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Arbitrator’s Link to Law Firm Triggers ‘Apparent Bias’ Claim

Professional contract arbitrators often maintain close links with the law firms which fostered their careers and that can sometimes give rise to their independence being questioned. However, in one case which gives authoritative guidance on the issue, the High Court cleared an arbitrator of giving an appearance of bias.

The arbitrator, a partner in a medium-sized Canadian law firm, had made two awards in respect of a contract dispute between overseas companies. However, one of them challenged his decisions under Section 68(2) of the Arbitration Act 1996 on the basis that there had been a serious irregularity in the proceedings.

The company pointed out that the arbitrator was a partner in a law firm which derived a substantial income from regularly giving advice to a company which was affiliated with its opponent in the arbitration. It was submitted that this gave rise to a potential conflict of interest and an appearance of partiality.

In rejecting those arguments, however, the Court noted that the arbitrator had never himself advised the affiliate company. For a number of years he had sat almost exclusively as an international arbitrator and had had no participation in the management of the firm. In those circumstances, a fair-minded and informed observer would not have concluded that there was a real possibility that he was biased or lacked independence.