The Duty of Disclosure on Arbitrators in English Law: A Necessary Reform
The last few years has seen a flurry of interventions and reforms to the English law of arbitration, particularly as far as the law on the expectations of the law on arbitrators is concerned. The decision of the Supreme Court in Halliburton v Chubb Bermuda International Ltd[1] has realigned English arbitral law with that of the rest of the world by now acknowledging that an arbitrator owes to the parties to arbitral proceedings a duty to disclose any and all facts which could give rise to a justifiable doubt as to the arbitrator’s impartiality; this is recognised as being within the existing statutory duty of fairness and impartiality an arbitrator owes under s33(1) of the Arbitration Act 1996.
Despite this position however, the fact that the existing statutory duty of fairness itself as contained in the Arbitration Act 1996 does not expressly state that such a duty exists explicitly. This, combined with the long-established prior position of law in England and Wales being that the duty of impartiality requires avoidance of ‘bias’ (both actual and apparent bias, as defined as being a position which a reasonable and informed observer would consider to give rise to a justifiable doubt as to impartiality of the arbitrator), raises the question of whether, firstly, the law is clear and understood by business anymore and, secondly, whether that much has really been changed by the Supreme Court’s decision in Halliburton.
Clarity Concerns following Halliburton
The Arbitration Act 1996 is a piece of legislation which places arbitration as it takes place in the UK within the understood framework of arbitral contract theory as it has been accepted in the UK.[2] As Onyema explains, there are various competing understandings as to what the relationship between the arbitrator and the parties actually is and how it can be rationalised in law.[3] Some perceive the agreement to be merely contractual in nature, with the arbitrator’s duties arising as and when they accept instruction as an arbitrator, whilst others consider the nature of the arbitral contact to be quasi-judicial, in that the arbitrator operates under the precepts of the governing arbitral statute in force and acts as a sort of public-figure akin to a judge, thereby bearing certain duties at law.[4] If the arbitrator’s agreement with the parties is only a creature of contract (with the two parties to the arbitral proceedings itself), then it is strange to suggest that the arbitrator might owe the parties any sort of contractual legal duties (such as to disclose information prior to being appointed) during negotiations and as the interview and scoping process takes place. Actions on the basis of contractual misrepresentation might of course be considered to apply to such a failure ex post facto, notwithstanding the arbitrator’s general immunity from such claims provided for by statute (in s29 Arbitration Act 1996 for example)[5]. However, if some other form of duty, such as a positive duty to make disclosure of certain facts (such as those which might lead a party to question the arbitrator’s independence) prior to their actual appointment (and therefore prior to their contract coming into effect), is imposed by law then the contract is perhaps better seen as a sui generis one legally. Such an agreement would be more akin to a contract of insurance, for example, where a duty of uberimae fides is accepted by common law as existing due to the special, unique nature of that form of contract.[6]
The Basis of the Arbitral Contract in Law: Still Unclear?
It is somewhat remarkable that this debate even exists, but there is no real fundamental agreement on the source of an arbitrator’s powers or duties in law, and we must therefore accept that the arbitrator is appointed by contract, but that this contract has its own sui generis nature.[7] It is therefore fair that the English law does recognise that some duties do lay on an arbitrator to disclose certain facts which might cause the arbitrator’s independence to be called into question even prior to their appointment being confirmed by the parties and agreed under a binding contract.[8] Historically, however, the English courts had refused to accept any such interpretation of the law. Instead, it has always (prior to Halliburton) been the case that an arbitrator has been expected only to act fairly and impartially between the parties, as required by s33(1) Arbitration Act 1996.[9] These duties applied only upon, and from, the time of the arbitrator’s appointment, and as such it is implicit that the English courts (knowingly or not) historically must have accepted that the arbitrator’s duties stemmed from their entry into contract (and only from that point forwards therefore in time).[10] Take the decision in Norbrook v Tank Laboratories for example.[11] In that case, Colman J identified a difference between an arbitrator’s failure to conduct proceedings properly and in accordance with their duty under s33(1) Arbitration Act 1996 (when the arbitrator showed hostility to one of the parties and their solicitor, contacted witnesses without disclosing it and without recording conversations thereof, and so on) and those failures to disclose facts which would have caused justifiable doubts as to their independence prior to their engagement.[12] Whilst therefore the arbitrator could be removed from office under s24(1) Arbitration Act 1996[13] because such justifiable doubts as to their impartiality (on the test set out in Porter v Magill as being that of a fair-minded and informed observer)[14], this was only because of failures which had taken place before, and not after, their appointment. In other words, even though the arbitrator had failed to disclose facts which an informed and fair minded observer would have considered to lead to justifiable doubts as to their impartiality (or an appearance of bias), this would in itself be no grounds to remove the arbitrator from office; instead, what was needed was some subsequent behaviour by the arbitrator which gave rise to such doubts once their appointment had been made;[15] Colman J indicates in paragraph 145 of his judgment that the court’s jurisdiction to remove an arbitrator appeared bound by the rules of ss24 and 68 of the Arbitration Act 1996 to either set aside an award made where a real possibility of bias was found or to remove the appointed arbitrator, but there was nothing from the judgment indicating that failing to disclose personal contact with a witness or other party to proceedings prior to appointment itself could constitute such a ‘real possibility’ of bias without some further indication that there was a de facto lack of impartiality subsequently shown.[16]
Bibliography
Cases
Carter v Boehm (1766) 3 Burr 1905
Norbrook Laboratories v Tank and others [2006] EWHC 1055 (Comm).
Porter v Magill [2002] 2 AC 357.
Legislation
Arbitration Act 1996.
Secondary Sources
Bingham T, ‘Don’t Touch That Dial’ (2006) 36 Building 66.
Doerries CA, ‘Concerned About the Apparent Bias of an Arbitrator?’ (2007) 70 European Lawyer.
Feehily R, ‘Neutrality, Independence and Impartiality in International Commercial Arbitration: A Fine Balance in the Quest for Arbitral Justice’ (2019) 7 Penn State Journal of Law and International Affairs 88.
Luttrell S, Bias Challenges In International Arbitration: The Need for a Real Danger Test (1st edn Wolters Kluwer 2009).
Onyema E, International Commercial Arbitration and the Arbitrator’s Contract (1st edn Routledge 2010).
[1] [2020] UKSC 48.
[2] Emilia Onyema, International Commercial Arbitration and the Arbitrator’s Contract (1st edn Routledge 2010) 8.
[3] Ibid.
[4] Ibid.
[5] s29 Arbitration Act 1996.
[6] Carter v Boehm (1766) 3 Burr 1905.
[7] Onyema (n2).
[8] Ronan Feehily, ‘Neutrality, Independence and Impartiality in International Commercial Arbitration: A Fine Balance in the Quest for Arbitral Justice’ (2019) 7 Penn State Journal of Law and International Affairs 88, 88.
[9] s33(1) Arbitration Act 1996.
[10] Chantal-Aimee Doerries, ‘Concerned About the Apparent Bias of an Arbitrator?’ (2007) 70 European Lawyer 56, 56.
[11] [2006] EWHC 1055 (Comm).
[12] Ibid.
[13] s24(1) Arbitration Act 1996.
[14] Porter v Magill [2002] 2 AC 357.
[15] Tony Bingham, ‘Don’t Touch That Dial’ (2006) 36 Building 66, 67.
[16] Norbrook Laboratories v Tank and others [2006] EWHC 1055 (Comm) (Colman J) [145].
