The Supreme Court has today handed down its long-anticipated judgment in the case of Halliburton v Chubb, concerning apparent bias in the context of arbitration. Charles Kimmins QC and Luke Pearce acted in the case on behalf of the LCIA, who were given permission to intervene by way of oral and written submissions.
The case arose out of the explosion of the Deepwater Horizon drilling rig in the Gulf of Mexico in 2010. Halliburton, which provided cementing and well-monitoring services in relation to the well, incurred substantial liabilities as a result of the incident, and sought an indemnity from its insurer, Chubb, in respect of such liabilities. Related claims were also brought against Chubb by Transocean, the owner of the rig, under a separate insurance policy.
In due course Halliburton commenced arbitration against Chubb under its policy. After both sides had each appointed an arbitrator, there was a dispute about who should be appointed as chair of the tribunal. That dispute was ultimately resolved by the commercial court, which appointed Mr Kenneth Rokison QC as the chair. Mr Rokison was one of the arbitrators Chubb had proposed to the Court.
Following his appointment in the Halliburton reference, Mr Rokison accepted an appointment on behalf of Chubb as an arbitrator in a separate arbitration commenced by Transocean. However, when doing so, he did not disclose the fact of this appointment to Halliburton. When Halliburton subsequently discovered this fact, it sought to remove Mr Rokison as an arbitrator on the grounds of apparent bias pursuant to s.24(1)(a) of the Arbitration Act 1996. It contended that by accepting the appointment in the Transocean reference, Mr Rokison had conferred a procedural advantage on Chubb in the Halliburton reference, which was exacerbated by Mr Rokison’s failure to disclose that fact to Halliburton. In all the circumstances, Halliburton contended that the fair minded and informed observer would conclude that these facts gave rise to a real possibility that Mr Rokison was biased (albeit it was not suggested that there was any actual bias).
The Supreme Court, upholding the decisions of both the Court of Appeal and Popplewell J below, held that on the facts of the case there was no apparent bias, and therefore no grounds for removing Mr Rokison as an arbitrator. But in an important judgment, the Supreme Court clarified the law in this area, and confirmed (as submitted by the LCIA) that the acceptance by an arbitrator of appointments in multiple references with overlapping issues but only one common party can, depending on the facts, give rise to an appearance of bias. Further, the Supreme Court confirmed (again as submitted by the LCIA) that an arbitrator will often be under a legal duty to disclose the fact of such appointment to the non-common parties. The judgment also contains an interesting discussion of the interplay between an arbitrator’s duty of disclosure and the competing duty of confidentiality.
Charles Kimmins QC and Luke Pearce appeared on behalf of the LCIA, instructed by Freshfields Bruckhaus Deringer LLP.