Multiple Arbitral Appointments: Chubb v Halliburton (Supreme Court)

8 December, 2020

On Friday 27 November 2020, the Supreme Court handed down judgment in Halliburton Company v Chubb Bermuda Insurance Ltd [2020] UKSC 48.

The case concerned a Bermuda Form insurance arbitration, between Halliburton and Chubb, arising out of the damage caused by the explosion and fire on the Deepwater Horizon drilling rig in the Gulf of Mexico in 2010.

The Deepwater Horizon incident gave rise to several further arbitrations, including two references in which the chairman of the arbitration between Halliburton and Chubb also accepted appointments. These further appointments were not disclosed to Halliburton, and, upon learning of them, it applied to the court under section 24(1)(a) of the Arbitration Act 1996 for an order that the chairman be removed.

The application was refused at both first instance and in the Court of Appeal – the courts below concluding that an objective observer would not consider that there was a real possibility that the chairman was biased.

The Supreme Court unanimously dismissed the appeal and held that:

  1. Where an arbitrator accepts appointments in multiple references concerning the same or overlapping subject matter with only one common party, this may, depending on the relevant custom and practice (which varies depending upon the market), give rise to an appearance of bias.
  2. Unless the parties to the arbitration otherwise agree, arbitrators have a legal duty to make disclosure of facts and circumstances which would, or might reasonably, give rise to the appearance of bias. Where an arbitrator has accepted appointments in multiple references concerning the same or overlapping subject matter with only one common party, that is a fact which may have to be disclosed, depending upon the customs and practice in the relevant field.
  3. As a matter of English law, in the context of Bermuda form arbitrations and in the absence of an agreement to the contrary between the parties, multiple appointments should be disclosed.
  4. In the circumstances, however, a fair-minded and informed observer would not have inferred that there was a real possibility of unconscious bias on the chairman’s part from his failure to disclose the further appointments. The failure was acknowledged to be attributable to accidental oversight. Since it was likely the other references would be resolved by a preliminary issue (as they indeed were), and since the chairman had stated that in the event the references were not resolved by a preliminary issue he would consider resigning from them, there was no likelihood that Chubb would gain any perceived advantage by reason of the overlapping references. There was also no question of the chairman having received any secret financial benefit or any basis for inferring any unconscious ill-will on his part.

In reaching its conclusions, the Supreme Court also clarified the scope of an arbitrator’s legal duty of disclosure and the relationship between the duty of disclosure and the duty of privacy and confidentiality.

Toby Landau QC acted for the successful Respondent, Chubb Bermuda Insurance Ltd, together with Michael Crane QC of Fountain Court Chambers and David Scorey QC and David Peters of Essex Court Chambers in London (instructed by Michael Payton QC (Hon) and Emma Ager of Clyde & Co LLP).

A copy of the Judgment can be found here.