By Zuzanna Cieplinska, ADC/ACICA Intern
LLB of International and European Law, The Hague University of Applied Sciences
The matter of transparency in arbitral appointments still raises many concerns in the international arbitration arena. Soon, the UK Supreme Court will hear an appeal from Halliburton Company v Chubb Bermuda Insurance Ltd, known as the ‘Deepwater Horizon’ case. The appeal concerns issues relating to the acceptance of appointments in multiple references concerning the same or overlapping subject matter with only one common party, the extent of such power, the time period for disclosure and the consequences of failing to disclose.
The appeal will have a considerable impact on the integrity of the arbitral process and will clarify:
‘(1) Whether and to what extent an arbitrator may accept appointments in multiple references concerning the same or overlapping subject matter with only one common party without thereby giving rise to an appearance of bias.
(2) Whether and to what extent he may do so without disclosure.
(3) When should an arbitrator make disclosure of circumstances which may give rise to justifiable doubts as to his impartiality?
(4) What are the consequences of failing to disclose circumstances which should have been disclosed?’
The Deepwater Horizon, an oil rig in the Gulf of Mexico, was leased by BP Exploration and Production Inc. (‘BP’) and owned by Transocean Holdings LLC (‘Transocean’). It exploded due to a well, which was in the process of being plugged, being temporarily abandoned and consequently suffering a blowout. The Appellant (Halliburton) provided cementing and well-monitoring services to BP through the temporary abandonment of the well.
After the accident, several private claims for damages were brought. The US government also raised claims for civil penalties under federal statutes. Following the judgment given on 4 September 2014, 67% of the blame was attributed to BP; 30% to Transocean, and 3% to Halliburton.
A compensation sum of US$1.1 billion followed the settlement concluded by Halliburton. Transocean settled for US$212 million and paid civil penalties of approximately US$ 1 billion to the US Government. Halliburton then claimed on its liability insurance against Chubb, who refused to pay the claim, arguing that Halliburton’s settlement of the claims was unreasonable, and that Chubb had not consented to it. 
Halliburton commenced arbitration and appointed N, the third respondent, as its arbitrator. Chubb appointed the fourth respondent, P. Upon application to the High Court, M, the second respondent, was appointed as the third arbitrator. M was Chubb’s preferred candidate.
M disclosed to Transocean that he had previously been in a number of arbitrations in which Chubb was a party and that he was currently appointed as an arbitrator in two pending cases with Chubb’s involvement. However, he did not disclose his proposed appointment by Transocean to Halliburton. He subsequently accepted an appointment as a substitute arbitrator in another of Transocean’s claims against a different insurer, which he also neglected to disclose to Halliburton.
Upon learning of M’s non-disclosure, Halliburton’s US lawyers contacted M, referring to the International Bar Association Guidelines on Conflicts of Interest in International Arbitration (‘IBA Guidlelines’), arguing that M had a continuing duty of disclosure of potential conflicts of interest. M responded, contending that while the claims in which he was an arbitrator arise from the same incident, they raise separate issues. He assured Halliburton of his independence and impartiality. While he believed no damage had been done, he indicated his willingness to resign from the Transcoean appointments should the parties remain concerned.
‘In these circumstances, might I venture to propose to the parties that, even now, they put aside their differences to the extent of concentrating their attention on trying to agree upon a mutually acceptable replacement chairman who would be available for the hearing, without spending further time on argument, and applications to the Court. Were they to do so, I would gladly resign. If that does not occur, I fear that I would have no alternative but to leave my fate in the hands of the Court.’
Awards were issued by the tribunals in Chubb’s favour in both arbitrations.
In relation to M’s conduct giving rise to the appearance of bias, the judge considered three issues:
(1) M’s acceptance of the appointments in the Transocean arbitrations;
(2) His failure to disclose those appointments to Halliburton and;
(3) His response to the challenge to his impartiality.
The Court decided that M had not been given a secret benefit by Chubb in the form of remuneration from the arbitration. M’s appointment would also not result in immediate benefit in terms of his fees, as it is the tribunal as a whole which decides who is to bear them. The Court found that:
‘[…] generally, the fact that an arbitrator may be involved in an arbitration between party A and party B, whose subject matter is identical to that in an arbitration between party B and party C does not preclude him or her from sitting on both tribunals.’
The Court reasoned that M should not be regarded as unable to act impartially solely because he is an arbitrator in other matters which arose from the same incident, but contained separate evidence and issues. Thus, there was nothing in the acceptance of the Transocean appointment by M that could give rise to any justifiable finding of bias. The judge held that there was nothing to disclose and that:
‘If a particular circumstance does not give rise to any justifiable concerns as to an arbitrator’s impartiality, then his failure to disclose that circumstance cannot, without more, give rise to any equivalent concern.’
Further, the Court referred to M’s correspondence, in which he stated that he did not disclose as he did not know there was any obligation to do so. The Court held that ‘the fair-minded observer would not think that it would raise a real possibility of apparent bias […].’
The subsequent appeal was dismissed on the grounds that M’s acceptance of appointments in various instances, concerning the same subject matter and one common party, does not give rise to an appearance of bias. On the issue of disclosure, the Court held that as a matter of good practice, M should have disclosed the appointments. The Court based its conclusion on the IBA Guidelines on Conflicts of Interest in International Arbitration 2014, General Principle 3. It further highlighted that although it is a standard of good practice in international commercial arbitration, it is the more certain standard of an objective observer that applies to disclosure under English law.
It was also noted that both the LCIA Rules and IBA Guidelines in the Explanation to General Standards provide that disclosure is only required for facts or circumstances known to the arbitrator. It is necessary for the Court to consider whether disclosure ought to have been made in accordance with the principles of non-disclosure. In relation to an application for removal of the impugned arbitrator, the Court must assess whether there was a real possibility that the arbitrator was biased.
The appeal, which will take place in November 2019, will significantly impact the rules for arbitral disclosure regarding the preservation of legitimacy and integrity of the entire arbitral process. The UK Supreme Court is to determine whether arbitrators are required to disclose, at any stage of the proceeding, the arbitral appointments related to the issues at stake, irrespective of the extent of any such relation.
 Halliburton Company v Chubb Bermuda Insurance Ltd  EWCA Civ 817 (‘Deepwater Horizon’).
 Ibid –.
 Deepwater Horizon (n 1).
 Ibid .
 Ibid .
 Ibid .
 Lee Carroll and Joshua Paffey. ‘The UK Supreme Court to Hear Deepwater Horizon Appeal Seeking Removal of an Arbitrator’ KluwerArbitration Blog (Blog Post) <http://arbitrationblog.kluwerarbitration.com/2019/06/01/the-uk-supreme-court-to-hear-deepwater-horizon-appeal-seeking-removal-of-an-arbitrator/>.