case in brief: W Limited v M SDN BHD [2016] EWHC 422 (Comm)
A recent case concerning the relationship between English Law and the International Bar Association Guidelines on Conflicts of Interest in International Arbitration (IBA Guidelines). The claimant sought to challenge two awards for “serious irregularity” under s68(2) of the Arbitration Act 1996. The challenge was founded on an argument of apparent bias on the part of the arbitrator due to an alleged conflict of interest. The claimant also relied on the IBA Guidelines to substantiate its position.
Background
A dispute arose between the parties, culminating in the commencement of an LCIA arbitration in 2012. Mr David Haigh QC, a Canadian lawyer, was appointed sole arbitrator (the Arbitrator). The Arbitrator made two awards, both of which were challenged under s68 of the Arbitration Act 1996 on the grounds of “serious irregularity”, with the claimant alleging apparent bias based on an alleged conflict of interest.
Although the governing law of the arbitration was English law, and therefore, the relevant test for apparent bias was whether a fair minded observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased,1 the case is of wider importance as the claimant also relied on paragraph 1.4 of the Non-Waivable Red List in the IBA Guidelines, which reads:
The arbitrator or his or her firm regularly advises the party, or an affiliate of the party, and the arbitrator or his or her firm derives significant financial income therefrom.
The Arbitrator was a partner in a Canadian Law firm. The law firm did work for a company (Q) which was bought by a parent company (P). The defendant was a subsidiary of company P. There was no question of actual bias. The Arbitrator conducted conflict checks and provided disclosure on other immaterial matters, however the conflict checks did not alert the Arbitrator to the fact that Q was a client of the firm.
On consenting to appointment as arbitrator, the Arbitrator also made a statement of independence such that he worked almost exclusively as an international arbitrator, was not involved in any partnership matters or meetings, and only used the law firm for administrative and secretarial services.
Decision
On applying the common law test for apparent bias: whether a fair minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased, Justice Knowles determined without hesitation that there was no apparent bias on the facts.