Challenging an arbitrator

Brick wall

One of the key advantages of arbitration over litigation is the parties’ ability to participate in the selection of the arbitrators. Sometimes, however, a party may decide that it is not happy with a particular arbitrator and seek to remove him or her from the panel.

In H v L the Commercial Court dismissed an application to remove the chairman of a tribunal appointed in a Bermuda Form arbitration. The parties had not been able to agree on the choice of third arbitrator, so the court appointed M, an experienced arbitrator who had sat in over 30 references concerning the Bermuda Form. M had disclosed that he had previously acted as arbitrator in a number of arbitrations in which L was a party, including two pending references in which L was involved. No-one raised an issue over this. However, subsequent to his appointment in these references, M accepted appointment as arbitrator in two other references involving claims by R against its excess liability insurers, including a claim by R against L. H sought to have M replaced as arbitrator in the current references on the grounds of an appearance of bias.

The Court dismissed the application, noting that it was commonplace, particularly in insurance and reinsurance disputes, for a loss to give rise to number of references in which an arbitrator might be appointed. This, it said, was a good thing because it reflected party autonomy and promoted efficiency. Moreover, arbitrators had a duty of impartiality under the Arbitration Act 1996 and would not be biased in any way by such multiple appointments.

Challenging arbitration appointments is a familiar tactic employed in US reinsurance arbitrations, where in recent years there have been numerous court applications on the issue. Thus, significant costs can be incurred on both sides, let alone the years wasted, before the parties even deal with the nitty gritty of their dispute. Such an approach has not generally carried over to this side of the pond.

Peter Rogan, Arbitrator with JAMS International, comments as follows:

“The judgment of Mr Justice Popplewell in H v L is welcome as, in my experience, there has been an increasing tendency for parties to object to an appointment on the basis of other appointments involving the same party on a similar subject matter. For the reasons given by Mr Justice Popplewell in paragraphs 23-24 of his judgment, there are major benefits in appointing arbitrators familiar with the issues and, in high value specialist insurance matters, the pool of such arbitrators is likely to be very limited. The judgment is also helpful in putting into context the IBA guidelines and, in particular, clarifying that they do not represent the English law of apparent bias.”