The Proof of Bias in Commercial Arbitration

As a rule of thumb, an arbitrator must possess a reputation for fairness, integrity and wisdom in relating with parties and co-arbitrators [1]. Bias is so highly insidious that even though a person may, in good faith, believe that he is acting impartially, his mind may be unconsciously affected by bias.[2] Bias is simply favoritism or the inclination to favour a party to the arbitration in a way considered to be unfair to the other party or parties.[3]

For an act or omission to qualify as bias, it must be an omission or act done directly in favour of a party (the beneficiary), or against another party who is said to be a victim. It is pertinent to note that the important words in determining the issue of bias in arbitration are “impartiality”, “independence” and “unfair”. Therefore, an arbitrator is deemed biased when it is established that his conduct is unfair or there is a reasonable question about his impartiality in the arbitral proceedings.[4]

According to Harry Matovu,[5] there are two types of arbitral and judicial bias that have come to be generally recognized: actual bias and the appearance of bias (also known as apparent bias). While actual bias is self-explanatory, the apparent bias is founded on the existence of circumstances that give rise to justifiable doubts as to the arbitrator’s impartiality”. The test for apparent bias is objective i.e. “would a fair-minded and informed observer, having considered the relevant facts conclude that there was a real possibility of bias by the arbitrator or tribunal?”.[6]

As a general rule, an arbitrator may be challenged on grounds of bias only if circumstances exist that give rise to justifiable doubts as to his impartiality or independence, or if he does not possess qualifications agreed by the parties.[7] The test for bias was established in Porter v Magill[8] where it was held that the court must decide whether there is any possibility (not just a probability) of bias. Lord Hope emphasized that the test is based on the perception of a fair-minded and informed observer, not the personalized or emotional views of the parties or the tribunal that is being investigated. A fair-minded and informed observer is one who always reserves judgment on every point until she has seen and fully understood both sides of the argument.[9] The Supreme Court emphasized the importance of the fair-minded and informed observer test of ascertaining the bias of an arbitrator in the case of Halliburton Company v Chubb Bermuda Insurance Ltd, while applying the test, the Supreme Court noted that the assessment involve a ‘balanced approach to any information given to her. The fair-minded and informed observer will take the trouble to inform herself on all matters that are relevant in order to understand and appreciate the context and materials before giving an arbitral award.[10]

In the Halliburton V Chubb matter, due to the inability of the parties to appoint the Chairman of the tribunal, Mr. Kenneth Rokison QC was appointed by the English High Court as the third arbitrator on behalf of the parties, he thereafter accepted appointments in two other matters related to the same subject matter of the arbitration which were not disclosed to Halliburton. Halliburton’s case was based on the suggestion that the situation gave Chubb the unfair advantage of being a common party to more than one related arbitrations with a joint arbitrator (Mr. Kenneth Rokison QC), while Halliburton was ignorant of the proceedings. Upon Halliburton’s challenge of Mr. Kenneth continual appointment as chairman of the tribunal on grounds of bias, the Supreme Court held that an arbitrator’s appointment in multiple arbitrations concerning the same or overlapping subject matter may give rise to an appearance of bias, depending on the custom and practice in the field of arbitration, the Supreme Court however unanimously dismissed Halliburton’s appeal, finding that there was no real possibility of bias.[11]

Conclusively, it is pertinent to note that the onus lies on the party alleging bias to prove acts constituting such bias by the arbitrator. The informed observer is informed on all matters which are relevant to put the matter into its overall social, political, or geographical context. The fair-minded observer is gender neutral, is not unduly sensitive or suspicious, reserves judgment on every point until he or she has fully understood both sides of the argument, is not complacent and is aware that arbitrators and other members of the tribunal have their weaknesses.[12] Therefore, a party who alleges bias must prove without any reasonable doubt that the actions or omissions of the arbitrator is indeed biased when viewed from the lens of a fair-minded and informed observer.

REFERENCES:

1. Aceris Law, International Arbitration Law Firm, “Bias in International Arbitration,” https://www.acerislaw.com/bias-international-arbitration/. Accessed on November 23, 2017
2. Harry Matovu QC, “traditional Bias in African Arbitrations” paper delivered at the ICC Africa Regional Arbitration Conference on Arbitration and Africa: Prospects and Challenges, Lagos, June 19–21, 2016
3. Yves Dezalay & Bryant G. Garth, DEALING IN VIRTUE, 18–29 (1966)
4. Criteria for establishing bias in arbitration. Professor Momodu Kassim-momodu, Chartered FCIPD, FCArb , Journal on Arbitration, Volume 14, Number 1, April 2019
5. Supra
6. https://www.stevens-bolton.com/site/insights/articles/apparent-bias-and-the-arbitrators-duty-of-disclosure
7. https://www.ibanet.org/article/1aa974da-932c-4e3e-a1bb-34f22357e6ec
8. https://www.hk-lawyer.org/content/halliburton-v-chubb-clarifying-arbitrators%E2%80%99-duty-disclosure
9. AEPB v. MAHAJ (NIG) LTD (2021) LPELR-55590 (CA)
10. Sec. 8(3) (A) and s. 45 (1) and (3) Arbitration and Conciliation Act, Chapter A18 Laws of the Federal Republic of Nigeria 2010
11. (2002) 2AC  357 Per Lord Hope, 99–103. The decision relied on the prior decision in R v Gough (1993) AC 646 at 670
12. Helow v Secretary of State for the Home Department [2008] UKHL 62, [2008] WLR 2416, Per Lord Hope
13. https://www.ibanet.org/article/1aa974da-932c-4e3e-a1bb-34f22357e6ec
14. https://www.hk-lawyer.org/content/halliburton-v-chubb-clarifying-arbitrators%E2%80%99-duty-disclosure
15. AEPB v. MAHAJ (NIG) LTD (2021) LPELR-55590(CA)

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