Disclose or be damned? I'm not so sure after Halliburton v Chubb
As you know, I began my career as an arbitrator in the United States and it was drilled into me that, when it came to disclosure obligations, if something that was connected to the arbitration sprung to mind then it should be disclosed, no matter how insignificant it seemed. There is no doubt that that approach is best practice and as an independent arbitrator I spend a great deal of time updating my conflicts database and reviewing it carefully prior to accepting appointments.
Yet in reviewing the Court of Appeal’s decision in Halliburton v Chubb I found myself becoming increasingly frustrated. The decision will be reviewed by the English Supreme Court in November and I hope that the Supreme Court will take the opportunity to clarify the current state of play. There are lots of good summaries of the Halliburton decision out there and I am not going to repeat them here, nor I am going to discuss whether or not the test of bias was correctly applied by the Court of Appeal. In this post I focus on the thorny question of disclosure.
In a nutshell, the Court of Appeal held that the arbitrator in Halliburton v Chubb should have disclosed his appointments in other, related, matters, but that his failure to do so had little to no bearing on whether or not he should be removed. There is some lack of clarity in the judgment with regard to the extent of the duty of disclosure and, more importantly, the impact of breaching that duty. At one stage the Court says that failing to disclose could “fortify or lead to a conclusion of apparent bias”, then it later goes on to say that non-disclosure cannot in and of itself justify an inference of apparent bias, and that “something more is required”. It seems to conclude that there is a positive obligation to disclose but that if the obligation is breached it doesn’t matter unless there is “something more”. Frankly, the decision leads to lots of questions: such as - is non-disclosure only relevant if it is deliberate/in some way nefarious, and how does one prove that? Is disclosure simply a prudent thing to do: disclose and if there is no objection then there is no issue, if there is an objection then at least the arbitrator has not added the “something more” mentioned by the Court of Appeal?
Part of the issue with Halliburton v Chubb was that it was a non-administered arbitration and, certainly in relation to the LCIA, ICC and ICDR (the three instutions in relation to which I receive the majority of my appointments) the institutions do encourage detailed and transparent disclosure but I still fail to see where any sanctions for (innocent) non-disclosure fall if Halliburton v Chubb is followed.
A further thought: disclosure is not just an arbitrator’s issue. In Halliburton v Chubb, the arbitrator and Chubb were in possession of information regarding the arbitrator’s other appointments that Halliburton was not. It seems to me that it could have been in Chubb’s interests to disclose this information (even where the arbitrator had not disclosed it) to avoid long drawn out court proceedings based on the undisclosed information.
So, certainly in regard to disclosure, for me, Halliburton raises more questions than answers. When the Supreme Court hears the case in a few months it is going to be interesting to see where it comes down on disclosure: will it strengthen the obligation to disclose by making the breach of the obligation to disclose more than just a “factor” in the consideration of whether there is apparent bias or will it decide that the obligation to disclose is ‘best practice’ and the failure to disclose per se does not lead to sanctions. From a personal perspective this second approach is frustrating, as the lack of sanctions for bad behaviour offends my sense of right and wrong, however my inclination is that legally (under English law at least) it is more appropriate. We shall see.