UK court rules in favour of Chubb in case against Halliburton

The UK Supreme Court has ruled in favour of insurer Chubb in the dispute with Halliburton Company in relation to alleged apparent bias of an arbitrator in multiple appointments.

Clyde & Co represented Chubb Bermuda in the case, led by chairman Michael Payton, partner Emma Ager and senior associate Rosehana Amin.

Chubb had opposed a challenge brought by Halliburton seeking to remove a third arbitrator, Kenneth Rokison QC, on the basis of an alleged appearance of impartiality. Rokison had accepted appointments in multiple related references, though both sides accepted the failure to disclose was innocent and inadvertent.

Clyde & Co argued that it is common, given the custom and practices of arbitration in the insurance industry, for both insurers and, in particular, insureds alike to appoint the same arbitrator across the insurance tower.

The Supreme Court unanimously dismissed Halliburton's appeal.

The arbitration between Halliburton and Chubb commenced in January 2015 and concerned a claim under a liability insurance policy arising from the explosion and fire on the Deepwater Horizon oil rig in the Gulf of Mexico on 20 April 2010.

The decision clarifies the issue of whether the conduct of an arbitrator who accepts appointments in multiple references concerning the same or overlapping subject matter gives rise to the appearance of bias. It also determines whether disclosure to the parties is required in those circumstances.

The Court ruled that the fair-minded and informed observer would not infer from Rokison's failure to disclose his appointments in subsequent related references that there was a real possibility of apparent unconscious bias. It highlighted the specific circumstances of the case to support its judgement, as well as the fact that there was a limited overlap between the references.

The Court did establish that arbitrators have a legal duty to disclose facts or circumstances that might reasonably give rise to the appearance of bias, unless otherwise agreed between the parties.

Ager said: “The Court has preserved the integrity of English arbitration and the twin pillars of confidentiality and fairness with a thoughtful analysis of the issues that maintains the central importance of impartiality in English arbitrations, whilst remaining alive to the practical issues arising in particular circumstances and on particular facts.”

She added: "The Court also makes clear that the complaint made in this particular case, regarding multiple appointments, does not, of itself, give rise to a need to disclose in certain markets, with the Court making specific reference to GAFTA, LMAA and reinsurance arbitrations in this regard. The Supreme Court has acted to ensure that England is not out of step with international norms in this area.”

However, Neil Newing, counsel and specialist international arbitration lawyer at Signature Litigation, warned the ruling may damage the reputation of the British legal system.

“The previous decisions in this case were perceived as being made to protect those members of the English Bar who have made a living from accepting the type of repeat appointments at issue in this case, in niche areas such as shipping and insurance,” he said. “The Supreme Court's decision is, unfortunately, unlikely to change that perception.”