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Connections, partiality and recusal

A recent development following Peter Smith J’s decision to recuse himself in Emerald Supplies Limited v British Airways reminds us once again of the need for both actual and apparent impartiality in dispute resolution. In that case, His Lordship was involved in a separate personal dispute with the defendant. In an article for The Times of 3 September 2013, Lord Pannick QC, of Blackstone Chambers, criticised the judge’s conduct during the hearing. Subsequently, His Lordship sent a letter to Blackstone Chambers withdrawing his support for the set (in respect of silk applications, for example). According to press reports, this led the appellant in Harb v Aziz to make accusations of bias against Peter Smith J in May 2016. The Court of Appeal’s judgment is awaited. The appellant had been represented by Blackstone Chambers before His Lordship in the High Court.

The escapade has thrown into sharp relief the law in relation to impartiality and the appearance of bias. Where the first part of the story was an example of a situation where there is some dispute or animosity between the tribunal and a party, the latest chapter concerns the relationship between the tribunal and the legal representatives before it. This is, of course, something with which arbitrators are all too familiar. In the close-knit world of arbitral institutions, where the same law firms and counsel appear regularly before the same arbitrators, familiarity between tribunals and legal representatives is inevitable. Moreover, given the number of arbitrators from a legal background, it is also inevitable that arbitrators will find themselves adjudicating on matters where the lawyers involved are based at their firms or chambers. With the topical focus on the possibility of judicial bias against advocates, it is worth reassessing the position of the arbitrator who finds themselves connected with the legal representatives for one party before them.

The duty to act impartially is enshrined in section 33(1)(a) Arbitration Act 1996 (AA 1996), and the test is whether in the circumstances a fair-minded and informed observer would conclude that there was a real possibility of bias. Each case will turn on its own facts. However, before a matter reaches the stage of an application to court, if one party expresses concern as to the arbitrator’s connection with the legal representatives of the other, the question as to whether the arbitrator should recuse themselves will arise. The representatives connected to the arbitrator should disclose the connection at the earliest opportunity, so as to prevent the issue being debated before much time and money is lost.

Where the issue is the connection with a law firm, the question will require consideration of the closeness of the connection. The courts have tended towards tolerance in these sorts of cases; for example, where the arbitrator:

  • Is a barrister who has taken instructions in the past from the solicitor for one of the parties.
  • Is a barrister from the same chambers as one of the parties.
  • Has sat previously on the same panel as the advocate for one of the parties.

Clearly, though, this is always a matter of degree, and it can be difficult to know where to draw the line in identifying the real danger of bias. In Sphere Drake Insurance v American Reliable Insurance Co, a partner was removed as an arbitrator where a significant client of his firm was an associated company of one of the parties. But query whether this would have been necessary if, for example, the arbitrator had ceased to be a partner of the firm.

Quite what will constitute impartiality then, can be difficult to predict, but the incidents involving Peter Smith J highlight the possible impact of connections between tribunals and legal representatives. Lord Justice Scrutton famously compared the quest to define a ship as being akin to:

“… the position of the gentleman who dealt with the elephant by saying that he could not define an elephant but he knew what it was when he saw one.”

The same may well be true of actual and apparent bias. There will be times where there are no qualms when arbitrator and representative share a professional or commercial relationship, just as there will be times when eyebrows will be raised and redress required. It goes without saying that arbitrators would be wise not to write extra-judicial letters to chambers or law firms criticising their general attitudes. However, if a lesson is to be learned from the latest aspect of the Peter Smith J story, it is that any hint of bias arising from the relationship between arbitrator and representative should be disclosed as soon as possible, lest it come back to bite the successful party at a later date.

Stone Chambers William Hooper

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