 48 . The court upheld the refusal to remove the arbitrator, while confirming that his non-disclosure breached a legal duty.
2. Court of Appeal: The appeal was dismissed in [2018] EWCA Civ 817 ; [2018] 1 WLR 3361 . The court held that disclosure should have been made but found no real possibility of bias.
3. High Court: Popplewell J dismissed the removal application in [2017] EWHC 137 (Comm) ; [2017] 1 WLR 2280 .