This week's caselaw

H v L: Judge rejects argument that arbitrator was biased

Clyde & Co (Michael Payton, Rosehana Amin and Shan Luo)

The claimant applied for an order to remove an arbitrator on the basis that his conduct had given rise to an appearance of bias. Two grounds were raised to support the application:

(1) After his appointment, the arbitrator had accepted two other references in which the defendant is involved. It was argued that these appointments involved the arbitrator receiving a secret benefit from the defendant (in the form of remuneration) and also that the arbitrator would learn information which might be relevant to the arbitration involving the claimant, because, it was claimed, there was a substantial overlap in the issues involved. Both arguments were rejected by Popplewell J.

He held that a fair-minded observer would expect an arbitrator with the extensive experience and high reputation of the arbitrator in this case, to be entirely unaffected by who appoints him, since the duty of impartiality "involves arbitrators owing no allegiance to the party appointing them". The defendant had also not undertaken to pay the arbitrator's fees in the other arbitrations.

Furthermore, whatever the degree of overlap in the subject matter of the arbitrations, "It is a regular feature of international arbitration in London that the same underlying subject matter gives rise to more than one claim and more than one arbitration without identity of parties. This is common in insurance and reinsurance claims where there has been a large casualty and is a consequence of the spread of risk which insurance and reinsurance provides…In such cases it is common for those with relevant expertise as arbitrators to sit in different arbitrations arising out of the same factual circumstances or subject matter". That is a desirable position because the parties should be free to appoint their chosen arbitrator, and there is a "limited pool of talent" to choose from. Also, the principle of speedy finality is served if the arbitrators are already familiar with the background to, and uncontroversial aspects of the subject matter of, the dispute.

Although there was little risk of an overlap in this particular case, the position would have been the same "even if the issues which had to be decided in the references were identical or substantially overlapping": "Just as an arbitrator … can be expected to bring an open mind and objective judgment to bear when redetermining the same question on the same evidence between the same parties, it is all the more so where the evidence is different and heard in a reference between different parties".

(2) The claimant had also argued that the arbitrator should have disclosed his other appointments. That argument was rejected on the basis that the acceptance of those appointments had not given rise to any justifiable concerns about the arbitrator's independence: "There may be exceptional cases where the approach which the arbitrator adopts in deciding not to give the relevant disclosure generates free-standing concerns as to his impartiality by reason of things said or done in reaching that decision. However this is not such a case." In any event, even if disclosure should have been made, the arbitrator had explained that it had not occurred to him that he was obliged to do so. The honesty of that statement was not challenged. An honest mistaken belief (which was not the case here in any event) would not cause a fair-minded observer to conclude that a real possibility of apparent bias had arisen.

The judge concluded that the claimant could not rely on the IBA Guidelines on Conflicts of Interest in International Arbitration, since they do not represent the English law of apparent bias. He also ruled out an argument that the arbitration could not now continue because the claimant had unsuccessfully challenged the arbitrator: "The argument is in effect that the possible offence taken by an arbitrator at an unmeritorious attempt to remove him should itself raise justifiable doubts as to his future conduct of the reference, with the paradoxical result that the more obnoxious the challenge the stronger this ground will be. It is self-evidently misguided".

COMMENT: Generally, the courts adopt a pragmatic approach where there is likely to be only a narrow field of suitable arbitrators to choose from. This decision confirms that that pragmatism extends to the situation where the same arbitrator may be hearing multiple arbitrations involving similar facts and issues. It also reiterates that the IBA Guidelines do not form part of English law (a point recently confirmed by Knowles J in W Ltd v M SDN BHD (see Weekly Update 09/16)).

Tchenguiz v Grant Thornton: Judge considers meaning of "collateral use" of disclosed documents

CPR r31.22 provides that a party to whom a document has been disclosed in the course of proceedings may use the document only for those proceedings (except where the document has been read in court, the court has given permission or the disclosing party agrees). This is known as the "collateral use" protection.

Documents were disclosed to the defendants in the course of other proceedings. It was not practical to obtain consent from the disclosing party and so the defendants asked the court whether it would be "collateral use" for them to review these documents to ascertain their relevance in the other proceedings but also with a view to deciding whether they wish to use those documents in these proceedings (in which case, permission would then be sought).

The judge noted that there is no clear authority on this issue. He said that it was clear from the wording of the rules that "Use for any purpose other than the proceedings in which the documents were disclosed (or the witness statement served) is the subject of the rules". That lead to the following conclusion: "In my judgment if the purpose of a review of documents that were disclosed in litigation is in order to advise on whether other proceedings would be possible or would be further informed, then the review would be a use for a collateral purpose. ..If however the purpose of the review of documents disclosed in litigation was to advise on that litigation, but when undertaken the review showed that other proceedings would be possible or would be further informed, then (i) the review would not have been for a collateral purpose, (ii) a further step would be a use for a collateral purpose, but (iii) the use of the document for the purpose of seeking permission or agreement to take that further step would be impliedly permitted".

COMMENT: In essence, the issue will be whether the party to whom the document was disclosed has, by chance, discovered that the document could be used in other proceedings once the document was reviewed (whereas an intention from the outset to potentially use the document in other proceedings would amount to collateral use). Determination of that issue may therefore turn on the credibility of the party (or its legal team) carrying out the review, and that in turn may depend, to some degree, on the nature of the disclosed document and the issues in dispute in both sets of proceedings.

Dawson-Damer: Court of Appeal considers a subject access request

The appellants sought the disclosure of personal data from the respondent via a subject access request ("SAR") under the Data Protection Act 1998 ("DPA"). The respondent refused to provide the data and the court rejected the appellants' application. An appeal was then brought to the Court of Appeal.

The Court of Appeal has now dismissed that appeal. In so doing, it confirmed that the legal professional privilege exemption at paragraph 10 of Schedule 7 of the DPA is expressly limited to legal professional privilege as traditionally defined by English law, and the law of any country outside of the UK is not applicable.

The DPA limits a data controller's obligations where the "supply" of the information requested by an SAR would involve disproportionate effort on the part of the data controller. However, the Court of Appeal indicated that it would not necessarily be disproportionate for lawyers to sift through large quantities of documentation to identify which documents are subject to legal professional privilege. (In considering this issue, the Court of Appeal indicated that the reference to the "supply" of information in the disproportionality exemption covers not only copying and physically supplying information, but also searching for documents). It was also indicated that searches will rarely be disproportionate.

Finally, in a significant move, the Court of Appeal held that an SAR would not be invalid if made for the collateral purpose of assisting with litigation. In so doing, the Court of Appeal confirmed the conclusion in Gurieva v Community Safety Development (see Weekly Update 06/13), in which it was held that dictum by Auld LJ in Durant v FSA [2003] was not authority for the proposition that a data controller can rely on purpose as a ground for refusing to respond.