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Impartiality Under Scrutiny: English Commercial Court Removes Arbitrator for Apparent Bias
In the recent judgment of H1 and another v W and others [2024] EWHC 382, the English Commercial Court took the significant step of removing a sole arbitrator under section 24 of the English Arbitration Act 1996 (the “EAA”). This decision, rooted in concerns over the arbitrator's impartiality, underscores the importance of neutrality in arbitration proceedings. Here, we examine the facts of the case, the legal framework applied by the court, and the broader implications for arbitration practice.
The Factual Background:
The dispute arose from a claim under an insurance policy issued in connection with a film production. Following an on-set accident, the film company’s claim was declined by the insurer, prompting the film company to challenge this denial through arbitration in London. The crux of the dispute hinged on whether, according to market practices, the stunt coordinator or the insured bore ultimate responsibility for safety on set. During the arbitration, both parties presented expert reports. At the first procedural hearing, the insured’s experts disclosed their relationships with the arbitrator. The insurer did not pursue further details at that time. However, at a subsequent hearing, the arbitrator, a film and television producer with no legal training, made remarks suggesting he would discount the insured’s experts' testimonies due to his familiarity with them, while expressing skepticism about the insurer's expert evidence. This led to concerns about his impartiality.
The Court’s Findings:
The court found that the arbitrator's statements indicated a pre-judgment of the expert evidence, thereby raising justifiable doubts about his impartiality. The remarks suggested he had already formed a view based on his prior knowledge of the experts, undermining the requirement for an open-minded assessment of all evidence.
Legal Framework and Analysis:
The law on apparent bias is well established. The core test, derived from Halliburton v Chubb [2020] UKSC 48, is whether a fair-minded and informed observer, considering the facts, would conclude there is a real possibility of bias. Bias here is understood as the absence of demonstrated independence and impartiality, not necessarily in a pejorative sense.
The court examined several precedents:
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Norbrook v Moulson [2006] EWHC 1055 (Comm): Technical expertise of an arbitrator does not justify ex parte communications with witnesses.
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AS Sourcing Cameroun v LMBS [2023] EWHC 150 (Comm) and Rustal v Gill & Duffus [2000] 1 Lloyd’s Rep 14: Trade arbitrators may have prior relationships, but these do not inherently disqualify them unless they impede impartiality.
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Morrison v AWG [2006] EWCA Civ 6: Disqualification for apparent bias is not discretionary; if there is a real possibility of bias, the judge (or arbitrator) is disqualified.
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Fox v Wellfair [1981] Lloyd’s Rep 514: An arbitrator’s trade expertise should assist in understanding evidence, not replace it.
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Bubbles & Wine v Lusha [2018] EWCA Civ 468: Provisional views are permissible unless they imply a final decision.
Although not cited, the House of Lords in Helow v S/S for Home Department [2008] UKHL 62 emphasized that perceptions of impartiality must be objectively justified.
Takeaways:
This case highlights the delicate balance between expertise and impartiality in arbitration. The court’s decision to remove the arbitrator was influenced by his apparent lack of legal procedural knowledge and his pre-judgment of evidence. This serves as a cautionary tale for arbitrators, especially those from non-legal backgrounds, to maintain an open mind and avoid premature conclusions. The decision suggests that in complex, high-stakes disputes, it may be prudent to appoint legally trained arbitrators or ensure a legally qualified chair oversees the process. This approach can help safeguard the integrity of the arbitration by ensuring all evidence is considered impartially and thoroughly.
Ultimately, H1 and another v W and others reaffirms the fundamental principle that justice must not only be done but must also be seen to be done, ensuring trust and fairness in arbitration proceedings.
- The court found that the arbitrator's statements indicated a pre-judgment of the expert evidence, thereby raising justifiable doubts about his impartiality.
- Bias here is understood as the absence of demonstrated independence and impartiality, not necessarily in a pejorative sense.
- An arbitrator’s trade expertise should assist in understanding evidence, not replace it.
