Halliburton Co v Chubb Bermuda Insurance Ltd [2020] UKSC 48 provides welcome opportunity for the UK Supreme Court to set out the obligations of arbitrators.

The Court addressed the obligations of arbitrators minded to accept appointments in multiple references concerning the same or overlapping subject matter with only one common party without giving rise to appearance of bias and whether and to what extent the arbitrator may do so without disclosure.

To reach its determination the Court considered the custom and practice in international arbitrations and was greatly assisted with submissions from, amongst other interveners, the London Court of International Arbitration and the International Court of Arbitration of the International Chamber of Commerce.

The question of disclosure is at the forefront of international arbitration as a means of ensuring impartiality because of the key differences between how arbitration operates in practice, in comparison to litigation (with its principle of open justice). Disclosure has heightened importance in arbitration because unlike court actions, the process is private with limited public oversight and there are limited powers to review the determination made. The decision maker is not appointed by the State but selected by the parties and unlike judges with a high degree of security of tenure, arbitrators are appointed for the reference only and naturally wish to seek repeat appointments.

The case arose from a challenge made by Halliburton to remove an arbitrator from a tribunal where he had failed to disclose to Halliburton his subsequent appointments to two arbitral panels, which like the reference in Halliburton's arbitration arose out of disputes between insurers and their insured concerning the reasonableness of settlements made by the insured following the Deep Water Horizon oil spill. Chubb featured as a party in the subsequent arbitrations. The action for removal was grounded not on there having been actual bias but on an objective appearance of bias.

The UK Supreme Court made clear that the English courts, in addressing an allegation of apparent bias in an English-seated arbitration, will (i) apply the objective test of the fair-minded and informed observer and (ii) have particular regard to the characteristics of the particular form of international arbitration from which the application to remove an arbitrator arises. Those characteristics highlight the importance of proper disclosure as a means of maintaining the integrity of international arbitration.

The Court of Appeal had previously determined that disclosure is a legal duty and not just good arbitral practice and accordingly developed English law of arbitration. The Supreme Court approved this approach.

Where an arbitrator accepts appointments in multiple references concerning the same or overlapping subject matter with only one common party, this may, depending on the relevant custom and practice of such arbitrations, give rise to an appearance of bias. It is not necessary that the facts and circumstances which are to be disclosed would cause the fair-minded and informed observer to conclude that there was a real possibility that the arbitrator was biased. It is sufficient that they might reasonably cause the objective observer to reach that conclusion. The failure of the arbitrator to disclose such facts and circumstances is itself a factor to which the fair-minded and informed observer would have regard in considering if there was a real possibility of bias.

If in doubt it is therefore better to disclose than not to do so. Whether an arbitrator fails in the duty to disclose requires examination of the facts as at and from the date when the duty arose.

However, the failure to disclose does not necessarily translate into there being a real possibility of bias requiring removal of the arbitrator. Such possibility of bias is assessed at the date of the hearing to remove. Whilst Halliburton's appeal failed for this very reason, the Court made clear that disclosure should have taken place albeit the failure to disclose did not cause a real possibility of bias.

Critics of the decision will no doubt point to a missed deterrent opportunity to arbitrators who fail to disclose material facts to parties but on any view the case provides welcome clarity on an arbitrator's duty of disclosure.