Like matrimony, a challenge to an arbitrator on grounds of bias, is not to be undertaken lightly. But when it is, what is the test for apparent bias? In a recent application to the court to remove a well-known arbitrator under s.24 of the 1996 Arbitration Act, on the basis that “circumstances  exist  that  give  rise  to  justifiable  doubts as to his impartiality” the court summarised the law relating to the test for apparent bias under s.24. Would the fair minded and informed observer, in possession of all relevant facts, aware of how the legal profession operates and having considered the facts, conclude that there was a real possibility that the tribunal was biased? This observer reserves judgment until they have seen and fully understood both sides of the argument; their approach must not be confused with that of the complainer. The observer takes a balanced approach and appreciates that context is an important consideration. Regular appointment or nomination by the same party/ legal representative may be relevant, particularly if it raises material financial dependence questions and the observer may need to consider the tribunal’s explanations as to their knowledge or appreciation of the circumstances.

The court decided that five of the seven grounds put forward, considered cumulatively, raised the real possibility of apparent bias and that the grounds for removal of the arbitrator had been established. Included in the court’s reasoning was the relationship between the arbitrator and the firm of claims consultants which had successfully sought his appointment in the arbitration. Over the previous three years 18% of the arbitrator’s appointments and 25% of his income as arbitrator/adjudicator derived from cases involving the firm, which, though not appointing an arbitrator/adjudicator directly, were able to, and did, influence appointments, both positively and negatively, as highlighted in another recent case. Also significant was the firm’s appointment “blacklist”. The arbitrator/adjudicator’s conduct of the reference might lead to them falling out of favour, being placed on that list and effectively excluded from further appointments involving the firm. That was important for anyone whose appointments and income were dependent on the firm’s cases to a material extent. Of further concern was the arbitrator inappropriately “descending into the arena”, at a meeting (and failing, subsequently, to acknowledge this conduct as inappropriate) and his witness statement, which showed that he did not recognise the relevance of the relationship information or the need for disclosure. This lack of awareness demonstrated a lack of objectivity and an increased risk of unconscious bias.

Cofely Ltd v Bingham & Anor [2016] EWHC   240