Halliburton Company v Chubb Bermuda Insurance Ltd [2020] UKSC 48

Halliburton sought removal of an arbitrator, Mr Rokison QC, who accepted multiple appointments in related Deepwater Horizon arbitrations involving Chubb without disclosure to Halliburton. The Supreme Court held there is a legal duty of disclosure but dismissed the appeal on the facts.

Facts

Halliburton held a Bermuda Form liability policy with Chubb arising from the 2010 Deepwater Horizon disaster. After Chubb refused to indemnify Halliburton’s settlement of claims, Halliburton invoked arbitration. Following a contested High Court hearing, Flaux J appointed Mr Kenneth Rokison QC as chair of the tribunal in June 2015 (reference 1), despite Halliburton’s objection. Mr Rokison had disclosed prior and existing Chubb appointments.

In December 2015, Mr Rokison accepted appointment by Chubb as arbitrator in a related Transocean/Chubb arbitration (reference 2) arising from the same incident. In August 2016 he accepted a further joint appointment in an overlapping Transocean arbitration against a different insurer (reference 3). He did not disclose either appointment to Halliburton. Halliburton discovered the appointments in November 2016 and sought Mr Rokison’s removal under section 24(1)(a) of the Arbitration Act 1996.

Popplewell J dismissed the application. The Court of Appeal dismissed the appeal, holding that Mr Rokison ought to have made disclosure but that the fair-minded and informed observer would not conclude there was a real possibility of bias.

Issues

The Supreme Court identified two principal issues:

• Whether and to what extent an arbitrator may accept appointments in multiple references concerning the same or overlapping subject matter with only one common party without giving rise to an appearance of bias.
• Whether and to what extent the arbitrator may do so without disclosure.

Subsidiary issues concerned the interaction between disclosure obligations and duties of privacy and confidentiality, whether a failure to disclose can itself demonstrate apparent bias, and the relevant dates for assessing disclosure obligations and the possibility of bias.

Arguments

Halliburton

Halliburton argued apparent unconscious bias based on: (i) Mr Rokison’s paid appointment by Chubb in reference 2 during reference 1; (ii) Chubb’s unfair informational advantage as a common party; (iii) Chubb’s ability to communicate with the arbitrator unilaterally via reference 2; (iv) the failure to disclose, depriving Halliburton of the opportunity to object; and (v) insufficient regard for Halliburton’s procedural fairness. The interveners ICC, LCIA and CIArb supported a stricter approach consistent with international norms.

Chubb

Chubb defended the judgments below but argued that disclosure of circumstances that might give rise to a possibility of bias was good practice rather than a legal obligation. The degree of overlap was limited, the failure to disclose was inadvertent, and Mr Rokison’s explanation was accepted as honest.

Interveners

GAFTA and LMAA explained that in commodities and maritime arbitration, multiple overlapping appointments are customary and do not require disclosure. ICC, LCIA and CIArb supported the recognition of a legal duty of disclosure.

Judgment

Lord Hodge (with whom Lord Reed, Lady Black and Lord Lloyd-Jones agreed; Lady Arden agreeing with qualifications) dismissed the appeal.

Duty of impartiality

The objective test in Porter v Magill applies equally to arbitrators and judges. However, the court must take account of the distinctive features of arbitration: its private and confidential nature, limited rights of appeal, the financial incentives of arbitrators, and differing international understandings of the party-appointed arbitrator’s role. In English law all arbitrators, including party-appointed arbitrators, must meet the same high standards of impartiality under section 33 of the 1996 Act.

Legal duty of disclosure

The Supreme Court confirmed that there is a legal duty of disclosure in English law, encompassed within the statutory duties in section 33 of the 1996 Act and forming an implied term of the arbitrator’s contract. An arbitrator must disclose facts and circumstances which would or might reasonably give rise to justifiable doubts as to impartiality — that is, which might reasonably lead the fair-minded and informed observer to conclude there was a real possibility of bias.

Relationship with confidentiality

The duty of disclosure does not override the arbitrator’s duty of privacy and confidentiality. However, consent to limited, high-level disclosure can often be inferred from the arbitration agreement in light of custom and practice. In Bermuda Form arbitrations, an arbitrator may disclose the existence of a related arbitration, the identity of the common party, the nature of the appointment, and that the reference arises from the same incident, without express consent.

Application to the facts

Mr Rokison was under a legal duty to disclose his appointment in reference 2 to Halliburton because, at that time, the existence of potentially overlapping arbitrations with only one common party might reasonably have given rise to a real possibility of bias. His failure to do so was a breach of that legal duty.

However, the question of apparent bias must be assessed by reference to the facts and circumstances known at the date of the hearing to remove the arbitrator. By the date of the January 2017 hearing: (i) there was a lack of clarity in English law about the duty to disclose; (ii) the time sequence explained the oversight; (iii) the preliminary issues in references 2 and 3 were likely to (and did) dispose of those references without overlap with reference 1; (iv) there was no secret financial benefit; and (v) Mr Rokison’s response to the challenge was measured and courteous, showing no animus. The fair-minded and informed observer would not conclude that there was a real possibility of bias.

The Court also concluded that there were no good grounds for maintaining anonymity of the arbitrators, consistent with the principle of open justice.

Implications

Legal principles

The judgment establishes or clarifies several principles in English arbitration law:

• Arbitrators owe a legal (not merely ethical) duty of disclosure of facts and circumstances which would or might reasonably give rise to justifiable doubts as to impartiality.
• All arbitrators, including party-appointed arbitrators, are held to the same standard of impartiality under section 33 of the 1996 Act.
• Acceptance of multiple overlapping appointments with one common party can, depending on custom and practice, give rise to an appearance of bias and trigger disclosure.
• In Bermuda Form arbitration, such appointments must be disclosed absent contrary agreement.
• The duty of disclosure does not override confidentiality, but limited high-level disclosure may be made on the basis of inferred consent.
• Whether disclosure was required is assessed as at the date the duty arose; whether there is a real possibility of bias is assessed at the date of the removal hearing.
• A failure to disclose is itself a factor relevant to the assessment of apparent bias.

Practical significance

The decision is of major importance for arbitrators, parties and arbitral institutions operating in or connected to London-seated arbitration. It affirms London’s integrity as a leading seat for international arbitration by aligning English law more closely with international norms while preserving party autonomy and the distinctive customs of different arbitral fields (such as GAFTA, LMAA, and reinsurance).

Limits and qualifications

The scope of inferred consent to disclosure was addressed specifically in the context of Bermuda Form arbitration; Lady Arden doubted that the reasoning should be confined so narrowly. The Court left open whether arbitrators are under a duty to make reasonable enquiries to identify conflicts. The recognition of a legal duty does not necessarily give rise to damages claims; section 29 of the 1996 Act protects arbitrators acting in good faith. Custom and practice in particular fields of arbitration may negate the need for disclosure.

The case is significant because it balances the competing demands of transparency, party autonomy, arbitral efficiency, and confidentiality, providing practitioners with a principled framework for assessing conflicts and disclosure obligations in international arbitration.

Verdict: The Supreme Court unanimously dismissed Halliburton’s appeal. Although the arbitrator was under a legal duty to disclose his appointments in the related arbitrations and breached that duty, the fair-minded and informed observer, assessing the matter at the date of the removal hearing, would not have concluded that there was a real possibility of bias.

Source: Halliburton Company v Chubb Bermuda Insurance Ltd [2020] UKSC 48