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The new Arbitration Bill and its impact
Mark Fallmann
Given that arbitrations take place in private, arbitral rules are important to maintain the fairness of the process, and ensure that parties are not disadvantaged by the lack of public scrutiny that accompanies a court case. The fact that communication with the tribunal is normally open to all parties adds to the transparency of the process, and avoids any suggestion of bias.
While cases relating to unilateral communications between a tribunal member and one party are uncommon, depending on the nature of such interactions, they could potentially lead to challenges to arbitral awards if they create an appearance of bias, particularly if the communication is with the party who appointed the arbitrator.
In the 2017 case of Symbion Power LLC v Venco Imtiaz Construction Company, an arbitration award was unsuccessfully challenged on the basis that the tribunal failed to deal with all the issues put to it. While the issue of unilateral communication did not impact upon the outcome of the case, the court made clear that once the tribunal is appointed, it is "wholly inappropriate for one arbitrator to communicate with the party that appointed him without notice to the other members of the tribunal and the other party. It also noted that, whether or not in any individual case there is the appearance of bias will, of course, turn on its particular facts, but such communications between one arbitrator and one party should be avoided.
Legal framework
International arbitration rules and legislation emphasise the importance of impartiality, reflecting the principle of party equality. Some examples are below:
LCIA Rules 2020: Article 13.4 prohibits any party from initiating or attempting unilateral communication regarding the arbitration or dispute with any member of the LCIA Court or Arbitral Tribunal, unless such contact is disclosed in writing to all other parties, the Tribunal, and the Registrar before or shortly after the communication. The only exception is for communication with the registrar regarding administrative matters.
ICC Arbitration Rules 2021: Article 11 emphasises the arbitrator’s duty to remain independent and impartial throughout the proceedings.
Arbitration Act 1996 (UK): Section 33 imposes a duty on arbitrators to act fairly and impartially. Section 24 allows for the removal of an arbitrator where there are justifiable doubts about their impartiality.
Why It Matters
1. Impartiality
In the Supreme Court case of Halliburton v Chubb Bermuda Insurance Ltd, the appellant sought the removal of an arbitrator who had not disclosed his appointment to related arbitrations involving one common party. While the appeal was unsuccessful, the court reaffirmed impartiality as a cornerstone of arbitration, emphasised that arbitrators owe no loyalty to their appointing party, and that they must remain neutral.
2. Grounds for challenging awards
Under Section 68 of the Arbitration Act 1996, awards may be remitted to the tribunal for reconsideration, set aside, or declared to have no effect in whole or in part if serious procedural irregularities have occurred which the court considers have caused or will cause substantial injustice to the applicant. The irregularities covered under section 68(2) include a failure to comply with section 33, being the duty to act fairly and impartially.
3. Unequal opportunity to respond
Unilateral communications relating to substantive issues could risk decisions being based on incomplete or one-sided information.
Conclusion
Even where intentions are innocent and no impartiality exists, private communication by a tribunal member with one party risks creating an appearance of bias. Practitioners should take care to ensure that all relevant parties are copied to correspondence to avoid creating potential grounds to seek the removal of an arbitrator or challenge any award later.
Further information
If you have any questions regarding this blog, please contact Leyla Maestri.
About the authors
Leyla is an Associate in the Dispute Resolution team at Kingsley Napley. She has experience acting on a broad range of disputes, including complex cross-border litigation, civil fraud matters and arbitration proceedings.
Abigail is a paralegal in the Dispute Resolution team. Her experience covers a broad range of litigation matters.
We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.
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