Summary from the Halliburton vs. Chubb case, regarding Arbitration Biasness

Summary from the Halliburton vs. Chubb case, regarding Arbitration Biasness

Arbitration works on the same principles as a normal judge: i.e. it must be fair and impartial. On the other hand, it may differ from the normal court proceedings as the concerned parties are able to select a prospective arbitrator in the event of a dispute. However, in the event that the same arbitrator is appointed to mediate in several related cases by the same party, it may raise the issue of doubts regarding the impartiality of the arbitrator.

British court rulings (including Thailand) are mostly based on an open public ruling. However, on the other hand, arbitral rulings are often not made public, and may raise doubts about the lack of transparency. It is, therefore, the arbitrator’s responsibility to disclose information that could lead to injustice.

The Supreme Court of the United Kingdom has given its ruling in the Halliburton vs. Chubb case, which concerns the arbitrator and its duties to disclose information relating to the appointment of an arbitrator. The court maintains that the arbitrator is bounded legally to disclose circumstances that would or might cast doubt on the impartiality and justice provided by the arbitrator, which in this case involves the acceptance of the multiple appointment of the same arbitrator.

Background

The case relates to an arbitration between Halliburton and Chubb Bermuda Insurance Company, over claims arising from the Deepwater Horizon oil rig incident in the Gulf of Mexico, which exploded in 2010 and sparked a massive ocean oil spill ever recorded in history. The rig is owned by Transocean Holdings LLC, operated by BP, and services provided by Halliburton.

After the incident, Halliburton attempted to claim the excess liability insurance policy from Chubb. However, Chubb denied the claim and in January 2015, Halliburton initiated an arbitration hearing against Chubb. The arbitration was governed by the Bermuda Form policy, which is under the jurisdiction of the laws of New York law and is intended for adhoc arbitration in London. Both Halliburton and Chubb each appointed their own arbitrator, but both parties could not agree on the issue of a third arbitrator who would serve as chairman. The British court later appointed Mr. Kenneth Rokison QC in June 2015, however Mr. Rokison was also nominated by Chubb.

In December 2015, Mr. Kenneth Rokison was re-appointed twice, the first appointment was made by Chubb to arbitrate in the case that was initiated by Transocean for the case of Deepwater Horizon as well. Later, he was also appointed in a case that was connected to Deepwater Horizon as a Transocean-related appointment to another insurer. Mr.Kenneth Rokison did not disclose about these appointments to Halliburton.

Several months later, when Halliburton became aware of the appointment, they made a request to the High Court pursuant to Section 24 (1) of the Arbitration Act 1996 to withdraw Mr. Kenneth Rokison on the grounds of his impartiality. Halliburton claimed that the appointment of Mr. Kenneth Rokison, which is referenced and related to Transocean, and the fact that Mr. Kenneth Rokison failed to disclose such facts was biased due to (a) undisclosed benefits that he might be receiving from Chubb in the form of compensation he will be receiving from the appointment; and (b) information he that he will be receiving from the Transocean references, which are relevant to the Halliburton dispute and are made available to Chubb. However, Halliburton’s request was rejected by both the High Court and Appeals Court, which prompted Halliburton to forward it to the Supreme Court

Conclusion from the Supreme Court

In this case, the court ruled that Mr. Kenneth Rokison had a legal obligation to disclose facts to Halliburton with regards to the appointment of an arbitrator in connection with the Chubb and Transocean case, an action that Mr. Kenneth Rokison had failed to do so. This maybe due to the fact that during Mr. Kenneth Rokison’s appointment as an arbitrator in the case, the timing might have also overlapped with Chubb’s arbitration in other cases and be a cause biasness.

Additionally, the verdict also helped clarified several related issues, which includes issues regarding British law, in which arbitrators are duty-bound to maintain impartiality and justice regardless of the parties that made the appointment. The Supreme Court considers the circumstances in which the arbitrator was appointed as a factual and relevant arbitral body. In addition, there was a very similar situation with one of the concerned parties (in the case where Mr. Kenneth Rokison was appointed by Chubb). The court reaffirmed that the arbitrator had a legal duty to disclose information about the arbitrator’s appointment in the event that such an appointment would raise doubts and the possibility of prejudice and injustice.

However, it does not imply that the failure to disclose such facts can be construed that it is biased, but it is a fact and circumstances that must also be considered in order to assess whether or not biasness was exercised in this case.

Source:

• https://www.mediate.com/articles/uksupremecourthalliburtonvchubb.cfm
• https://www.shearman.com/perspectives/2020/12/uk-supreme-court-rules-on-arbitrator-disclosure-and-apparent-bias
• https://www.whitecase.com/publications/alert/uk-supreme-court-clarifies-arbitrators-duty-disclosure-when-accepting-multiple
• https://www.sidley.com/en/insights/publications/2020/12/bias-by-arbitrators-the-uk-supreme-court-clarifies-the-law
• https://corrs.com.au/insights/uk-supreme-court-decision-in-halliburton-v-chubb-clarity-or-missed-opportunity
• https://uk.practicallaw.thomsonreuters.com/Cosi/SignOn?redirectId=rt_0e47e549-86a9-46b7-aa17-8e0a574bdfe3

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