OF DISCLOSURES AND DISCOVERIES: A RECENT DECISION FROM THE UK AND HOW IT COMPARES TO THE FRENCH LAW APPROACH

OF DISCLOSURES AND DISCOVERIES: A RECENT DECISION FROM THE UK AND HOW IT COMPARES TO THE FRENCH LAW APPROACH

teynier-rajan-campbell

Introduction

The UK Supreme Court recently rendered its long-awaited judgment in the case of Halliburton v. Chubb. While the decision focuses on whether arbitrators may accept multiple appointments, the UK Supreme Court seized this opportunity to clarify the English law approach on an arbitrator’s twin obligations of impartiality and disclosure. In this note, we summarise the main findings of this decision before comparing the English law approach it describes to the French law approach when it comes to an arbitrator’s duty of independence and disclosure obligation.

 

I. The UK Supreme Court decision in Halliburton v. Chubb

On 27 November 2020, the UK Supreme Court unanimously dismissed Halliburton’s appeal from the decision of the UK Court of Appeal, finding that an arbitrator should have been removed on grounds of apparent bias.1 The lead judgment, penned by Lord Hodge,2 addressed two principle questions: (1) whether acceptance of multiple appointments involving a common party and overlapping subject matters can give rise to the appearance of bias; and (2) whether and to what extent an arbitrator can accept such appointments without disclosure.

1) The factual background

Halliburton Company (“Halliburton”) provided cementing and well monitoring services to BP in the Gulf of Mexico. Transocean Ltd also provided services to BP, including overlapping services to those provided by Halliburton. Both Halliburton and Transocean Ltd were insured by Chubb Bermuda Insurance Ltd (formerly known as Ace Bermuda Insurance Ltd) (“Chubb”). In 2010, there was an explosion and fire on an oil rig in the Gulf of Mexico, the “Deepwater Horizon” oil spill. As a result, thousands of civil claims were brought against BP, Halliburton and Transocean. BP also claimed against Halliburton and Transocean.

Following a trial in the US in which judgment was given apportioning blame between the parties, Halliburton concluded a settlement to agree on the amount of damages. Halliburton then sought to claim a proportion of this settlement under its liability policy with Chubb, which declined to pay on the basis that the settlement was not reasonable and that it had not been consulted with, such that it had no obligation to indemnify. As the liability policy provided that indemnity disputes were to be resolved by arbitration, Halliburton commenced arbitral proceedings against Chubb. Both parties nominated their own arbitrator but were unable to agree on the chairman of the tribunal. Accordingly, they applied to the High Court, resulting in the selection of Mr Rokison QC, Chubb’s first-choice candidate.

In 2016, Halliburton discovered that subsequent to his appointment, Mr Rokison QC had accepted appointments as an arbitrator in two other matters arising out of the Deepwater Horizon incident: (i) Transocean’s claim against Chubb; and (ii) a claim by Transocean against another insurer. In the first arbitration, Mr Rokison QC was appointed by Chubb. In the second arbitration, he was appointed as chairman by agreement of the parties. Crucially, he failed to disclose these two appointments to Halliburton while the arbitration against Chubb was ongoing.

In December 2016, Halliburton applied to the Court of Appeal to remove Mr Rokison QC as arbitrator. The court refused the application, rejecting the suggestion that his handling of the three cases made him biased. It held that although Mr Rokison QC’s acceptance of appointments in overlapping cases created a risk that he would be privy to information and arguments in one case that were not advanced in the others, he “should be trusted” to decide each case on the basis of the information before him. The court held that Mr Rokison QC’s failure to disclose the subsequent appointments was an “innocent oversight” and that an objective observer would not conclude there was a real possibility that Mr Rokison QC was biased and dismissed the appeal. Halliburton appealed to the Supreme Court.

 

2) The English law principles on impartiality and disclosure

The Supreme Court unanimously dismissed Halliburton’s appeal on the basis that a “fair minded and informed observer…would not conclude…that circumstances existed that gave rise to justifiable doubts about Mr Rokison’s impartiality.”3 In doing so, it considered the following two questions:

Whether and to what extent the acceptance of multiple appointments concerning the same or overlapping subject matter with only one common party can give rise to the appearance of bias ?

The Supreme Court recalled that an arbitrator’s duty to act fairly and impartially is core under English law. The Supreme Court affirmed that this gave rise to a legal duty to make a disclosure of such matters which would otherwise cause the arbitrator to be in breach of their “statutory obligation of fairness”.4 In other words, “an arbitrator who knowingly fails to act in a way which fairness requires to the potential detriment of a party is guilty of partiality.”5

The Court noted that in considering an allegation of apparent bias against an arbitrator, the test is whether the fair-minded and informed observer would conclude there is a real possibility of bias. Courts will apply that objective test, having regard to particularities including the private nature of most arbitrations.

Accordingly, the Court noted that there may be circumstances where accepting multiple appointments involving a common party and the same or overlapping subject matter gives rise to an appearance of bias. Whether it does so will depend on the facts of the case and, in particular, the customs and practice in the relevant field of arbitration.

In this regard, the Court heard interventions by various arbitral institutions, including the LMAA (London Maritime Arbitrators Association) and the GAFTA (Grain and Feed Trade Association), which emphasised that in maritime and commodities arbitration, it is not unusual to see the same arbitrators appointed multiple times in disputes concerning the same or overlapping subject matter.

The court concluded that the practice of accepting such multiple appointments was not “inherently problematic” but that it depended “on the facts of the individual case.”6 The Court did specify, however, that the acceptance of multiple references concerning the same or overlapping subjects with a common party could give rise to an appearance of bias if there was a knowledge imbalance between the parties or if only one party has an unfair advantage over the other of which an arbitrator ought to be aware.

Whether and to what extent an arbitrator can accept multiple appointments without disclosure ?

The Court then considered in what circumstances an arbitrator may accept multiple appointments without triggering the obligation to disclose. The Court explained that under English law, arbitrators have a legal duty to disclose facts and circumstances which “would or might reasonably give rise to the appearance of bias.”7 The obligation to disclose arises when an objective observer might reasonably conclude that there was a real possibility of bias at the date when the decision to disclose is or should have been made (“the disclosure date”). Accordingly, the duty to disclose may arise even though the same observer, with the benefit of information not available on the disclosure date, would have concluded that there was no such real possibility.8

The Court then turned to the relationship between the duty to disclose, on the one hand, and the duty of privacy and confidentiality on the other. The Court noted that disclosure can be made only if the parties to whom the obligations are owed give their consent, further indicating that regard must be given to the relevant custom and practice to ascertain whether consent can be inferred. For instance, in arbitrations which are governed by institutional rules which require disclosure to the institution or the parties of matters which may include information about other arbitrations (such as article 11(2) of the ICC Arbitration Rules or article 5.4 of the LCIA Rules), the Court noted that the incorporation of such rules into an arbitration provides a basis for the inference that the parties to that arbitration consent to disclosure of such information about that arbitration to the parties to a prospective arbitration under such rules. Similarly, in maritime and commodities arbitrations, in which it is an accepted feature that arbitrators will act in multiple arbitrations, often arising out of the same events, the Court found that the parties are taken to have acceded to this practice and to accept that such involvement by their arbitrators does not call into question their fairness or impartiality, such that the requirement of disclosure does not arise.

It is interesting to note in this regard that the UK Supreme Court referred to the IBA Guidelines on Conflicts of Interest (the “Guidelines”), which include in the “orange list” the circumstance of multiple appointments within the past 3 years. The Guidelines also indicate that it may be the practice in certain types of arbitration (e.g., in maritime, sports or commodities arbitration) to draw arbitrator from a smaller pool of individuals. It is not, therefore, clear-cut when an obligation to disclose multiple appointments arises under the IBA Guidelines.9

Considering the impact of varying practices and customs, and to avoid debates about the existence or absence of such a duty by proof of a general custom and practice in a particular field of arbitration, the Court noted that there may be merit in including an express statement in the rules or guidance of the relevant institutions to the effect that multiple appointments are accepted. Failing that, that Court also noted that the parties can contract to limit the arbitrator’s obligation of disclosure pursuant to the principle of party autonomy.10

 

3) Application to the facts

The Court considered that, under English law, multiple appointments in the context of a Bermuda Form arbitration (the nature of the arbitration in this case) should be disclosed in the absence of an agreement to the contrary. Indeed, the Court was not satisfied that there exists an established custom or practice in Bermuda Form arbitrations by which parties have accepted that an arbitrator may take on such multiple appointments without disclosure. The Court therefore concluded that Mr Rokison QC should have disclosed his appointment in a subsequent case involving Chubb.

The Court was however not persuaded that the objective observer would have found a real possibility of bias on Mr Rokison QC’s part at the date of the hearing of his removal, which was the key date to assess whether there existed justifiable doubts regarding his impartiality (which is different from the disclose date, which is the time when the duty arose). In particular, the Court cited the following factors:

  • By the date of hearing of his removal, Mr Rokison QC had provided an explanation of his oversight to disclose his subsequent appointments, which Halliburton had accepted without challenge;
  • The time sequence of his three appointments (the second appointment followed six months after his first) could explain why Mr Rokison QC did not see the need to inform Halliburton of his appointment in the second arbitration;
  • Mr Rokison QC had a “measured response” to Halliburton’s challenge in which he disclosed that the second and third arbitrations would not overlap in legal evidence or submissions with the first. As a result, there was no likelihood of Chubb gaining an advantage;
  • Mr Rokison QC had received no secret financial benefit from his subsequent appointments;
  • There was no basis for inferring unconscious bias on Mr Rokison QC’s behalf in the form of subconscious ill-will in response to his challenge as arbitrator.

For these reasons, the Court concluded that the objective observer would not conclude that circumstances existed which gave rise to justifiable doubts about Mr Rokison QC’s impartiality. Halliburton’s appeal therefore failed.

 

II. A comparative law note on the French law approach to impartiality and disclosure

While the English and the French Courts have sometimes rendered diametrically opposed decisions over the last year,11 what Halliburton v. Chubb articulates as the English law position as to an arbitrator’s duty of independence impartiality, and the related duty to disclose facts and circumstances relevant to the parties’ assessment of this independence and impartiality, is not far removed from the French law approach.

As is the case under English law, under French law, whether multiple appointments with one common party in cases with overlapping subject matter can give rise to an appearance of bias depends on the particular circumstances of each case. In 1996, the Paris Court of Appeal dismissed a challenge against an arbitrator appointed in concurrent arbitrations concerning the same construction project by the common party, Creighton, because the disputes in the related arbitrations raised distinct issues. The first arbitration concerned a dispute between Creighton and its subcontractor over the termination of the subcontractor’s agreement, whereas the second arbitration concerned a distinct dispute over the termination of the construction agreement between Creighton and the Government of Qatar.12

More generally, French law requires arbitrators to disclose facts or circumstances which may call into question the arbitrator’s independence.13 French Courts have in the past explained that arbitrators must share any facts that could, in the eyes of the parties, give rise to a reasonable doubt regarding their independence or impartiality. Earlier this year, in its decision in the Dommo case,14 the International Chamber of the Paris Court of Appeal (ICCP-CA) further expanded on the scope of an arbitrator’s duty to disclose, by explaining that it must be assessed in light of the publicity (“notoriété”) of the disputed situation, its connection to the dispute and its impact on the arbitrator’s judgment.15

The Dommo decision further confirms that failure by an arbitrator to disclose does not automatically result in setting aside of the award on the basis that the tribunal was improperly constituted, as is also the case under English law. Courts must undertake an objective assessment of the case at hand to analyse if the undisclosed facts create a reasonable doubt as to arbitrator’s independence or impartiality. The award will only be set aside if there are sufficient doubts as to the arbitrator’s lack of independence or impartiality.16

Finally, French law is also similar to the English law approach in that it also requires parties to raise their concerns relating an arbitrator’s impartiality swiftly. Article 1466 of the French Code of Civil Procedure, which applies to domestic and international arbitration, provides that a party that, knowingly and without a legitimate reason, fails to object to an irregularity before the arbitral tribunal in a timely manner shall be deemed to have waived its right to avail itself of such irregularity. One of the factors the UK Supreme Court considered in Halliburton v. Chubb to reach the conclusion that there was no justifiable doubts about Mr Rokison QC’s impartiality is that by the date of the hearing on his removal, Mr Rokison QC had provided an explanation of his oversight to disclose his subsequent appointments, which Halliburton had accepted without challenge. Under French law, while failure to object to an undisclosed fact relating to the impartiality of an arbitrator in a timely manner is not per se relevant to assess the existence of a reasonable doubt as to the arbitrator’s independence or impartiality, it will nevertheless prevent the parties from subsequently invoking that undisclosed facts to challenge an arbitrator’s impartiality. The end result is therefore the same as under English law.

 

Conclusion

The decision of the UK Supreme Court in Halliburton v. Chubb provides clarity on an important question: what are arbitrators required to disclose, and when does the failure to disclose justify a disqualification of the arbitrator or the setting-aside of the award(s) issued?

According to the UK Supreme Court, arbitrators are under a legal duty to disclose when the circumstances might reasonably give rise to a conclusion by the objective observer that there was a real possibility of bias, unless the parties to the arbitration have agreed otherwise. This is slightly different from the French law standard, which requires arbitrators to disclose any circumstances that could, in the eyes of the parties, give rise to a reasonable doubt regarding their independence or impartiality. The wider, subjective, French standard to determine the existence of an obligation to disclose is consistent with the IBA Guidelines on Conflicts of Interests.17 Ironically, while the UK Supreme Court did acknowledge the IBA Guidelines as reflecting good practice in arbitration in Halliburton v. Chubb, it nevertheless departed from the subjective standard they enunciate and preferred the test of the “fair minded and informed observer”.

In the end, however, one may argue that the analysis to be carried out is so fact specific that whether the standard applied is an objective or subjective one is unlikely to change the result. After all, as indicated by Professor Dr Jacomijn van Haersolte-van Hof (Director General of the LCIA) during the 35th Annual Freshfields Arbitration Lecture, while an arbitrator’s obligation of impartiality and disclosure are fundamental tenets, they are also fundamentally fluid.

When there is a failure to disclose, the approach of English law and French law are more aligned. Under both systems, there is a clear dissociation between undisclosed facts and the lack of independence and impartiality, such that a failure to disclose does not automatically justify disqualifying the arbitrator or setting aside the award. The information not disclosed must be such as to provoke a reasonable doubt in the minds of the parties as to the impartiality and independence of the arbitrator, an assessment that has to be made objectively, taking into account the specific facts of the case.


  1. Halliburton Company (Appellant) v Chubb Bermuda Insurance Ltd (formerly known as Ace Bermuda Insurance Ltd) (Respondent) [2020] UKSC 48.
  2. With which Lords Reid and Lloyd-Jones and Lady Black agreed. Lady Arden gave a concurring judgment.
  3. Para. 150.
  4. Para. 78.
  5. Id.
  6. Para. 128.
  7. Para. 132.
  8. Id.
  9. Para. 134.
  10. Para. 135.
  11. See, for instance: http://www.teynier.fr/enka-c-chubb-la-cour-supreme-du-royaume-uni-tranche-la-question-de-la-loi-applicable-a-la-convention-darbitrage-et-celle-du-pouvoir-des-juridictions-anglaises-demettre-des-anti-su/?lang=en
  12. Qatar v. Creighton, Cour d’appel [CA] [regional court of appeal] Paris, 1e ch., Jan. 12, 1996, 1996 REV. ARB. 428 (Fr.).
  13. Article 1456 of the French Code of Civil Procedure.
  14. 25 February 2020, CCIP-CA- RG 19/07575. The ICCP-CA issued a press release on the five decisions upholding the underlying arbitral awards that is available here: https://www.cours-appel.justice.fr/paris/25022020-rg-1907575-sentence-arbitrale-internationale-international-arbitral-award.
  15. Para. 43.
  16. Ch. Seraglini, J. Ortscheidt, Droit de l’arbitrage interne et international, 2nd edition, para. 245.
  17. Under principle 3 a): “If facts or circumstances exist that may, in the eyes of the parties, give rise to doubts as to the arbitrator’s impartiality or independence, the arbitrator shall disclose such facts or circumstances to the parties, the arbitration institution or other appointing authority (if any, and if so required by the applicable institutional rules) and the co-arbitrators, if any, prior to accepting his or her appointment 7 or, if thereafter, as soon as he or she learns of them.”