Arbitrator Who Gave ‘Appearance of Bias’ Removed by High Court

Contract arbitrators obviously have to be impartial and the courts are astute even to the appearance of bias. In one case which made that point, an arbitrator presiding over a £3.5 million dispute was removed by the High Court due to legitimate concerns about his past professional dealings with one of the parties.

The matter concerned success fees allegedly payable by a construction company to claim consultants following the settlement of a commercial dispute. Following his appointment, the arbitrator made a £1 million partial award to the consultants. That sum was duly paid. However, the company objected to the arbitrator’s continued involvement in the matter and applied for his removal under Section 24(1)(a) of the Arbitration Act 1996. Whilst not accusing him of actual bias, the company argued that circumstances existed which gave rise to justifiable doubts as to his impartiality.

Amongst other things, the company argued that the consultants had been favourably treated by the same arbitrator in earlier proceedings and that the former had clearly been keen to see the latter appointed. Over a three-year period, the arbitrator had acted as either arbitrator or adjudicator in 25 matters involving the consultants. Those matters accounted for 18 per cent of his appointments and 25 per cent of his income. He was also said to have responded in an evasive, defensive and unjustified manner to legitimate questions relating to his previous work.

The Court found that concerns about the relationship between the arbitrator and the consultants had been heightened by his response to the company’s reasonable inquiries and requests for information. The appearance of bias on the arbitrator’s part automatically amounted to a substantial injustice. If he did not resign from future conduct of the arbitration, his removal would be ordered.