A & Others v B & Anr [2011] EWHC 2345 (Ch)  

Mr Justice Flaux had to consider an application to remove a sole arbitrator and set aside an award for serious irregularity on grounds that there were justifi able doubts as to the arbitrator’s impartiality. A dispute had arisen under a share sale and purchase agreement (“SPA”). B commenced arbitration proceedings under the Rules of the London Court of International Arbitration (“LCIA”). The parties’ solicitors agreed to appoint a QC to act as sole arbitrator. The arbitrator had previously been instructed by both parties’ solicitors in unrelated matters.

In respect of the arbitrator’s instruction from B’s solicitors, this had resulted in unrelated litigation before the commercial court. This settled in 2008 and was stayed under a Tomlin order. The partner with conduct of that litigation, and generally the legal team, was diff erent to that engaged in the arbitration proceedings. On 8 May 2009, the arbitrator signed a statement of independence, in compliance with the LCIA Rules, confi rming that he was impartial and independent. The arbitration proceeded with a fi nal hearing in September 2010. In late November 2009 the litigation had been reactivated and the matter was listed for trial in late November 2010. The arbitrator was instructed by B’s solicitors to advise their clients which he did. In early December 2010 the arbitrator wrote to the parties informing them of his involvement . The letter did not immediately provoke an adverse response from A’s solicitors, however, when the partial award was issued in favour of B, A’s solicitors applied to the LCIA to remove the Arbitrator under Article 10(3) of the LCIA Rules. The application was rejected and A applied to the court to remove the arbitrator and challenge the award.

The application to remove the arbitrator and set aside the award was dismissed. The Judge considered that a fair-minded and informed observer, who was presumed to know how the legal profession worked, would consider that because the arbitrator acted as counsel for one of the fi rms of solicitors acting in the arbitration, (whether in the past or simultaneously with the arbitration) there was a real possibility of apparent bias. As to non-disclosure until late in the day, the Judge commented that this failure was clearly inadvertent and a fair minded and informed observer would not consider that the delay would have a bearing on whether there was apparent or unconscious bias. The nondisclosure did not constitute a serious irregularity, not least because of the high threshold that was required to be satisfi ed to set aside an award on such grounds. The Judge indicated that the issue of whether there is a real possibility of apparent bias should be considered by adopting a common sense approach:

“It is a fact that judges of the Commercial Court (whether through having been instructed by particular fi rms of solicitors whilst at the Bar or through experience of case management and trial of cases as judges) build up a picture of the strengths and weaknesses of particular fi rms of solicitors or indeed of individual solicitors, just as they do of individual members of the Bar. Accordingly they will have more confi dence in some fi rms or individual solicitors (or members of the Bar) than in others. No-one could sensibly suggest that a judge should have to recuse him or herself in such situations. Were that so, there would be no judges sitting.”