HALLIBURTON V CHUBB: THE DUTY OF IMPARTIALITY & THE OBLIGATION OF ARBITRATORS TO MAKE DISCLOSURE
In the recent United Kingdom Supreme Court (“UKSC”) decision of Halliburton Company v Chubb Bermuda Insurance Ltd (formerly known as Ace Bermuda Insurance Ltd) [2020] UKSC 48 (“Halliburton v Chubb”), the UKSC dealt with the requirement for arbitrators to not appear to be biased and the obligation of arbitrators to make disclosure, particularly in the context of accepting multiple appointments with overlapping subject matter but only one common party.
Salient facts. The appellants (Halliburton) had entered into a Bermuda Form liability policy with the respondent (Chubb), and sought to claim under the policy against Chubb. As Chubb disputed the claim, Halliburton invoked the arbitration clause.
Subsequently, Halliburton discovered that the chairperson of the arbitration was appointed to another arbitral tribunal in a related case involving Chubb (but not Halliburton) to deal with a claim by a third party.
Halliburton applied to remove the chairperson and to appoint another chairperson on the basis that circumstances existed which gave rise to justifiable doubts about the chairperson’s impartiality.
Duty of impartiality. The UKSC held that the duty of impartiality is enshrined in Section 33 of the Arbitration Act 1996 ([49] Halliburton v Chubb). The UKSC also held that in Halliburton v Chubb, the court is only concerned with apparent bias, and not actual bias, and hence the test is that as set out by Lord Hope at paragraph 103 of Porter v Magill [2002] 2 AC 357 ([52] Halliburton v Chubb).
It is important to note that the UKSC stated at [64] that “… The requirement in English law that all arbitrators, whether party-appointed or independently appointed, comply with the same high standards of impartiality, appears to be the increasingly widely accepted as the legal norm internationally…” and referred to Sundaresh Menon CJ’s article in “Adjudicator, advocate or something in between? Coming to terms with the role of the party-appointed arbitrator”, though the UKSC also noted that some quarters and some legal systems may have different views.
Hence, the UKSC went on to hold at [66] that “The courts in applying the test of the fair-minded and informed observer would credit that objective observer with the knowledge both that some, maybe many, parties and some, maybe many, arbitrators in international arbitrations have that understanding and that there is a debate within the arbitration community as to the precise role of the party-appointed arbitrator and the compatibility of that role with the requirement of impartiality.”
Disclosure. After setting out the role of disclosure in arbitrations at [70] – [73], the UKSC held that under English law, the arbitrator is under a duty to provide disclosure of facts and circumstances which would or might give rise to justifiable doubts as to his impartiality ([75] – [76] Halliburton v Chubb). However, the information that can be disclosed is subject to an arbitrator’s duty of privacy and confidentiality. As such, the UKSC held at [88] that:
“… if a person seeking appointment as an arbitrator in a later arbitration does not obtain the consent of the parties to a prior related arbitration to make a necessary disclosure about it, or the parties to the later arbitration do not consent to the arbitrator’s disclosure of confidential matters relating to that prospective appointment to the parties to the earlier arbitration, the arbitrator will have to decline the second appointment. Such consent may be express or may be inferred from the arbitration agreement itself in the context of the custom and practice in the relevant field.”
The UKSC held that for institutional arbitrations which are governed by institutional rules such as Art. 11(2) of the ICC Arbitration Rules, Art. 5.4 of the LCIA Rules and Rule 6(2) of the ICSID Arbitration Rules, “the incorporation of such rules into an arbitration (arbitration 1) 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 (arbitration 2) under such rules. Similarly, one can readily infer from the submission of the parties in arbitration 2 to such rules that they have consented to such disclosure to the parties to arbitration 1.”
When we look at those institutional rules:
1. Art. 11(2) of the ICC Arbitration Rules provides that “Before appointment or confirmation, a prospective arbitrator shall sign a statement of acceptance, availability, impartiality and independence. The prospective arbitrator shall disclose in writing to the Secretariat any facts or circumstances which might be of such a nature as to call into question the arbitrator’s independence in the eyes of the parties, as well as any circumstances that could give rise to reasonable doubts as to the arbitrator’s impartiality. The Secretariat shall provide such information to the parties in writing and fix a time limit for any comments from them.”
2. Art. 5.4 of the LCIA Rules provides that “5.4 Before appointment by the LCIA Court, each arbitrator candidate shall furnish to the Registrar (upon the latter’s request) a brief written summary of his or her qualifications and professional positions (past and present); the candidate shall also agree in writing fee rates conforming to the Schedule of Costs; the candidate shall sign a written declaration stating: (i) whether there are any circumstances currently known to the candidate which are likely to give rise in the mind of any party to any justifiable doubts as to his or her impartiality or independence and, if so, specifying in full such circumstances in the declaration; and (ii) whether the candidate is ready, willing and able to devote sufficient time, diligence and industry to ensure the expeditious and efficient conduct of the arbitration. The candidate shall promptly furnish such agreement and declaration to the Registrar.”
3. Rule 6(2) of the ICSID Arbitration Rules requires the arbitrator to sign a declaration in a form which, among others, requires the arbitrator to attach “… statement of (a) my past and present professional, business and other relationships (if any) with the parties and (b) any other circumstance that might cause my reliability for independent judgment to be questioned by a party. I acknowledge that by signing this declaration, I assume a continuing obligation promptly to notify the Secretary-General of the Centre of any such relationship or circumstance that subsequently arises during this proceeding”
Given that Rule 13.4 of the SIAC Arbitration Rules 2016 provides that “A nominated arbitrator shall disclose to the parties and to the Registrar any circumstances that may give rise to justifiable doubts as to his impartiality or independence as soon as reasonably practicable and in any event before his appointment” and Rule 13.5 provides that “An arbitrator shall immediately disclose to the parties, to the other arbitrators and to the Registrar any circumstances that may give rise to justifiable doubts as to his impartiality or independence that may be discovered or arise during the arbitration”, it is likely that pursuant to Halliburton v Chubb, there is a basis for arguing that consent to disclosure would be given by the parties if they incorporate the SIAC Rules in their arbitration agreement.
Disclosure and apparent bias. The UKSC then held at [117] – [118] that where an arbitrator has accepted appointments in multiple references in “circumstances which might reasonably give rise to justifiable doubts” about the impartiality of the arbitrator, the failure of the arbitrator to provide disclosure to the party who is not the common party in those references “may demonstrate a lack of regard to the interests of the non-common party and may in certain circumstances amount to apparent bias”.
The UKSC further held at [125] – [131] that “where an arbitrator accepts appointments in multiple references concerning the same or overlapping subject matter with only one common party, this may, depending on the relevant custom and practice, give rise to an appearance of bias”, stating that it is important in such situations to have regard to, among others, the terms of the contract and the relevant factual matrix, which includes the facts of the particular case, as well as whether there are any relevant customs and practice in the industry.
Takeaway. The UKSC in Halliburton v Chubb covered a wide range of topics and provides a useful guidance on whether there is a legal duty of disclosure under English law and how an arbitrator’s duty to disclose interacts with the arbitrator’s duty of privacy and confidentiality.
While Halliburton v Chubb is an English decision and is not binding on the Singapore Courts, it is likely that the general approach taken by the UKSC would nonetheless be relevant. The key point to note is that timely disclosure is important, and arbitrators must carefully consider if they have complied with their duties of disclosure.
Lastly, we highlight that while on the facts of Halliburton v Chubb, the chairperson was not removed, the UKSC did hold that the chairperson had breached his legal duty of disclosure (see [147]). Pertinently, though the UKSC held that a fair-minded and informed observer would not infer that there was a “real possibility of unconscious bias” given that, among others there “appears to have been a lack of clarity in English case law”, it remains to be questioned whether similar situations post Halliburton v Chubb would be dealt with in the same manner, since guidance would now have been provided by the UKSC’s decision.
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