ReSolution Issue 26, December 2020 | Page 35

On 27 November 2020, the UK Supreme Court handed down its judgment in the landmark case of Halliburton Company v Chubb Bermuda Insurance Ltd [2020] UKSC 48. The decision has provided important clarification of the nature and scope of an arbitrator’s duty to make disclosures of facts and circumstances that may give rise to doubts about their independence and impartiality. It also addresses how this duty interrelates with the duty of privacy and confidentiality, and the circumstances in which an arbitrator’s failure to make a disclosure could give rise to an appearance of bias.

The Supreme Court reiterated the importance of the duty of impartiality as a core principle of arbitration law, which applies equally to party-appointed and independently-appointed arbitrators, and the need to apply an objective observer test, in determining whether circumstances exist that create the appearance of bias.

Background

Halliburton Company (Halliburton) provided cementing and oil well monitoring services to BP Exploration and Production Inc (BP) in the Gulf of Mexico. Halliburton entered into a liability policy with Chubb Bermuda Insurance Ltd (Chubb). Transocean Ltd (Transocean) also provided services to BP. Those services overlapped with those provided by Halliburton. Transocean was also insured with Chubb.

In 2010, the Deepwater Horizon oil spill occurred in the Gulf of Mexico, resulting in civil claims against BP, Halliburton and Transocean.

After a trial in the United States, the judgment apportioned blame between the parties and Halliburton concluded a settlement to agree the amount of damages. When Halliburton sought to claim a proportion of this settlement under its insurance policy, Chubb declined to pay Halliburton’s claim. As a result, an arbitration was commenced. Both Halliburton and Chubb selected their own arbitrator but were unable to agree the Chairman of the arbitration, resulting in an application to the High Court in which Chubb’s first-choice candidate, Mr Rokison QC, was selected.

In 2016, Halliburton discovered that following Mr Rokison’s appointment and without Halliburton’s knowledge, Mr Rokison had accepted appointment as an arbitrator in two other references, both of which arose out of the same Deepwater Horizon incident and involved Transocean.

Halliburton applied to the High Court to remove Mr Rokison as arbitrator on the grounds of perceived bias. That application was refused on the basis that there were no grounds for removing Mr Rokison under section 24(1)(a) of the Arbitration Act 1996.

The Court of Appeal dismissed Halliburton’s appeal as on the facts of the case, there was no real possibility that the arbitrator was biased when viewed from the perspective of the fair minded and informed observer. The Court of Appeal found that the mere fact that an arbitrator accepts multiple appointments in overlapping subject matter with only one common party does not, of itself, give rise to an appearance of bias. The court also remarked that in keeping with best practice in international arbitration and as a matter of law, disclosure of the appointments should have been made. Notwithstanding that, the court concluded that non-disclosure alone would not have led the fair-minded and informed observer to conclude that there was a real possibility of bias.

Arbitrators, independence and impartiality – important guidance from the UK Supreme Court

By Melissa Perkin

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

www.nzdrc.co.nz 34

ReSolution | Dec 2020