Halliburton v Chubb: Supreme Court rules on arbitrator bias

However, in an eagerly anticipated ruling in the case of Halliburton v Chubb, the court confirmed that arbitrators are not automatically obliged, under English law, to make a disclosure in such cases. They must factor in their equal legal duties to privacy and confidentiality in the context of the specific facts and circumstances of each case to determine the right course of action, it said.

The Supreme Court considered the issues of arbitrator appointments and apparent bias after oil giant Halliburton Company challenged whether an arbitrator appointed as chair to an arbitral tribunal in proceedings involving it and insurer Chubb Bermuda Insurance could act impartially in the case.

Parties to arbitration have a legal right, under the Arbitration Act 1996, to request that a court remove an arbitrator from an arbitral tribunal sitting in England and Wales if "circumstances exist that give rise to justifiable doubts as to his impartiality".

Halliburton raised the challenge after the arbitrator failed to inform it that he had accepted appointment to another arbitral tribunal in a related case in which Chubb, but not it, was a party. Both tribunals were tasked with considering claims brought against Chubb in light of liabilities arising out of the explosion of the Deepwater Horizon drilling rig in the Gulf of Mexico in 2010.

The Supreme Court, upholding the decisions of both the Court of Appeal and the High Court, held that, on the facts of the case, there was no apparent bias, and therefore no grounds for removing the chair as an arbitrator. It reached that view despite finding that the chair appointed to the Halliburton v Chubb arbitral tribunal had breached his legal duty of disclosure.

In its ruling the court clarified the legal test that applies to the duty of disclosure. It confirmed that even if a real possibility of bias is not established on the facts of a case, the duty to make the disclosure nonetheless arises if it might "reasonably" give rise to such doubt.

The Supreme Court explained that the legal test, and the assessment of the possibility of bias following disclosure, should be applied through the eyes of a "fair minded and informed observer", and account given to "the realities of international arbitration" and the "custom and practice in the relevant field of arbitration".

The failure to make a disclosure is a fact that the observer can take into account when assessing whether there is a real possibility of bias, the court said. This assessment should be made at the date of the hearing to remove the arbitrator, and not at the date of the arbitrator's acceptance of the subsequent appointment, it said.