CL-2024-000510 - [2025] EWHC 1523 (Comm)

In any event, I consider that Mr. H had no duty of disclosure of his previous Reed Smith arbitral appointments in the present case.

As explained above, in Halliburton Lord Hodge pointed out on a number of occasions that there is an established custom or practice in LMAA arbitrations that an arbitrator may take on such multiple appointments without disclosure.

In the present case, the court is not concerned with “multiple appointments”, that is appointments in multiple references concerning the same or overlapping subject matter with only one common party, as in Halliburton, where the arbitrator may become privy to information in arbitration 1 which will be unknown to one of the parties in arbitration 2. Rather, this case concerns repeated instructions in unrelated arbitrations by the same law firm over a number of years. As Mr. Mander rightly submitted, law firms specialising in maritime law such as Reed Smith will naturally act for many different clients, such that the inevitability of repeat appointments of individual LMAA arbitrators is greatly magnified.

In support of his argument that there was no legal duty upon Mr. H to make disclosure of previous instructions by Reed Smith for him to act as a LMAA arbitrator, Mr. Mander referred to and sought to rely upon the LMAA Advice on Ethics.

The opening paragraph of the LMAA Advice on Ethics is significant. It states:

“This advice is intended for arbitrators conducting maritime arbitrations, or accepting appointments as arbitrator, on terms of the London Maritime Arbitrators Association. The advice draws in part on the IBA Guidelines on Conflicts of Interest in International Arbitration published in February 2024, but reflects the recognised fact that in maritime arbitration, arbitrators are drawn largely from a specialised pool of individuals and the number of specialised law firms and other representatives internationally who appoint arbitrators is relatively small. Consequently, there is a custom or practice for parties or their representatives to frequently appoint the same arbitrator in different cases.” (emphasis added)

Paragraph 1.8 of the LMAA Advice on Ethics further provides:

“It has been suggested that the frequent appointment of arbitrators on different cases by the same appointing person, party or entity may give rise to a lack of independence, or a perception of bias. However, it remains the case in maritime arbitration that the pool of arbitrators and the number of specialised law firms and other representatives who appoint arbitrators is not large and it is accepted as inevitable that such circumstances will arise. This is not considered to be a matter for disclosure although an arbitrator should always be satisfied as to the other matters referred to in these notes …” (emphasis added).

Mr. Karia KC, on the other hand, sought to rely upon paragraph 1.4 as requiring disclosure in a case such as the present. That reads as follows:

“1.4

Where there has been a regular relationship in the past, whether with the proposed appointor or with the opponents to the dispute, the test is usually one of time. As a general guideline a period of less than three years will require disclosure by the arbitrator. However, whilst the question of actual independence is very important, what is crucial is the question of how a reasonable party may perceive the situation. If a reasonable party may reasonably think that there is or has been an undue connection resulting in a perceived lack of independence, then whether or not that is the case, the Courts would be likely to intervene, if invited. It follows that arbitrators should not accept appointments in the first instance where there is any substantial risk of that happening.”

However, paragraph 1.4 follows on from paragraph 1.3 which reads:

“1.3

There are obvious cases which preclude the acceptance of an appointment, if it be offered. These include a personal or ongoing or recent commercial relationship with one of the parties, even though it may be, or may have been, on a casual basis only, and whether or not related to the dispute. In such circumstances an arbitrator should consider carefully whether, to a third party, he or she would be seen as independent and impartial. In most cases it is likely that the prudent course would be to refuse the appointment.”

Since the opening paragraph of the Advice on Ethics refers to the LMAA custom or practice for parties or their representatives to frequently appoint the same arbitrator in different cases but that (per paragraph 1.8) the frequent appointment of arbitrators on different cases by the same appointing person, party or entity is not considered a matter for disclosure, I do not consider that paragraph 1.4 can have been intended to go back on that central proposition. It is more likely that paragraph 1.4 is intended to refer to a regular relationship with the appointing party. In any event, the Advice on Ethics clearly refers to there being, in the London maritime market, a custom or practice of the appointment of the same arbitrator in different cases such that disclosure of those appointments is not required (absent some other special feature(s) making disclosure in the particular case necessary). I do not consider that there is any such special feature in this case.

Mr. Karia KC also pointed out that whilst this document is on the LMAA website it is not part of the LMAA terms which an arbitrator accepts upon appointment. However, as its states in its first sentence, the “advice is intended for arbitrators conducting maritime arbitrations, or accepting appointments as arbitrator, on terms of the London Maritime Arbitrators Association.” It is of course correct that this advice does not contain binding terms of an LMAA appointment. But it is clearly intended to reflect the custom and practice of the participants in the London maritime market (being updated from time to time).

Moreover, the “custom or practice” of the London maritime market which is referred to in the opening paragraph of the Advice on Ethics is consistent with the submissions, accepted by Lord Hodge, which were made to the Supreme Court by the LMAA in Halliburton. In Halliburton Lodge Hodge referred to the fact that even in the case of multiple overlapping LMAA arbitrations disclosure was not required by the arbitrator as a matter of custom or practice as this fact was not generally perceived (in the LMAA market) as calling into question an arbitrator’s impartiality or giving rise to unfairness.

Mr. Karia KC sought to distinguish this case from the factual situation which arose in Halliburton in that, he argued, we are here not concerned with multiple overlapping arbitrations arising out of the same incident but rather a number of “historic instructions”. However, if there is no duty of disclosure in the case of multiple overlapping LMAA arbitrations, it is even less likely that there is a duty of disclosure in the case of instruction in multiple unrelated LMAA arbitrations concerning different parties.

I consider that this would be understood by regular participants in the London maritime market such as Zaiwalla and Reed Smith, such that disclosure of previous appointments in this case would not be thought necessary. Indeed, this conclusion is supported by the Claimants’/Zaiwalla’s own actions in this case, as set out in paragraphs 71 and 86 above. This also presumably explains why, in the correspondence referred to above, Zaiwalla did not simply allege that Mr. H had a duty voluntarily to disclose all of his arbitral instructions by Reed Smith. Rather, they looked to find a reason to demand disclosure by Mr. H of his previous appointments by Reed Smith. In particular they sought to suggest that the Tribunal’s procedural rulings favoured Reed Smith’s client and sought to justify their request for disclosure by the fact that, they said, they intended to bring a claim against Reed Smith in the High Court.

In the circumstances, I do not consider that Mr. H had a duty of disclosure of his previous Reed Smith arbitral appointments in the present case.

However, Mr. Karia KC further submitted that this conclusion cannot stand in the light of the decision of Jacobs J in Aiteo Eastern E&P Co Ltd v Shell Western Supply [2024] EWHC 1993 (Comm), arguing that there was a “striking similarity between the facts of that case and those of the present case”.

I do not accept Mr. Karia KC’s submission. The facts of Aiteo are materially different.

Aiteo concerned an Onshore and an Offshore ICC arbitration. Shell nominated Dame Elizabeth Gloster (DEG), a retired Court of Appeal judge, as arbitrator in the Offshore Arbitration, and the Onshore Lenders did likewise in the Onshore Arbitration. The Lenders requested the consolidation of both arbitration references.

The facts of the case were that:

Aiteo appealed to the court under section 68 of the Arbitration Act 1996, seeking to set aside the four Arbitration Awards on the grounds of DEG’s apparent bias by reason of her professional links with Freshfields and her failure to disclose those links in a timely fashion. Aiteo argued that the breach of section 68 had given rise to substantial injustice.

In Aiteo, Jacobs J referred to two important features of that case which clearly distinguish it from the present case.

First and most importantly, the Judge referred at [71] to the fact that the court was concerned with ICC arbitrations and he referred to the ICC Rules (which it was common ground operated contractually) concerning the required independence and impartiality of ICC arbitrators which, importantly, has a subjective element:

“Article 11 requires the disclosure of “any facts or circumstances which might be of such a nature as to call into question the arbitrator’s independence in the eyes of the parties, as well as any circumstances that could give rise to reasonable doubts as to the arbitrator’s impartiality”. Halliburton indicates that the reference to “eyes of the parties” connotes, certainly as far as independence is concerned, an element of subjectivity; it requires consideration of how the parties might view matters, not simply how a fair-minded observer might do so.”

The Judge also referred at [23] to the guidance which the ICC provides concerning independence and impartiality which makes the same point, and also provided as follows:

“Each arbitrator or prospective arbitrator must assess what circumstances, if any, are such as to call into question his or her independence in the eyes of the parties or give rise to reasonable doubts as to his or her impartiality. In making such assessment, an arbitrator or prospective arbitrator should consider all potentially relevant circumstances, including but not limited to the following: …

• The arbitrator or prospective arbitrator has in the past been appointed as arbitrator by one of the parties or one of its affiliates, or by counsel to one of the parties or the counsel’s law firm.”

In consequence, the Judge found that [at 76-77]:

“76.

Against this background, it was in my view clearly appropriate, under the applicable ICC Rules and bearing in mind the guidance given in the Arbitrator Statement and the Note (which in my view must be taken as representing good current arbitral practice) for DEG to disclose the two relatively recent appointments by Freshfields, which brought the total number of appointments or nominations for appointment (including the current nomination) to four, within a relatively short space of time. As Mr. Juratowitch KC’s submissions acknowledged, the Lenders’ present case would certainly have been problematic if disclosure of these two appointments had not been made.

77.

However, the disclosure was in fact made, and no criticism can be made of the arbitrator in relation to the two prior appointments. The question which arises is whether, as Aiteo contends, the disclosure was incomplete, because of the non-disclosure of a further recent professional relationship between DEG and Freshfields.”

The Judge held at [78] that it was incomplete. The nature of the instruction was important: “An advisory engagement of that kind [i.e. the engagement in June-July 2020], whether in respect of a barrister or retired judge, gives rise to a closer and different relationship to that which exists between arbitrator and the firm of solicitors which has appointed him or her” [79]. But most significantly, the Judge’s finding that DEG was bound to disclose her instruction by Freshfields in June-July 2020 was clearly made in the context of the application of the ICC Rules, containing as they do the element of subjectivity: see [87] and, in particular [93]:

“I do not consider that it is appropriate to approach this issue by considering what the position would be under English law divorced from the terms of the ICC Rules; bearing in mind that the parties, as well as the arbitrator when accepting appointment, were bound by those Rules. The more significant question, therefore, is whether the June–July 2020 engagement was disclosable under article 11 of the ICC Rules; because it was a fact or circumstance which “might be of such a nature as to call into question the arbitrator’s independence in the eyes of the parties” or because it was a circumstance that “could give rise to reasonable doubts as to the arbitrator’s impartiality”. In approaching that question, I consider that the guidance provided by the ICC in the standard form ICC Arbitrator Statement, and the Note, is relevant. Against that background, I consider that the June–July 2020 engagement by Freshfields was indeed disclosable…”

In addition, the Judge found that DEG failed to disclose, but ought to have disclosed, her instruction to provide an expert declaration in unrelated foreign law proceedings in February/March 2022. Once again, the Judge’s finding in this respect was driven by the ICC context. He stated at [102]:

“The February–March 2022 engagement was another professional engagement by Freshfields, and both the Note and the terms of the ICC Arbitrator Statement would point very clearly in the direction of disclosure.”

Finally, the Judge held, by parity of reasoning, that there was a failure to disclose an October 2023 instruction to advise on English law in connection with foreign proceedings: [111].

Second, as the Judge stated at [3]:

“[a]n important and unusual feature of the present case is that a successful challenge to DEG was made to the ICC Court, which is the ICC body responsible for dealing with challenges to arbitrators pursuant to article 14 of the rules which govern ICC arbitrations, namely the ICC Rules of Arbitration (“the ICC Rules”). … Challenges are often made, but rarely succeed. The ICC Court gave its unreasoned decision [on 17 January 2024], upholding the challenge on its merits. The challenge was made upon substantially the same grounds as those advanced on the present application under section 68.”

He addressed this unusual feature at [113] ff. of his judgment. He stated that it was common ground, based on Halliburton, that the fair-minded and informed observer would know that the ICC had accepted the challenge to DEG and had removed her. He held at [136] that:

“In my view, the observer would pay regard to the decision, and indeed it is difficult to see how the observer’s approach could not, at least to some degree, be coloured by the decision taken by the arbitral institution, here the ICC Court, which has determined the challenge. An informed observer would recognise that the ICC Court had considerable experience of determining challenges, inevitably far more experience than the observer. He or she would also recognise that the ICC is one of the world’s leading arbitral institutions, and that the parties must have had faith in that institution since they agreed to submit their disputes to ICC arbitration.”

He added at [137] that the informed observer would also appreciate that the ICC’s decision to remove DEG is a relatively rare example of a challenge that succeeded. Ultimately, whilst the observer would recognise that he or she should make up his or her own mind on the basis of the underlying facts, and that it would be wrong to reach a conclusion simply by reference to what the ICC Court had decided, the decision of the ICC Court could serve as a useful cross-check on the observer’s own conclusions based on the underlying facts ([138]).

Mr Justice Jacobs concluded at [166] that, whilst there were arguments that could be made on either side, “I consider that the observer would consider that when considering the facts in the round, this case falls on the wrong side of the line, and that there was a real possibility of unconscious bias. The observer’s view to that effect would be confirmed and reinforced by the decision of the ICC Court to remove DEG”. The expert instruction which predated and was concluded prior to the appointment in issue was not unduly concerning, but the second and third advisory/expert engagements occurred during the currency of the arbitration and in view of the close relationship to which they gave rise this was concerning. Accordingly (at [184]):

“The observer would consider that there was a real possibility of unconscious bias, notwithstanding that there were some factors which would favour a different conclusion. The observer would feel comfortable in reaching that conclusion in circumstances where the ICC Court had removed DEG as arbitrator. Any possible doubt as to the answer to the question for the observer would be resolved by the consideration of the decision of the ICC Court, which would strike the observer as rational and well founded.”

The determination as to whether the fair-minded and informed observer would conclude that there was a real possibility that an arbitrator was biased will depend in each case on the facts of the particular case. The critical factors in Aiteo which led to that conclusion were: (1) it was an arbitration under ICC rules with an element of subjectivity in the test; (2) the ICC had already upheld the challenge to the arbitrator; and (3) the relevant engagements gave rise to a particularly close relationship which occurred during the currency of the arbitration. None of these factors are present in the instant case.