In a long-awaited judgement arising from the Deepwater Horizon oil rig disaster, the Supreme Court has confirmed that arbitrators may accept multiple appointments on related matters.  However in this significant ruling it has been decided that an arbitrator has a duty to disclose circumstances which may reasonably give rise to the appearance of bias.

The Deepwater Horizon sank in the Gulf of Mexico in 2010 after a blowout and explosion which killed 11 crewmen.  The disaster led to multiple insurance claims and litigation.  In one case insurer Chubb declined a claim made by Halliburton, a major oil field services provider.

Halliburton started an arbitration against Chubb.  When the parties disputed the membership of the arbitration panel, the UK High Court was called on to appoint the Tribunal Chair.  It selected Kenneth Rokison, one of the candidates put forward by Chubb.  During the appointment process Kenneth Rokison disclosed that he had previously received several appointments by Chubb.

After being appointed on the first arbitration, Mr Rokison accepted a second arbitration appointment from Chubb relating to the Deepwater Horizon loss.  He also accepted a third Deepwater Horizon appointment from another insurer.  It is common for specialist arbitrators to be appointed on multiple related claims and Mr Rokison did not disclose the subsequent appointments to Halliburton.  He later accepted that it would have been prudent to do so.

When Halliburton discovered the second and third appointments it applied to the High Court to have Mr Rokison removed as Tribunal Chair in the first arbitration on the grounds of the appearance of bias.

The High Court refused Halliburton’s request.  It applied the common law test for apparent bias, which asks whether a fair-minded and informed observer (the ‘Observer’), having considered the facts, would conclude that there was a real possibility of the Tribunal Chair being biased.  The Court concluded that none of the grounds put forward would give rise to doubts about Mr Rokison’s impartiality.

The case went to appeal where the Court considered whether an arbitrator could accept multiple appointments concerning the same matter, but with only one common party, without appearing biased.  It concluded that while Mr Rokison should have disclosed the appointments to Halliburton as a matter of good practice and law, this alone would not have led the ‘Observer’ to conclude that he was biased.

Halliburton took the decision to the Supreme Court, which ruled there were no grounds to doubt Mr Rokison’s impartiality and dismissed the appeal.  However the Supreme Court clarified English law about arbitrator impartiality and has ruled that arbitrators have a duty to disclose additional appointments which might reasonably give rise to an appearance of bias.

James Burgoyne, Director – Claims & Technical, Brunel Professions said: “The Supreme Court has clarified that arbitrators who accept multiple appointments on the same or overlapping matters could give the appearance of being biased.  As a result they must disclose their appointment to the parties.  It will be interesting to see if these concerns in arbitration have consequences for practice in adjudication, where it is common for construction contracts to call for related adjudications to be decided by the same adjudicator.

Reports about the judgement have been published by Stewarts, Herbert Smith Freehills, Quadrant Chambers and Insurance Business.

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