In the recent case of Cofely Ltd v Bingham and another [2016] EWHC 240, the Commercial Court granted an application to remove an arbitrator under section 24 of the Arbitration Act 1996 ("s.24"), on the grounds of apparent bias.

Background

Cofely, a major construction company, instructed claims consultants Knowles to handle a dispute in which it was involved. A further dispute then arose between Cofely and Knowles and Knowles applied for arbitration. Anthony Bingham, a barrister and chartered surveyor, was appointed as arbitrator.

Shortly after, a judgment was handed down in Eurocom Ltd v Siemens plc [2014] EWHC 3710, which held that Knowles had made a fraudulent misrepresentation in connection with the appointment of Mr Bingham as arbitrator in those proceedings. The court found that, when seeking to appoint an arbitrator, Knowles had falsely claimed conflicts of interest in respect of some other potential arbitrators, so that Mr Bingham would be appointed.

As a result of the decision in Eurocom, Cofely became concerned about the relationship between Mr Bingham and Knowles and requested further information. Bingham's response to the request was hostile and evasive. He called a meeting between the parties and proceeded to cross examine Cofely's counsel in an aggressive manner before ruling that the tribunal was properly constituted and that there was no conflict of interest.

The case came before Mr Justice Hamblen when Cofely applied to have Mr Bingham removed as arbitrator on the grounds of "justifiable doubts as to his impartiality" and apparent bias.

Grounds for apparent bias

Relationship with Knowles

Hamblen J commented on Mr Bingham's relationship with Knowles, saying: "The fact that an arbitrator is regularly appointed or nominated by the same party/legal representative may be relevant to the issue of apparent bias, particularly if it raises questions of material financial dependence…". Evidence showed that over the previous 3 years 18% of Mr Bingham’s appointments and 25% of his income as arbitrator/adjudicator was derived from cases involving Knowles. In fact, in those 3 years, Mr Bingham had acted in cases involving Knowles as either a party or representative 25 times. In 18 of those cases, Mr Bingham had ruled in Knowles' favour.

Mr Bingham argued that the large percentage of cases involving Knowles was irrelevant, as all the appointments were made by CIArb (Chartered Institute of Arbitrators) rather than by Knowles directly. The court dismissed this argument, stating that "On this logic even if all his income derived from cases involving Knowles there would still be no cause for concern.”

Hamblen J highlighted that the CIArb acceptance of nomination form calls for disclosure of “any involvement, however remote”, with either party over the last five years. "Acting as arbitrator/adjudicator in cases in which Knowles is a party or a representative of a party is a form of involvement" and therefore should have been disclosed. Bingham's failure to disclose suggested either a lack of awareness of the risk of bias, or a conscious effort to conceal his previous involvement with Knowles.

The court also found that, although Knowles had not appointed Mr Bingham directly, it was able to influence his appointments by stipulating a very specific and narrow set of qualification requirements. In all 25 cases, Knowles had requested the appointment of someone who was both a chartered surveyor and a barrister (Bingham was both), thereby significantly reducing the number of possible candidates. Knowles also claimed conflicts of interest against other possible candidates.

Arbitrator's conduct

Hamblen J's concerns about the relationship between Mr Bingham and Knowles were "heightened" by Mr Bingham's response to Cofely's request for further information about that relationship. The Court held that Bingham had adopted an inappropriately evasive, defensive and hostile stance towards Cofely, which, of itself, demonstrated reasonable grounds to suspect bias.

These concerns were yet further amplified by Mr Bingham’s witness statement in response to Cofely's application; "This shows that even now Mr Bingham does not recognise the relevance of the relationship information or the need for any disclosure… This lack of awareness demonstrates a lack of objectivity and an increased risk of unconscious bias.”

The verdict

Hamblen J found that a case of apparent bias had been made out. The Court ruled that Cofely was entitled to have Bingham removed as arbitrator and if he would not resign, the Court would remove him.

Comment

The judgment, and particularly the fact that Mr Bingham's conduct was a crucial factor, should be of interest to parties and arbitrators alike. Earlier this year, in Sierra Fishing Company & Ors v Hasan Said Farran, the Commercial Court granted an application to remove an arbitrator, also under s.24, holding that an arbitrator's conduct alone (including in that case the "content and tone" of his communications) could give rise to justifiable doubts as to impartiality.

It is not uncommon in niche areas for there to be a relatively small pool of arbitrators with the necessary skills and experience to determine a dispute, at least in one party's opinion. In the present case, although Mr Bingham had presided over a number of arbitrations involving Knowles, he had decided against the company on a number of occasions. Had Mr Bingham responded to Cofely's requests, and indeed the application before the High Court, in a different, more transparent manner, there may well have been a different outcome.

Ultimately, parties and arbitrators alike must ensure they are entirely open about any previous relationships to avoid any inference of foul play.

The question of bias is highly topical in England at the moment in that the Chancery Division's most senior judge, Mr Justice Peter Smith's judgment in a significant action is being challenged due to alleged concerns regarding his bias towards counsel from a set of chambers with which the judge has had a very public falling-out.