Arbitrators have many legal duties. One significant duty is to resolve disputes fairly, impartially and without unnecessary delay or expense. This is the first principle laid out in both the Arbitration Act 1996 and the Arbitration (Scotland) Act 2010. But what if that duty conflicts with another - the duty of privacy and confidentiality. How to balance these duties was a recent consideration of the Supreme Court in its decision in Halliburton Company v Chubb Bermuda Insurance Ltd [2020] UKSC 48.
Duty of impartiality
Arbitral awards must be seen to have been determined fairly and without bias. What is important is not only that there is no actual impartiality on the part of the tribunal or any of its members but that there is no perception of any real possibility of bias. Accordingly, not only do arbitrators have to remain impartial, but they also have a continuing duty to disclose any facts or circumstances which may give rise to a perception of bias.
It was this failure to disclose which was the basis for a challenge to remove an arbitrator from the tribunal that the Supreme Court considered in Halliburton v Chubb. We have discussed the reasoning of the Supreme Court in determining this duty in our previous blog.
Privacy and confidentiality
There are however duties on an arbitrator concerning the privacy and confidentiality of proceedings. Arbitrations are a characteristically confidential means of dispute resolution. One oft-cited advantage of arbitration over traditional dispute resolution is the level of privacy it affords disputants. This confidentiality covers all evidence (documentary and from witnesses) and legal submissions advanced in arbitration.
How to balance the obligations
But what happens when these obligations collide? The issues in Halliburton raised this very point.
The case addressed an application by Halliburton to have an arbitrator removed because of his failure to disclose his subsequent appointments to two separate arbitral tribunals which concerned the same subject dispute as the Halliburton/Chubb arbitration and also included Chubb as a party in a subsequent referral. Halliburton argued that, by failing to disclose his appointment to the subsequent arbitrations, the arbitrator had failed in his continuing duty of disclosure and accordingly there was an objective appearance of bias.
However, the arbitrator had a parallel duty of privacy and confidentiality. Had he disclosed his appointment in the subsequent arbitrations, would he have breached the duty of privacy and confidentiality owed to parties in the subsequent referrals by informing Halliburton of the existence, parties and subject matter of the subsequent arbitrations?
The Supreme Court noted that whilst the law regarding the boundaries of the obligations of privacy and confidentiality were developing on an case-by-case basis and often depended on the facts at hand, it was generally accepted (in English law) that the obligation was not absolute. The court considered (as had been determined in previous cases) that disclosure would be permissible: 1) where there was express or implied consent; 2) where there was an order of the court (though the court does not have a general discretion to lift the obligation of confidentiality); 3) where it was reasonably necessary for the protection of the legitimate interests of a party to the arbitration; 4) where the interests of justice require; and 5) (perhaps) where public interest requires it.
Where parties to whom a duty of privacy and confidentiality is owed require to provide their consent before a disclosure can be made, that consent may be express or may be implied by the arbitration agreement in the context of the custom and practice of the relevant field. In particular, the court considered evidence of interveners in the case: The Grain and Feed Trade Association and the London Maritime Arbitrators Association whose institutional rules do not require disclosure of involvement in overlapping arbitrations. It also considered the International Bar Association guidelines in the context of maritime, sports and commodities arbitrations, where such involvement does not need to be disclosed. In these fields, overlapping appointments are commonplace.
The court further considered that the duty of privacy and confidentiality was not absolute (subject to any contractual agreement between parties) and it was common practice for arbitrators in English seated arbitrations to make high level disclosure of an involvement in other arbitrations without obtaining consent. Such disclosure may cover the proposal for the arbitrator's engagement and details of the common party who is making the proposal. The common practice, however, did not, the court was clear, give arbitrators a 'carte blanche' to disclose further details in an effort to persuade a party that there was no issue impacting impartiality (without express consent from the parties).
Therefore, having considered the general practice and various institutional rules, the court took the view that the developing law in this area should be guided by the realities of commercial and arbitral practice. Privacy and confidentiality may be waived with parties' consent. Such consent may be expressed or may be implied by the arbitration agreement, particularly with reference to the rules of the institutional body which has been adopted and the general practice within the specific type of arbitration. However, in English seated arbitrations, generally, no express consent will be required to make high level disclosures (so as to identify the existence of a proposed overlapping appointment).
It is encouraging to see the court recognising the practical and commercial realities of arbitration. Such practical and commercial realities require a level of flexibility in demarcating the boundaries of potentially conflicting arbitrator duties. It is noteworthy to see the court's recognition that more flexibility may be required in certain fields of international arbitration where there are a limited number of specialist determiners available for arbitral appointments. Ultimately matters are within the control of parties when entering into an arbitration agreement (for example by agreeing whether the rules of any institutional body will be adopted). The court clearly laid down a marker that disclosure is an important aspect of ensuring impartiality and that a decision to provide an appropriate level of disclosure to parties to an arbitration would not breach the obligation of privacy and confidentiality owed to parties in another arbitration. However, this did not give arbitrators carte blanche on disclosures. Any disclosures would need to be carefully considered and weigh up the duty to disclose against the duty of privacy and confidentiality. Halliburton v Chubb provides welcome guidance on where the boundaries lie between both duties.
