ENGLISH HIGH COURT REJECTS CHALLENGE TO ARBITRAL AWARD ON BASIS OF APPARENT BIAS
In the recent English case, W Limited vs. M SDN BHD, Mr Justice Knowles determined that there was no apparent bias arising from the connection between a sole arbitrator’s law firm and a company within the same corporate structure as the defendant. The case raises an interesting issue regarding the relationship between English law (which suggested there was no apparent bias) and the International Bar Association Guidelines on Conflicts of Interest in International Arbitration (the IBA Guidelines) (which suggested there was apparent bias). It also reminds users of arbitration about the potential for challenges at court post-award.
Background
The claimant challenged an arbitration award pursuant to section 68(2) of the Arbitration Act 1996, alleging serious irregularity on the basis of apparent bias and a conflict of interest.
The sole arbitrator was a partner in a Canadian law firm. The law firm did work for a company (Q) that was bought by a parent company whose subsidiaries included the defendant. The defendant was, therefore, the sister company of a client of the law firm whose partner was the arbitrator in the matter at the relevant time.
There was no question of actual bias. The arbitrator did not know that his firm was doing work for Q and asserted that he would have disclosed that information had he known. He did no work for Q (although his firm did), and the firm did not advise the defendant or the common parent of Q and the defendant.
The arbitrator had performed conflict checks and provided disclosures on other (non-material) issues, the conflict checks simply had not picked up this relationship. Further, he played no active part in the firm’s partnership, had not attended partnership meetings for a number of years, and considered himself a sole practitioner with access to the resources that a law firm can provide.
Jul-Sep 2016 issue
Morgan Lewis