Partner Leigh Crestohl comments on the UK Supreme Court ruling in Halliburton Company v Chubb Bermuda Insurance Ltd

November 27 2020

Leigh Crestohl, partner and head of the international arbitration practice at City boutique firm Zaiwalla & Co, commented on the UK Supreme Court ruling this morning that dismissed the appeal in Halliburton Company v Chubb Bermuda Insurance Ltd.

Leigh's comments, enclosed below, have been published in Edward Fennell's Legal Diary here, The Law Society Gazette here, Insurance Business UK here and Litigation Futures here

"The Supreme Court today dismissed Halliburton’s appeal of its application to remove a court-appointed chair of an arbitration tribunal in a dispute between it and Chubb relating to a liability insurance policy. It has been almost four years since Halliburton made its application to the English Court, and over one year since the Supreme Court heard arguments in the appeal.

"The independence and impartiality of the ultimate decision-makers is a vital component of natural justice, and private arbitration cases are no different in that sense from cases tried by judges in the Courts. The Judgment from the UK's highest appellate Court has been eagerly awaited by the international arbitration community. By its nature, arbitration tends to create greater potential for challenges to the impartiality of arbitrators, and international practice on these questions is neither uniform nor entirely consistent.

"Whilst it remains true that the English Court is reluctant to intervene in arbitration cases, the Supreme Court has sought to provide clarity on the English law position on impartiality in cases of multiple appointments in related arbitrations. It will take some time before the practical effect of this guidance is known, including the impact, if any, on London’s position as a premier venue for the resolution of international disputes, which may assume even greater importance post-Brexit."

 

Background

This appeal concerns the circumstances in which an arbitrator in an international arbitration may appear to be biased. It raises important questions about the duty of impartiality and obligation of arbitrators to make disclosure.

The appeal relates to an arbitration under a liability insurance policy which arose out of damage caused by an explosion and fire on the Deepwater Horizon drilling rig in the Gulf of Mexico. BP Exploration and Production Inc. (“BP”) was the lessee of the Deepwater Horizon rig. Transocean Holdings LLC (“Transocean”) owned the rig and provided crew and drilling teams to BP. The appellant, Halliburton Company (“Halliburton”) provided cementing and well-monitoring services to BP. Halliburton had entered into a Bermuda Form liability policy with the respondent, Chubb Bermuda Insurance Ltd (“Chubb"). Transocean was also insured with Chubb by a Bermuda Form policy.

The Bermuda Form policies provided for disputes to be resolved by arbitration. Halliburton commenced arbitration. Halliburton and Chubb each selected one arbitrator but were unable to agree on the appointment of a third arbitrator as chairman. As a result, after a contested hearing in the High Court, Mr Rokison, proposed by Chubb to the court, was appointed. Subsequently and without Halliburton’s knowledge, Mr Rokison accepted appointment as an arbitrator in two separate references also arising from the Deepwater Horizon incident. The first appointment was made by Chubb and related to Transocean’s claim against Chubb. The second was a joint nomination by the parties involved in a claim by Transocean against another insurer.

On discovering Mr Rokison’s appointment in the later references, Halliburton applied to the court under section 24 of the Arbitration Act 1996 to remove Mr Rokison as an arbitrator. That application was refused. On appeal, the Court of Appeal found that, while Mr Rokison ought to have disclosed his proposed appointment in the subsequent references, an objective observer would not in the circumstances conclude there was a real possibility Mr Rokison was biased. The appeal was therefore dismissed. Halliburton renews its challenge before the Supreme Court.

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