A court in the United Kingdom refused to remove an arbitrator for perceived bias where the arbitrator was appointed to arbitrate multiple disputes arising from the same underlying incident triggering insurance coverage. A company (“H”) was adjudged in a US proceeding to be liable and subsequently settled the claims before judgment. A Bermudan insurance company (“L”) wrote the top layer of H’s liability insurance and refused H’s claim for the full coverage of its layer, on the grounds that the settlement was not reasonable and L had reasonably not consented to it. The dispute was subject to arbitration in London, and the instant opinion addressed H’s arguments that the third, neutral arbitrator appointed (“M”) was partial and biased, warranting removal.
The claims of partiality concerned the revelation that M had accepted arbitral appointments in two other cases arising out of the same underlying incident and another party (“R”)’s disputes with its excess liability insurers—including a claim by R against L. H made three arguments regarding M’s conduct allegedly demonstrating bias: M’s acceptance of the R arbitral appointments, M’s failure to disclose those appointments, and M’s response to H’s challenge to his impartiality.
The court rejected the first argument, finding that no fair-minded or informed observer would doubt M’s impartiality because it was receiving remuneration for arbitrating other disputes involving L and that overlapping subject matter was a regular feature of international arbitration in London. The court rejected the second argument because—already having found the other arbitral appointments were not problematic—there was no reason to disclose the appointments; alternatively, the court found even if M should have disclosed the appointments, the failure to do so did not give rise to a real possibility of apparent bias. Finally, the court rejected the third argument, holding that if an arbitrator were biased merely because a party had challenged his impartiality, any party would be able to self-select neutral arbitrators by unjustifiably challenging disfavored arbitrator’s impartiality.
H v. L [2017] EWHIC 137 (Comm) (Mar. 3, 2017).
This post written by Thaddeus Ewald .
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