ENGLISH COURT ALLOWS SECTION 69 APPEAL ON A POINT OF LAW, BLOCKING PARTY’S ATTEMPT TO REVISIT PERMISSION TO APPEAL ONCE GRANTED

In the recent decision of CVLC Three Carrier Corp and another company v Arab Maritime Petroleum Transport Co [2021] EWHC 551 (Comm) (available here), the English High Court allowed an appeal on a point of law under s69 of the Arbitration Act 1996 (the “Act”).

The Court provided guidance on two significant issues: (i) whether the permission to appeal an award under s69, can be revisited after it has been granted and, (ii) how the Court should identify the relevant question of law when granting permission under s69.

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HSF CONTRIBUTES UK ARBITRATION CHAPTER TO LEXOLOGY’S GETTING THE DEAL THROUGH

Partner Craig Tevendale, Professional Support Consultant Vanessa Naish and Professional Support Lawyer Rebecca Warder have jointly authored the UK Arbitration chapter to Lexology’s Getting the Deal Through. The Chapter contains expert local insight into the jurisdiction’s arbitration law and institutions, providing essential “need to know” answers to the arbitration issues and questions facing corporations and counsel.

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UPCOMING WEBINAR: MEDIATION IN ARBITRATION

On Thursday 18 March 2021 at 10.45 am (GMT) speakers from Herbert Smith Freehills will join the panel for a live London Chamber of Arbitration and Mediation (LCAM) webinar on Mediation in Arbitration.

The recent Mediation in Arbitration Survey conducted jointly by Herbert Smith Freehills and LCAM highlighted the impressive settlement rates for mediation of arbitration cases. The survey also showed that high value arbitrations are being resolved via mediation and covered the stage of the proceedings at which such mediations typically occur and the extent to which they feature in mediator caseload.

This webinar will look at these and other insights from the survey and will also discuss the current take-up of mediation in international arbitration and how that could potentially be increased.

Speakers:

  • Craig Tevendale, Partner, International Arbitration, London
  • Chris Parker, Partner, International Arbitration, London
  • Rebecca Warder,  Professional Support Lawyer, International Arbitration, London
  • Kathryn Britten, AlixPartners
  • Jonathan Wood, RPC

To register for this event please click here.

Further details about the responses to the Mediation in Arbitration Survey can be accessed here.

For more information, please contact Craig Tevendale, Partner, Chris Parker, Partner, Rebecca Warder, Professional Support Lawyer, or your usual Herbert Smith Freehills contact.

Craig Tevendale
Craig Tevendale
Partner
+44 20 7466 2445
Chris Parker
Chris Parker
Partner
+44 20 7466 2767
Rebecca Warder
Rebecca Warder
Professional Support Lawyer
+44 20 7466 3418

MEDIATION IN ARBITRATION PODCAST: THE PROFILE OF MEDIATION IN ARBITRATION

We are pleased to share this Mediation in Arbitration podcast, in which Craig Tevendale, Chris Parker and Rebecca Warder discuss the results of the Herbert Smith Freehills and London Chamber of Arbitration and Mediation (LCAM) Mediation in Arbitration Survey. The podcast also covers potential barriers to mediation in international arbitration, how these might be overcome and the future of mediation in arbitration.

The snapshot survey delved into trends in mediation in arbitration, aiming to find out more about the current take-up of mediation in international arbitration. Mediators were asked to fill in the survey in relation to mediations undertaken in 2019 and 2020, answering four very straight-forward questions on:

  • the stage at which these mediations occur
  • their claim values
  • the proportion of mediator caseload they made up; and
  • how often mediation in arbitration leads to settlement

Over 50 mediators completed the online survey. Despite the majority of the time period covered by the survey falling into the pre-Covid-19-pandemic era, mediations in the later months of 2020 also fell into the survey window and in that timeframe patterns of claims, and also to some extent perhaps approaches to settlement, will have been impacted by the Covid-19 pandemic. While it will take some time to tease out the impact of Covid-19 on mediation patterns, the fact that the survey covered 2020 as well as 2019 means it provides a reasonably current picture.

The survey results highlighted the following key trends:

  • The timing of mediation: the survey showed fairly overwhelmingly that mediations in arbitration usually happen at the pre-document production stage. In fact, only 6% of the mediators who had experience of mediation in arbitration had not done a mediation pre-document production in 2019 or 2020.
  • The value of disputes mediated: high value arbitration claims are being resolved in mediation. The majority of mediators we surveyed who reported having some experience of mediation in arbitration said that they had carried out mediations in cases worth over £10M.
  • Mediator caseload: a quarter of the mediators had quite a significant mediation in arbitration practice, with around a third of their caseload made up of those cases. 10% of our survey sample had a lot of these cases and told us that the majority of their mediations were arbitration cases.
  • Settlement rates: the success rates which were reported by the majority of the mediators were pretty impressive. Just under half of the mediators who said they had mediated arbitration cases had settled at least 70% of these cases at the mediation across 2019 and 2020. Most of these mediators were reporting a success rate in the 80% plus bracket.

The podcast can be listened to on SoundCloud, Spotify and iTunes.

The results of the survey have been published here if you would like to read in more detail.

For further information, please contact Craig Tevendale, Partner, Chris Parker, Partner, Rebecca Warder, Professional Support Lawyer or your usual Herbert Smith contact.

Craig Tevendale
Craig Tevendale
Partner
+44 20 7466 2445
Chris Parker
Chris Parker
Partner
+44 20 7466 2767
Rebecca Warder
Rebecca Warder
Professional Support Lawyer
+44 20 7466 3418

UK Supreme Court judgment in Halliburton v Chubb clarifies English law on arbitrator apparent bias

The UK Supreme Court has handed down its judgment in Halliburton Company (Appellant) v Chubb Bermuda Insurance Ltd [2020] UKSC 48, which is the most significant decision on English arbitration law in nearly a decade.

The Halliburton judgment is now the leading English law case on arbitrator conflicts. Importantly, the decision has clarified how apparent bias will be assessed by the English courts, refining the test in the context of arbitration. While the arbitrator challenge was not successful in this case, the judgment has re-emphasised the importance of arbitrator impartiality in English-seated arbitration.      

The case was notable for a significant number of arbitral institutions and organisations being given permission by the Court to intervene, with submissions made by the LCIA, ICC, CIArb, LMAA and GAFTA.

Background 

Claims arising out of the Deepwater Horizon incident were made against Halliburton, which had provided offshore services in relation to the project. Halliburton then sought to claim in turn under its excess liability insurance policy with Chubb. Chubb rejected the claim and in January 2015 Halliburton commenced arbitration against Chubb. The claim was brought under the Bermuda Form policy in question, which was governed by New York law and provided for London-seated ad hoc arbitration.

The parties were unable to agree on the selection of the presiding arbitrator and the English High Court appointed Kenneth Rokison QC in June 2015. Mr Rokison had been proposed by Chubb, but Halliburton had opposed his appointment on the grounds that Mr Rokison was an English lawyer, whereas the policy was governed by New York law.

Before he was appointed in June 2015, Mr Rokison disclosed that he had previously been an arbitrator in arbitrations involving Chubb, including some appointments on behalf of Chubb. The judgment does not set out the number of appointments involved, or the timescales. He also disclosed that he was acting as arbitrator in relation to two current references involving Chubb.

After Mr Rokison took up his appointment in the arbitration between Halliburton and Chubb, he accepted two appointments in additional arbitrations relating to the Deepwater Horizon incident: (a) in December 2015, he was appointed by Chubb in an arbitration relating to a claim under the same excess liability cover, which Chubb had sold to another insured party, Transocean; and (b) in August 2016, he was appointed by Transocean, in an arbitration relating to a claim Transocean was bringing against a different insurer that related to the same layer of insurance. Mr Rokison did not disclose the December 2015 and August 2016 appointments to Halliburton, but Halliburton became aware of them in November 2016.

Halliburton then asked Mr Rokison to resign, but he stated that he did not feel he could do so, as he had been appointed by the court. Mr Rokison noted that the issues under consideration were neither the same nor similar. He stated that he had been independent and impartial throughout and that this would continue to be the case. Halliburton then made an application to the English court for his removal under s24 of the Arbitration Act 1996. The application was unsuccessful and Halliburton then appealed to the Court of Appeal, which also rejected the challenge. Halliburton appealed to the Supreme Court.

The Supreme Court appeal

The two main issues before the Supreme Court were:

  • whether and to what extent an arbitrator is entitled to accept appointments in multiple arbitrations relating to the same or overlapping matters and where there is only one common party, without this resulting in an appearance of bias; and
  • whether and to what extent the arbitrator could accept multiple appointments in this way without providing disclosure.

Halliburton took the position that there was apparent unconscious bias on the part of Mr Rokison. Halliburton’s case was based on the suggestion that the situation “gave Chubb the unfair advantage of being a common party to two related arbitrations with a joint arbitrator while Halliburton was ignorant of the proceedings” in the later arbitrations and “thus unaware whether and to what extent he would be influenced in reference 1 by the arguments and evidence in reference 2”. Halliburton contended that Chubb would be able to communicate with the arbitrator, for example via submissions and evidence submitted in the later proceedings, on questions that might be relevant to the arbitration between Halliburton and Chubb. Haliburton took the position that apparent bias was also made out by Mr Rokison’s failure to disclose his later appointments to Halliburton. There was also a suggestion that Mr Rokison “did not pay proper regard to Halliburton’s interest in the fairness of the procedure”.

Supreme Court decision

The Supreme Court emphasised the importance of impartiality in arbitration, highlighting that impartiality had always been a “cardinal duty” for arbitrators. Given that there was no allegation that the arbitrator was actually biased, the court was only concerned with whether there was an appearance of bias. It was well established that the correct legal test was “whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased.

The Supreme Court considered how the hypothetical observer is taken to be “informed”. This meant, quoting an earlier case, that “before she takes a balanced approach to any information she is given, she will take the trouble to inform herself on all matters that are relevant…She is fair-minded, so she will appreciate that the context forms an important part of the material which she must consider before passing judgment.” When the apparent bias test is applied to arbitrators, the distinctive features of arbitration must therefore be taken into account. This includes a consideration of the private nature of arbitration, and the very limited rights of appeal. The Supreme Court also referred to the appointment process for arbitrators, noting the potential for party nomination and that there may be a “financial interest in obtaining further appointments as arbitrator”. It also observed that arbitrators may be non-lawyers with only limited experience of arbitration and may be from a variety of jurisdictions and legal traditions, with a range of views on arbitrator ethics.

The Supreme Court emphasised that, due to the private nature of arbitration, where an arbitrator is appointed in relation to multiple overlapping references the non-common party cannot discover what evidence or submissions have been put before the tribunal, or the arbitrator’s response. The Court also had regard to the range of understandings in relation to the role and duties of party-appointed arbitrators, recognising that some parties may expect party-nominated arbitrators to be pre-disposed towards their nominating parties, while the chair has a particular role to play in ensuring the tribunal acts fairly. While taking these differing perspectives into account, the duty of impartiality applied in the same way to every member of the tribunal and “the party-appointed arbitrator in English law is expected to come up to precisely the same high standards of fairness and impartiality as the person chairing the tribunal”.

While the professional reputation and experience of an individual arbitrator was a relevant consideration in assessing whether there was apparent bias, the Court noted this was likely to be a factor accorded only limited weight.

Duty of disclosure

The Supreme Court confirmed that an arbitrator is under a duty to disclose facts and circumstances which would or might reasonably give rise to the appearance of bias. The Supreme Court held that compliance with this duty should be assessed with regard to the circumstances at the time the disclosure fell to be made.

The Court noted that the LCIA, ICC and CIArb, as organisations having “an interest in the integrity and reputation of English-seated arbitration”, had all argued in favour of the recognition of a legal duty of disclosure. The Court stated that this legal duty furthered transparency in arbitration and was in alignment with the best practice set out in the IBA Guidelines and the approach taken by arbitration institutions such as the LCIA and ICC. The Court said that the IBA Guidelines “assist the court in identifying what is an unacceptable conflict of interest and what matters may require disclosure” but emphasised that they are non-binding.

The Supreme Court stated that an arbitrator may have to disclose acceptance of appointments in multiple overlapping references with only one common party, depending upon the customs and practice of the type of arbitration in question. The judgment explores in some detail the need to consider the duty of confidentiality in determining what information about potential conflicts may be disclosed.

The Court also explored the relationship between the duty to disclose and the duty of impartiality and concluded that failure to disclose will be one factor which the fair-minded and informed observer will take into account in considering whether there was a real possibility of bias. However, the Court held that questions of disclosure and apparent bias fell to be assessed at different times. Whereas the question of whether there was a failure to disclose was analysed as at the time the alleged duty of disclosure arose, the question of whether the relevant circumstances in any case amount to apparent bias must be assessed at the time of the hearing of the challenge to the arbitrator.

The Supreme Court held that failure to disclose overlapping references is capable of demonstrating “a lack of regard to the interests of the non-common party” and may in certain circumstances therefore constitute apparent bias.

Rejection of challenge

The Court held that, in the context of the Bermuda Form arbitration between Halliburton and Chubb, the Arbitrator was required to disclose the multiple appointments in question. This was because there was no established custom or practice in Bermuda Form arbitration of allowing an arbitrator to take on multiple and overlapping appointments without disclosure. Mr Rokison was therefore under a legal duty to disclose his appointment in the subsequent overlapping proceedings because, at the time of appointment in those arbitrations, those appointments might reasonably give rise to the real possibility of bias.

However, the Supreme Court concluded that the fair-minded and informed observer would not determine that there was a real possibility of bias. This was because:

  1. At the time the disclosure fell to be made there had been uncertainty under English law about the existence and scope of an arbitrator’s duty of disclosure;
  2. The time sequence of the arbitrations may have been an explanation for the non-disclosure to Halliburton;
  3. Mr Rokison had explained that both the subsequent overlapping arbitrations would be resolved by way of preliminary issue, which meant there would in fact be no overlapping evidence or submissions. Mr Rokison had offered to resign from the subsequent arbitrations if that was not the case and it was therefore unlikely that Chubb would benefit as a result of the overlapping arbitrations;
  4. Mr Rokison had not received any secret financial benefit; and
  5. Mr Rokison’s response to the challenge had been “courteous, temperate and fair…and there is no evidence that he bore any animus towards Halliburton as a result”.

Comment

This judgment has emphasised the importance of arbitrator impartiality and has both clarified and refined the law on apparent bias in the context of arbitration. The case is of real significance for the wider international arbitration community, and should allay potential concerns as to London’s status as a leading seat of arbitration.

The decision is the latest case to demonstrate the robust approach of the English courts to arbitrator challenges, in line with the courts’ non-interventionist and pro-arbitration stance. In this case the Supreme Court noted that challenges of this kind have “rarely succeeded” and also noted that the objective observer at the heart of the apparent bias test will be “alive to the possibility of opportunistic or tactical challenges”.

For more information, please contact Craig Tevendale, Head of International Arbitration London, Chris Parker, Partner, Vanessa Naish, Professional Support Consultant, Rebecca Warder, Professional Support Lawyer, or your usual Herbert Smith Freehills contact.

Craig Tevendale
Craig Tevendale
Head of International Arbitration London
+44 20 7466 2445
Chris Parker
Chris Parker
Partner
+44 20 7466 2767
Vanessa Naish
Vanessa Naish
Professional Support Consultant
+44 20 7466 2112
Rebecca Warder
Rebecca Warder
Professional Support Lawyer
+44 20 7466 3418

PODCAST: ICC RULES 2021 – WHAT YOU NEED TO KNOW

Following the release of the ICC’s new 2021 Arbitration Rules in draft on 9 October 2020, Craig Tevendale (Partner and UK Head of International Arbitration), Thierry Tomasi (Partner) and Vanessa Naish (Professional Support Consultant) have recorded a podcast discussing the top 5 changes to be aware of in the new Rules, being:

  • Amendments to the consolidation provision, and to the joinder provision to allow for joinder after the confirmation or appointment of a tribunal in certain limited circumstances;
  • Provision for virtual hearings and a shift away from paper filings;
  • Allowing for the Tribunal to limit changes to party representation where it causes conflicts of interest;
  • A requirement that parties disclose certain third party funding agreements; and
  • ICC Court discretion in “exceptional circumstances” to deviate from party agreement on the method of constitution of the arbitral tribunal and appoint the entire tribunal to avoid unequal treatment.

The podcast can be listened to via SoundCloud, Spotify and iTunes.

Once the 2021 Rules have been confirmed as “final”, Herbert Smith Freehills’ Global Arbitration Team will produce a updated Step by Step Guide to Arbitration under the ICC Rules and an interactive PDF table comparing the Rules of Key Arbitral Institutions and the UNCITRAL Rules. To receive an electronic copy of these documents in due course, please contact arbitration.info@hsf.com and we will be in touch in December.

For more information, please contact Craig Tevendale, Partner, Thierry Tomasi, Partner, Vanessa Naish, Professional Support Consultant, or your usual Herbert Smith Freehills contact.

Craig Tevendale
Craig Tevendale
Head of International Arbitration, London
+44 20 7466 2445

Thierry Tomasi
Thierry Tomasi
Partner
+33 1 53 57 70 92

Vanessa Naish
Vanessa Naish
Professional Support Consultant
+44 20 7466 2112