United Kingdom / March 9
In a recent case, the English High Court removed an arbitrator for apparent bias following a successful application under s24 of the Arbitration Act 1996 (“the Act”) in relation to comments made about expert evidence. The case concerned, H1 & Anor v W & Ors [2024] EWHC 382 (Comm), is a rare example of a successful application under this provision.
Background
A dispute arose between a film company and their insurer following a stunt scene gone wrong during filming in Sweden. The insurer rejected the film company’s subsequent claim under the insurance policy, alleging that they had not undertaken appropriate due diligence by ensuring safety on set. The policy contained an arbitration clause with a London seat and the film company brought an arbitration claim seeking a pay out under the policy. At a procedural hearing, the sole arbitrator, who was a film production professional, made a number of statements about inevitably accepting the evidence of the insured’s experts. These comments raised concerns about impartiality prompting the insurer’s application.
Issue
At the relevant procedural hearing, the sole arbitrator made various statements that the applicant in this case used as evidence of apparent bias; these included that the arbitrator:
- knew the insured party’s experts “extremely well” having worked with them closely in the film industry;
- would “absolutely believe” the insured party’s evidence on particular issues;
- did not “need to hear any of the expert witnesses”, given he already had sufficient knowledge about what was appropriate on a film set; and
- ultimately, he could “say now” what his decision would be.
The applicant argued that the arbitrator’s comments warranted his removal under s24(1)(a) of the Act. This provision gives the Court the power to remove an arbitrator should “circumstances exist that give rise to justifiable doubts as to his impartiality”.
On granting the application for removal, the Court held that the arbitrator’s explicit remarks regarding his inclination not to accept certain expert evidence indicated a pre-judgment of the case, as they expressed a willingness to accept one party’s evidence without hearing it. This could lead a fair-minded, objective observer to conclude there was a real possibility of bias, thereby necessitating the arbitrator’s removal to ensure a fair hearing. This followed the test for bias set out in the Supreme Court’s decision in Halliburton Co v Chubb Bermuda Insurance Ltd [2020] UKSC 48, [2021], which does not require actual bias to be shown, but just a real possibility of bias.
The Court noted that while it is reasonable for an arbitrator to have industry connections and specialist knowledge (and the fact that an arbitrator might know an expert personally does not give rise to apparent bias), relying on such knowledge to predetermine a preference for certain evidence undermines the objectivity expected in arbitration proceedings. This situation was notably troubling, considering he was a sole arbitrator whose factual conclusions would not be subject to appeal. The application to remove the arbitrator was accordingly granted.
Comment
The English courts maintain a non-interventionist approach to arbitration proceedings and the threshold for removal of an arbitrator is not easily overcome. This said, while successful applications under s24 are rare, the Court’s decision in this case serves as a reminder that the English courts will not permit “extraneous, illegitimate factors” to prejudge a case. Where there is apparent bias and it is appropriate to remove an arbitrator, the Court will do so.
Many arbitrators decide cases in sectors where they have valuable industry expertise. This is particularly common in certain types of arbitration, including maritime and commodities arbitration, where there is a significant pool of highly experienced arbitrators who are not legally qualified. In relation to decisions on the law, s69 of the Act of course contains a safeguard, in that decisions can be appealed to the courts should a party believe that there has been an error of law.
This case does, however, highlight the importance of arbitrators understanding procedural fairness and a proper approach to evidence. These are factors which should always be taken into account at the arbitrator selection stage.
